Offer and Acceptance
A buyer and seller are said to be “under contract” for the purchase and sale of real estate when the buyer makes an offer to purchase a property at a certain price under certain terms and the seller accepts the buyer’s offer. In some cases, the seller may counter the buyer’s offer with a new offer, in which case the buyer must accept the seller’s counteroffer to create a binding contract. This back and forth process can be iterative until a final price and terms are agreed upon.
Statute of Frauds and Contract Contingencies
A contract for the sale of real estate will generally not be enforced by a court unless the contract is signed and in writing. Many states, including Ohio and Maryland, permit the use of electronic signatures for this purpose. However, a binding contract does not necessarily guarantee a successful closing. Usually, contracts for the purchase and sale of a home are “contingent” on important items such as a home inspection and the buyer securing financing. Each contract contingency must be cleared or re-negotiated in order to finalize the sale and transfer formal ownership of the property from the seller to the buyer at closing.
Buyer and Seller Rights Between Contract and Closing
During the period when a buyer and seller are under contract for the sale of a property, legal title remains with the seller until formal ownership is validly transferred to the buyer through a deed at the time of closing. Up until closing, a buyer under contract is commonly said to have “equitable” title to the seller’s property, which essentially means the buyer has a contractual right to purchase the property at the sale price at the time of closing, among other possible rights.
Between the time a real estate purchase contract is first signed and the closing is finalized, disputes sometimes arise between the buyer and seller over various provisions set forth in the purchase contract. In some instances, when informal resolution is not possible, it may be advisable to seek help from an attorney to review the facts and circumstances surrounding a dispute to evaluate options and the risks associated with walking away from a contract.
If you are the seller or buyer of real estate and you need legal assistance, please contact Mulhall Zion LLC at (216) 586-4278 in Ohio, or (240) 630-0407 in Maryland.
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