SALES AGREEMENTS IN PROPERTY PURCHASE
A sales agreement is a legal contract that serves as the official document in the transaction of real estate property. If you are an aspiring homeowner, you will probably come across it in your quest to buy a home. Sales agreements generally outline the conditions of sales as agreed between the sales parties, in the case you and the individual or establishment that is selling you the property. it is drafted after the terms of the transaction have been agreed upon and is signed off by the buyer, seller, and their respective legal representatives. As with any other agreement, it is advisable to have a legal professional to review and interpret the legal jargon in a sales agreement for you so that you understand exactly what you are agreeing to before you actually sign. This is important because sales agreements are legally binding and can be adduced as evidence in a court of law. Having done so, here are a few areas you need to pay particular attention to:
a) The Terms of Payment
A sales agreement should set out the purchase price of the property in detail. It should also make provision for a down payment or deposit, which is usually 10% of the purchase price but could vary depending on yours and the developer’s preferences, and a schedule of subsequent payments depending on the consensus between the two parties. It is important that you review the amounts and signs-off only when you are agreeable since any default in payment could derail your buying of the home. Consequences range from incurring penalty fees or in the worst case, having to forfeit the property and some of the money you paid for it. If you understand the payment terms beforehand, you are able to arrange your finances accordingly. This saves you from any unwelcome surprises further along your homeownership journey.
b) Completion time is a particularly crucial consideration if you intend to purchase an off-plan property.
As you negotiate the terms of the sales agreement with the developer, ensure that a tentative date of completion is included before you sign anything. In as much as construction rarely ever conforms to the budget of expected timelines, delays are never exceedingly long. One of the advantages of having an estimated completion date is that it allows you to organize your finances according to your payment plan. Furthermore, if you are purchasing a given property as a landlord or for other commercial purposes, you are able to line up tenants in the time for completion and in this way, reap most from your investment. Most importantly, it is a way to hold the developers accountable. In the event of an unusually long delay, you may use your sales agreement when recording complaint against the developer.
c) Event of Default (Termination)
It is important for you to clearly understand the consequences of any default on either your part or that of the seller. This enables you to protect yourself against any action by the seller that may be prejudicial to your interests and any consequences that would accrue against you should you fail to pay or meet your obligations as per the agreement. In either instance, the seller may withhold the deposit or even resell the property and only refund you upon getting alternate buyers, depending on the event of default. Above all else, knowing what would happen in the event of termination lets you explore your options and makes for better planning.
d) Specification of the Property
The sales agreement should detail specifics of the property to provide you with a complete picture of what you are buying into. This is another important consideration if you are buying off-plan but also applies for buyers of a complete project. Property specification includes the typology of the property, location, and amenities. Understanding the specifications will help you evaluate whether you are getting value for your money. It is also useful in planning for your use of the property. Additionally, if you intend to let out the property, knowing the specifics will help you advertise it to potential tenants.
e) Completion Documents
Completion documents are the documents that the seller is expected to provide when you finish paying the unit. These vary depending on the developer, but essential documents are listed in the agreement. Some of these include the title deed, rent clearance, and rate clearance, among others.
In conclusion, it is important to always be keen when reviewing your sales agreement. Always remember that once you sign off on the dotted line, you are legally bound to all the terms and conditions