There are many options for real estate transactions – purchase and sale, exchange, lease, purchase through investments, etc. The contract is the primary source of regulation of such transactions. In each such transaction, the contract has its own features and legal requirements.
Types of real estate contracts:
- Contract of purchase and sale. The most common contract for real estate transactions. Despite the simplicity of the transaction, VigoLex recommends the seller’s guarantee to be incorporated into the contract that one is the full-fledged owner of the real estate and real estate having no encumbrances, is not an object of interests of third parties, etc. Any violation of such a guarantee should be subject to appropriate fines. For example, if the seller does not have rights to the real estate, then reimbursement for the time and resources spent is possible.
- Exchange contract is less common: its essence is similar to contract of purchase and sale, however, instead of money, the buyer transacts to the seller another real estate, asset or any other property as agreed with the seller.
- Investment contract that is concluded between buyers and real estate developers, usually at the stage of construction. It is difficult for a developer to amass independently the necessary amount in order to cover the construction costs. To facilitate this, it attracts funds from persons intending buy property in the future. In return for investment, the developer will transfer the apartments to the buyers in future. Such contracts require awareness of the guarantees provided by the developer regarding the late delivery of the property, the alteration of the agreed apartment area at the end of construction, as well as the procedure for refunding the buyer in the case of the contract cancelation.
- Real estate lease contracts. Lease contracts are varied, but for each of such contracts it is necessary: to clearly establish a list of deeds which mandate lessee’s permissions from the lessor; to establish specific amounts of payments under the contract, including rent, utilities and other payments and to foresee that such payments amount may only be changed upon the parties’ consent; to enforce the most simple procedure for acceptance and transferral of the premises, including check-up of the premises condition in both situations.
It is absolutely necessary to check whether the contract contains all the essential terms, namely: the subject of the contract, the term and the price. Without these terms, a real estate transaction may be deemed void
In every real estate transaction, you must also consider:
- whether the property address in the contract, matches the factual registered address;
- what payments, in addition to the transaction cost, must be made under the contract: utilities, cleaning, use of common spaces, commission on profits, payment of notary and realtor services, etc.;
- whether the refund procedure set in the contract – this is especially relevant for investment and lease contracts;
- if there are fines for violating he contract terms – for example, for replanning of premises or for missing payments.
Not all real estate contracts are subject to notarization, but the notarization is always preferable to a simple signature
For real estate, it is necessary to notarize:
- contracts of purchase and sale, exchange, deeds of gift;
- inheritance contracts;
- mortgage contracts;
- contracts on the transferral of ownership or the establishment of common partial ownership regime of a land plot;
- contracts on division of property;
- lease contract for a building or permanent structure for the period of more than 3 years;
- real estate management contracts.