The real estate purchase agreement marks the end of a buyer’s search for that dream home and the beginning of the legal process leading to the transfer of title at the closing. The agreement is usually prepared by the selling real estate agent, but it can also be drawn up by the attorney for the buyer or the seller.The contents of the agreement in Illinois may differ slightly from one part of the state to another, but in addition to information about the transaction, such as location of the property, names of the parties and the price, there are certain clauses that are common to all agreements.
Attorney Review Clause
Contrary to popular belief, Illinois does not have a law that gives buyers the right to cancel the real estate purchase agreement if they change their mind. Signing the agreement constitutes an offer to purchase the seller’s home at the price and terms contained in the agreement. It becomes a binding contract when signed by the seller.
Chicago buyers who are concerned about signing a legal document without having it reviewed by an attorney will sometimes ask the real estate agent to include a provision making it contingent upon review by an attorney. The wording of the attorney review clause is important. An agreement subject to an attorney’s review and approval gives the buyer an unrestricted right to cancel, but an offer that is subject to an attorney’s review and modification limits the right of a buyer to cancel the agreement.
The home inspection clause gives a buyer a short period of time following the acceptance of the offer by the seller to have the property inspected by a qualified home inspector. The inspection usually includes structural and mechanical elements of the home such as the roof, heating and air conditioning systems, plumbing and electrical. Depending upon the certification of the inspector, the home inspection may also include tests for the existence of radon or lead paint.
Depending upon the terms written into the purchase agreement, unsatisfactory conditions disclosed by the home inspection may give the buyer the right to cancel the transaction unless the seller agrees to remedy the condition.
Mortgage Contingency Clause
Most buyers require bank financing to complete the purchase of a home. The mortgage contingency clause makes the purchase agreement subject to the buyer securing a commitment from a lender for a loan in an amount and under terms specified in the agreement. The mortgage contingency clause gives the buyer a period of time, usually 30 to 60 days, within which to obtain financing. If the buyer cannot obtain a loan within the contingency period, the seller may extend the time period or either party may cancel the transaction.
Importance of the Real Estate Purchase Agreement
The purchase agreement plays an important role in defining the rights and obligations of the buyer and seller in a real estate transaction. It is a legal document that should not be signed without having a full understanding of the legal significance of its terms.