Selecting a Real Estate Contract

Legally-binding contracts are critical to any major deal you make. A real estate contract in particular is important, as purchasing and selling real estate are the largest transactions you're ever likely to make.

Harriet M. was preparing to retire, and she decided to sell her house to her daughter in law. It was a very informal situation, as she was going to leave her home to the daughter in law's children anyway, and she wanted to move to Florida.

Everything that could go wrong, did. First the daughter in law stopped paying Harriet for the home. This cut Harriet's income by about a third, seriously impacting her lifestyle and almost causing her to lose the home she'd purchased near Tampa. Then one of her grandchild's friends fell out of a swing on the property of the house. To Harriet's shock, she found that her daughter in law had let the liability insurance on the house lapse. When the parents of the injured child sued, Harried found herself completely exposed to liability.

Why? Because she had sold the home to her daughter in law without a contract, the house was still in Harriet's name. And since she had passed the responsibility of the homeowners insurance to the same daughter in law, who had let it lapse, Harriet had no idea that the insurance on the home had lapsed.

We all want to trust our family and friends, but the truth is, ninety percent of the time that things like this happen, it's family and friends that do it to you. Instead of taking a chance, and instead of spending a fortune on a lawyer or real estate agent when you know how the sale will occur, download a good real estate contract. Properly signed, notarized, and filed, this will give you a lien on the property, ensure you have recourse if payments stop coming, and protect you from liability caused by the other party.