FAQs: Purchase Contracts

Posted on: May 8th, 2020 by RAGC Team No Comments

FAQs: Purchase Contracts

1. If a contract to purchase does not specify a closing date, is the contract void?
A: No. If a contract doesn’t specify a date or time of performance, a reasonable time will be implied.

2. Do you have to present a verbal offer to purchase to a seller?
A: Yes, you are obligated to present all offers to purchase to the seller. While you should certainly attempt to persuade the prospective purchaser to reduce the offer to writing, if he/she refuses, the offer should still be presented to the seller. However if the offer is accepted, the contract will not be binding or enforceable until it is in writing and signed.

3. An offer to purchase was “faxed” to an out-of-state seller. He signed it and “faxed” it back to the listing broker. Is this “faxed” contract legally binding?
A: The validity of facsimile transmissions is still a new issue in contract law. Basically a “faxed” contract is a copy of the contract and the signature of the parties. Because the law prefers original documents, faxed transmissions should be followed up with signatures on the original documents. In the event these originals are lost or one of the parties refused to sign the original and refused to perform, a court would probably admit the faxed document into evidence, unless the other party could establish that the faxed copy was forged or altered.

4. If there is a contract to purchase pending do you have to present a subsequent offer to purchase that is received?
A: Yes. Unless you are instructed otherwise by the seller, all offers must be presented until the date of closing. Of course any such subsequent offer should only be accepted by the seller as a back-up contract.

5. If a contract contains an inspection contingency and the inspection reveals a defect can the buyer terminate the contract or must the buyer allow the seller to repair the defect?
A: The terms of the contract dictate what action can be taken when the inspection reveals a defect. Therefore, the terms of the inspection contingency should be carefully reviewed. The contract may give the buyer the right to terminate the contract or it may provide that the seller can repair the defect. If the seller will not make the repair the buyer can usually terminate the contract or accept the defect as is. Inspection contingencies vary and the parties should be aware of its terms prior to entering into the contract.

6. If a contract contains a first right of refusal clause (concurrency clause) and the seller gives the buyer notification pursuant thereto, must the buyer remove all contingencies in the contract (i.e. financing) or must only the sale of their home contingency be removed?
A: The terms of the first right of refusal clause dictate if all contingencies or just the sale of their home contingency must be removed. A properly written contingency would clearly a this question and the parties should understand those terms before entering into a contract.

7. If a home does not appraise for the purchase price can the buyer automatically get out of the contract?
A: Clearly the buyer will be able to do so if the contract was contingent upon the home appraising for the purchase price. If not, the only other grounds for the buyer to get out of the contract will be if the contract was contingent on the buyer obtaining a specific amount of financing and the buyer cannot obtain that financing due to the low appraisal.

8. Can a person under the age of 18 enter into a real estate purchase contract?
A: If a minor, someone under the age of 18, enters into a contract, the contract is voidable or may be canceled by the minor before or within a reasonable time after reaching age 18.

9. The seller has received a full price offer on his property. However, he is refusing to accept this offer and says he wants to make a counteroffer for more than the asking price. Can the seller refuse a full price offer and “counter” for more than the listed price?
A: Yes. The seller is not legally required to accept an offer because it is “full price” and he can counter for more than the listed price. However, the listing broker could bring a claim against the seller for his commission based upon the theory that the broker has produced a ready, willing and able buyer on the terms provided for in the listing contract.

10. On a listing submitted to MLS several appliances were checked as staying with the property. A contract to purchase was subsequently negotiated and closed. When the seller moved out, they took the appliances listed in the MLS, claiming that because the purchase contract did not provide that the appliances stayed, they did not have to leave them. The buyers thought they would stay because they were listed in the MLS. Who is right?
A: The sellers are. Although the appliances may have been listed in the MLS, the purchase contract is the legal document that controls the terms of sale between the buyers and sellers. Unless the appliances were listed in the purchase contract, the sellers were free to take them.

11. Is earnest money required to have a legally binding contract?
A: No, earnest money is not required under Ohio law to have a binding contract.

12. Can a buyer make a purchase contract contingent on the seller paying the buyer broker’s commission?
A: Yes. While Standard of Practice 16-16 prohibits a REALTOR from making an offer contingent on the listing broker paying a commission different than the amount indicated in the MLS, this section does not apply to negotiations between buyers and sellers. Therefore, a purchaser could negotiate for the seller to pay his broker’s fee just like he negotiates for payment of his closing costs.

13. Must the revocation of an offer be in writing?
A: No. A verbal revocation to the offeree or their agent prior to the offeree’s acceptance of the offer is sufficient to revoke the offer. However, it is best to also provide written notice of the revocation so it can be proved that the revocation was made.

14. Can a “back-up” buyer get out of a back-up contract at anytime if they find another property?
A: No. A back-up buyer is bound by the terms of the back-up contract. If the buyer wants the ability to terminate the contract if they find another home they would include this provision in the terms of the back-up contract.

15. If a seller rejects an offer to purchase must the seller indicate “rejected” on the face of the offer?
A: No. A seller can verbally reject an offer. However, it is best that the rejection is marked on the offer so there is no question that the offer was presented and that it was rejected.

16. Does Ohio law provide for a three-day “cooling off” period for real estate purchase contracts?
A: No. Ohio law does not provide a “cooling off” or right of rescission period for real estate purchase contracts.

17. Is an offer (or counteroffer) that is accepted not a binding contract until it is actually received by the other party?
A: Contract law does require delivery of an offer or counteroffer that has been accepted. While most REALTORS view this as requiring physical delivery of the signed contract, from a legal standpoint delivery occurs when a party–or their agent–is notified that their offer has been accepted. Actual physical receipt of the signed contract would only be necessary if the term’s of the contract itself required this.

18. A buyer made an offer which the sellers countered. The buyer told the listing agent he was rejecting this counteroffer. The next day the sellers received another offer and accepted it. The following day, the first buyer changed his mind, accepted the sellers’ counteroffer and delivered it to the listing agent. Is there a legally binding contract with the first buyer?
A: No. Once the first buyer rejected the sellers’ counteroffer and communicated that to the sellers’ agent, it could only be accepted if the sellers renewed their offer. Since the sellers did not renew their counteroffer to the buyer, it was no longer open for acceptance by the first buyer.

19. Is a buyer legally entitled to a “walk-through” before closing?
A: No. Ohio law does not provide the buyer with a legal right to a walk-through. If the buyer wants a walk-through prior to closing the buyer should include this in the terms of the purchase contract.

This content is copyright 2020 Ohio REALTORS. Read more at: https://www.ohiorealtors.org/faqs-purchase-contracts/