Buying a home is a major transaction, and one that most purchasers want to complete as soon as possible. However, they must be sure they understand the terms and conditions of the sale as set forth in the contract, and have an attorney review it for possible flaws that can impair the value of the deal.

The following are terms and conditions in real estate contracts that could be red flags for potential problems or unfavorable outcomes:

  1. Vague or incomplete descriptions — The contract should clearly describe the property in detail, including its boundaries, buildings and any fixtures included in the sale. Lack of specificity may lead to disputes later about what was included in the sale. 

  2. As-is clause — This provision means the seller will not make assume financial responsibility for making repairs before the sale, and that the buyer will inherit all existing problems with the property. If such a clause is included, the buyer needs to conduct a rigorous inspection.

  3. Lack of contingency clauses — These provisions protect buyers, allowing them to back out of the sale under certain conditions without losing their deposit. Common contingencies include those for financing, home inspections and the sale of a current home. 

  4. Penalties and deposits — Look out for harsh penalties for failing to close the deal, or unusually large deposit requirements. These can indicate a seller's attempt to lock a buyer into the sale regardless of potential issues discovered later or changes in the buyer's circumstances.

  5. Closing costs and fees — The contract should clearly outline all costs the buyer is responsible for, including commissions, attorney fees and transfer taxes. Buyers should be watchful of being asked to cover what are traditionally seller's costs.

  6. Title issues — Ensure the contract stipulates that the seller must provide clear title to the property, free of liens or other encumbrances. Be wary of known issues with the title that are not being addressed.

  7. Lack of right to cancel — The contract should give the buyer a period to review and cancel the contract without penalties. This period allows the buyer to conduct due diligence and confirm that all aspects of the property and the deal are satisfactory. 

  8. Adjustments and prorations — The contract should include details about how ongoing costs like property taxes, utility bills and community association fees will be prorated between buyer and seller. Misalignment in these details can lead to unexpected expenses after taking possession.

  9. Fixtures and appliances — Ensure the contract specifies which fixtures and appliances (if any) are included with the property. Sometimes sellers remove fixtures you might expect to be included, such as chandeliers, custom window treatments or even appliances.

  10. Legal and zoning compliance — The contract should guarantee that the property and its use comply with local zoning laws and building codes. Non-compliance can be costly and time-consuming to resolve.

By being aware of these potential issues, buyers can better protect themselves from entering into a disadvantageous real estate contract. Always consider consulting with a real estate attorney who can provide detailed advice and guidance tailored to your specific situation.

Favaro, Lavezzo, Gill, Caretti & Heppell, PC in Vallejo has decades of experience providing sound advice and effective representation for real estate clients in Solano, Contra Costa and Napa counties. If you are seeking counsel as a buyer or seller in a transaction, call us at 707-674-6057 or contact us online.