The Real Estate Purchase Agreement in Michigan: What You Need to Know
A real estate purchase agreement, also known as a sales contract, is a legally binding document that outlines the terms and conditions of a real estate transaction. In Michigan, the purchase agreement must comply with state laws and regulations. It is essential to understand the terms and obligations outlined in the agreement before signing it. Here’s what you need to know:
Content of the Purchase Agreement
The purchase agreement should include the names of the buyer and seller, the property’s legal description, purchase price, possession date, closing date, and other relevant details. It should also specify the contingencies that allow either party to cancel the agreement if the conditions are not met, such as financing, home inspection, and appraisal.
Earnest Money Deposit
The buyer is required to provide an earnest money deposit, usually a percentage of the purchase price, as a show of good faith towards the transaction. It is held in an escrow account until closing and credited towards the purchase price. If the buyer cancels the agreement without a valid reason, the seller may be entitled to keep the deposit as liquidated damages.
Closing costs are the expenses associated with finalizing the real estate transaction, including title search, title insurance, recording fees, and transfer taxes. The purchase agreement should specify which party is responsible for paying these costs.
Possession and Closing
The purchase agreement should include the possession and closing dates. Typically, the possession date is when the buyer takes possession of the property, and the closing date is when the transaction is completed, and the title is transferred. The buyer should conduct a final walk-through of the property before closing to ensure that it is in the same condition as when the purchase agreement was signed.
Default and Remedies
If either party defaults on the purchase agreement, the non-defaulting party may have remedies, such as specific performance, which requires the parties to fulfill their contractual obligations, or damages, which may include compensation for lost profits or expenses incurred due to the breach.
A real estate purchase agreement is a crucial document that protects the interests of both the buyer and seller and ensures a smooth real estate transaction. It is essential to seek legal advice from a qualified real estate attorney before signing the purchase agreement to ensure that all terms and conditions are in compliance with Michigan law and regulations. By doing so, you can avoid costly legal disputes and protect your investment.