If you`re in the business of investing in real estate, you may have come across the term “wholesale real estate contract.” Essentially, this type of contract is an agreement between a real estate investor (the “assignor”) who has a property under contract and wishes to assign their interest to another investor (the “assignee”) for a fee.
One crucial aspect of this agreement is the purchase agreement. This document outlines the terms of the sale of the property and is vital to the success of the transaction.
So, what exactly should be included in a purchase agreement for a wholesale real estate contract?
1. Purchase Price and Payment Terms
The purchase price is the amount that the assignee will pay for the property. It should be clearly stated in the purchase agreement, along with any payment terms such as the amount of the initial deposit and the schedule for subsequent payments.
2. Property Description
The purchase agreement should include a detailed description of the property, including its address, legal description, and any other relevant information.
3. Title and Closing
The title is the legal ownership of the property, and it`s essential to ensure that the title is clear before closing the sale. The purchase agreement should outline the process for clearing the title and the timeline for closing the sale.
4. Contingencies
Contingencies are conditions that must be met before the sale can be completed. The purchase agreement should include any contingencies that are relevant to the sale, such as inspections, financing, or the assignment of the contract.
5. Disclosure Requirements
Depending on the state or municipality, there may be specific disclosure requirements that must be met when selling a property. The purchase agreement should include any necessary disclosures, such as lead-based paint disclosures or disclosure of any material defects in the property.
6. Assumption of Risk
Real estate investing carries risks, and the purchase agreement should include a clause that outlines the risks assumed by both the assignor and assignee. This clause can help protect both parties in case of unforeseen circumstances.
Overall, a well-written purchase agreement is crucial to the success of a wholesale real estate contract. It outlines the terms of the sale, provides protection for both parties, and helps ensure a smooth transaction. If you`re new to investing in real estate, it`s wise to work with an experienced real estate attorney to help you navigate the process and ensure that your purchase agreement is legally sound.