Property Law and Contracts

A property contract should outline the rights and responsibilities of both the buyer and seller. Contracts serve as a means by which the terms of a deal can be defined and agreed upon. The buyer and seller in any deal may have different ideas in terms of what is important to them and the contract is the vehicle with which these conditions may be set.

The first step in the process of purchasing a piece of property is to establish the appropriate corporate structure to with which to conduct the deal. Limited liability corporations and limited partnerships a common means by which a person or group of people can purchase an asset while limiting their personal liability. These two corporate structures are popular with real estate contracts because they allow the purchaser to limit their liability to only the deal at hand. A limited partnership is used to allow outside equity investors to put their money into a deal without having to worry about recourse outside of their initial investment, while also allowing the developer to run the deal.

Once a corporate entity has been established, the deal can be negotiated. Contract negotiations typically center around price and the various conveyances allocated to the property. These can be encumbrances such as mortgages, liens, or easements that affect the site, but they can also include any entitlements the property has gained.

Intentional failure to disclose information that may affect the deal can result in termination of contracts and ultimately law suits. It is the responsibility of both parties to be upfront and honest about all aspects of the deal.