Are you a new real estate investor in Houston, Texas? If that’s the case, it’s safe to assume that you don’t know much about real estate contracts or even the different types. But that’s okay because we are here to school you.
Before we get deep into it, we feel obligated to let you know that these contracts often play a significant role in the investment process. If fact, as a real estate investor in Houston, Texas, you’ll always be required to sign contracts while striking real estate deals. Therefore, it’s necessary for any real estate investor to be well-informed about the different contracts that they might come across throughout their real estate career.
What’s a real estate contract?
We will keep it simple to make it easier for you to understand. Basically, it’s a legally binding agreement. This agreement is usually between two or more parties and it’s usually made while exchanging or purchasing real estate in Houston, Texas. In the document, you’ll find the terms agreed upon during the negotiations. And to be enforced, the contract has to be in writing and signed by all the parties involved. This is a requirement outlined by the Statute of frauds in U.S. common law.
Requirements for a real estate contract
For the contract to be enforceable, the following requirements have to be followed:
- Offer: an interested party will prepare a written contract, sing it, and then hand it over to the other party. Upon receiving the offer, the other party might accept it, come up with a counteroffer, reject it, or fail to respond.
- Acceptance: this is the part where the other party accepts and signs the offer. And for it to be enforceable, the document will need original signatures from all the parties involved. If there’s a counter offer, the original offer won’t be legally binding because there was no agreement. And if it’s rejected, it’s terminated.
- Consideration: seeing as something of value is being exchanged between the parties involved, there’s usually a consideration in the form of money. But sometimes this consideration is another property or promise to perform.
- Legal capacity: parties entering the contract have to be mental sound, considered adults, and not impaired in any way.
- Legality of purpose: if the contract calls for illegal action, it’s not enforceable.
Types of real estate contracts in Houston, Texas
This is your typical sales contract. It’s usually the agreement made between the property seller and the property buyer to transfer a particular Houston property in Texas.
Real estate assignment contract:
This type of contract is normally used in a wholesale strategy. A property owner in Houston, Texas can initiate a real estate assignment contract when they are ready to sell the rights to buy a home or property to an investor.
This is the type of contract that binds the landlord and tenant to the property. The property owner in this case agrees to offer his or her apartment for the renter to reside in at a particular rate.
The bottom line is…
You’re going to sign a contract in Houston, Texas regardless of what real estate transaction you’re doing. So it’s imperative you understand what the contracts are all about before you start investing. Call us today and lets discuss!