What clauses do you need to make sure you have in the contract so that if something goes wrong you are able to get out of it?
I was also wondering if instead of using a trec form you can use the forms that they sell at office max. I am nervous to use the trec form because I do not completely understand everything that is on there and I do not want to lose a deal or get sued because I filled out the contract wrong. Basically, I am just looking for a simpler contract.
When first starting out in this great industry, I realize that a new person may be getting started short on funds. Maybe this is not your case, but generic forms are not the way to start.
I recommend that you always have your paperwork reviewed by an attorney.
There is a way that you might want to take a look at, contact a local Title Company and ask them what forms they recommend for your investing method.
As far as getting out of a contract if you have done your due diligence and find a discrepancy between what your seller told you then you do not have to continue with the agreement.
An example would be you agree to purchase the property for $100K, you do your due diligence and find a lien for $5K the seller did not tell you about. One or two things can happen, the seller pays the lien off or you cancel the contract.
A simple contract may not be really what you are looking for.
I use the standard TREC contract for all my purchases and sales. The main reason is because that’s what title companies and real estate agents are use to. You can always add extra clauses in the special provisions section of the contract.
As far as getting out of a contract goes, in Texas, sellers have to sell, but buyers don’t have to buy. You can get out of the contract at anytime you want for any reason you want. You can walk away at the closing table if you want and no one can do anything about it. I would assume the other states have similar laws.
The only thing that will happen to you if you back out is that you’ll lose your earnest money deposit. That’s why you should always keep your earnest money deposit to an absolute minimum. I try not to put up more than $100, but sometimes banks want $500.
Now, if a seller tries to get out of a contract, that’s a different matter. It’s much more difficult for the seller to bail than it is for the buyer.
Just remember the saying, sellers have to sell, but buyers don’t have to buy and you’ll be ok.
Hi Stacy, thank you very much for your reply. I do not intend to weasle out of contracts but it is always nice to know that if something very unexpected comes up I am not obligated to purchase the property.
When Stacy mentioned that you can “walk away” from a contract and there is nothing you can do about it, she is referring only to “Option” contracts, and then you may do so only during your Option period. If you walk away from a contract at the closing table, the contract, and the law, provides for certain remedies including a specific performance suit. If you don’t put up Option money, you don’t have an option contract and therefore you have a bilateral contract. In other words, you have to buy and the seller has to sell, absent some special provision which would specifically change that. Good Luck.