• 161 North Clark Street, Suite 1600, Chicago, IL 60601

Did you know that very often controversies that result in litigation involving real estate transactions could have been avoided by a comprehensive, well drafted agreement at the inception or early stages of a real estate transaction?

I recommend that each client prepare a detailed list of all important terms that have been agreed upon.  I believe that the attorney should review the list, and include legally enforceable language in the real estate agreement, reflecting the parties’ understandings.  It is my sincere belief that the extra care and attention that I devote to negotiating and drafting real estate agreements often saves my client the substantial expense and inconvenience of unnecessary litigation, or of a deal that fails to close.

Once you have agreed upon the price for the home you are buying or selling, the next step is usually to enter into a formal contract of sale. There are many extremely important legal and financial issues that should be addressed in the contract. It is my firm belief that negotiating the contract of sale is the most important phase of the transaction, since the contract will serve as the blueprint for the entire transaction. Furthermore, if something “goes wrong”, which it often does, your legal rights will usually be determined by the terms of the contract.

The following are a few examples of issues that we believe should be included in the contract of sale:

  • Under what circumstances can the purchaser cancel the contract, and obtain a refund of the down payment?
  • What are the purchaser’s legal rights and remedies if:
    • Seller can’t deliver good title?
    • Seller doesn’t have the required Certificate of Occupancy?
    • Seller is unable to deliver possession (vacate the premises) on time or prior to the expiration of purchaser’s  mortgage loan commitment?
    • The plumbing, heating, electrical systems, air conditioning, appliances, etc. are not working at the time of closing?
    • Seller needs to close the transaction in order to obtain the money required to close title on his or her new home, but the seller needs some time after the closing in order to move?  This will require purchaser to pay the entire balance of the purchase price, although purchaser will not be given possession of the property until several days later. Adequate provisions should be included in the contract of sale, in order to insure that the seller will move out promptly after the closing of title, and deliver possession of the property to the purchaser. Also, provisions should be included in the contract, in order to compensate purchaser, in the event that the condition of the premises upon transfer of possession, is no longer as represented in the contract of sale.
    • Purchaser is unable to secure a mortgage loan commitment within the time allotted in the contract of sale?
    • Purchaser’s loan commitment is for an amount less than the amount applied for?
    • Purchaser unnecessarily delays the progress of the transaction, which causes the seller to incur substantial additional expense?  (This is especially significant if the seller has already moved from the premises, and is therefore paying the expenses on two residences simultaneously.)

These potential problems can often be avoided or solved if they are properly addressed in the contract of sale, and followed through by experienced real estate attorneys.

Why does it usually take two to three months from the date the contract is signed, until the closing of title takes place?

Most real estate transactions are contingent upon the purchaser obtaining financing. It usually takes approximately 4 to 6 weeks for the purchaser’s bank or mortgage company to issue a loan commitment. Furthermore, even after the loan commitment is issued, the bank’s attorneys often require various additional items which the purchaser’s attorney will usually obtain and provide. For houses and condos, purchaser’s attorney will obtain a title search, including various departmental searches. For the sale of houses and other real estate, if the seller does not have a current survey, purchaser’s attorney may attempt to locate a valid survey, or obtain a new survey. For co-op apartments, the purchaser’s attorney will usually obtain a “co-op search”. Furthermore, a detailed co-op application must be completed and submitted to the co-op Board of Directors, together with required financial documentation, character references, etc. Thereafter, an interview of the prospective purchaser will be conducted by the co-op’s Board of Directors. If the purchaser and seller are both anxious to expedite the closing, it may be possible to shorten the time period from contract signing to closing.