Recording-2025-03-11T13:02:17.353Z

Excatory Period

• The period prior to the formal completion of a sale when potential buyers conduct due diligence on the property.

• Homeowner can change their mind about selling during this time, as demonstrated by the homeowner who decided not to sell.

• Monetary damages for the buyer due to changes during this period are a consideration.

Notice Requirements

• Parties involved must notify each other about events occurring during the escrow period.

• Example: A home inspection should not be conducted without proper approvals during this period.

Property Condition

• The property must be in the same condition from the date of ratification (when both parties have signed) to the closing date.

• Final Walk-Through: A walkthrough is conducted just before closing to ensure the property's condition remains unchanged since the offer was made.

  • Events such as floods or tree falls can complicate this.

Proration and Risk of Loss

• Proration: Fees such as property taxes are split between the buyer and the seller at closing.

• Risk of Loss: The seller retains the risk of loss for events like fires or natural disasters during the escrow period.

Legal Terms and Obligations

• Survival of the Merger: Once the property sale is closed, obligations in the contract merge into the deed.

• Times of the Essence: Specific time frames must be adhered to for contractual obligations (e.g., inspections typically within the first seven days).

• Marketable Title: Sellers are required to deliver a clear and unencumbered title to the buyer at closing.

• A property cannot be sold with a lien (a legal claim) or a cloud on the title (unclear ownership).

Lease Agreements and Tenant Rights

• Exclusive Right of Possession: Tenants may be allowed to stay post-lease expiration (e.g., month-to-month agreements).

• Covenants: Restrictions may be placed on tenants regarding property usage.

• Subordination Clause: The tenant's lease is subordinate to the mortgage on the property.

• Option Clause: Allows renters the right to purchase the property after a certain period, resembling 'rent-to-own' agreements.

Rent Increases and Escalator Clause

• Escalator Clause: A clause that allows landlords to raise rent based on market conditions or rising costs.

• Example: Annual rent increases to accommodate rising taxes and HOA fees.

Sale-Leaseback Transactions

• Property owners may sell their property and then lease it back, allowing continued occupancy for a designated time.

• Virginia state limits this arrangement to a maximum of two months.

Option Contracts

• Option contracts give a lessee exclusive rights to purchase the property at a specified price within a specific timeframe.

• Terms include: offer, acceptance, consideration, and property description.

Notice, Delivery, and Acceptance of Contracts

• Actual Notice: Requires documents to be received legally and formally acknowledged.

• Constructive Notice: Implies that individuals are aware of the information available through public records.

• Contract forms can be accepted in various ways, such as mail or email, and all parties must receive a copy.

Parties in Contracts: Rights and Obligations

• Buyer's Rights: Inspection, contingency financing, title review, possession, and disclosures.

• Buyer's Obligations: Provide a deposit, due diligence, acquire financing, and cover closing costs.

• Seller's Rights: Receive the earnest money deposit, payment, and remedies for any breach.

• Seller's Obligations: Required disclosures, clean title provision, property condition maintenance, and cooperation during closing.

Monetary Damages and Breach of Contract

• Liquidated damages are predetermined financial losses designated in a contract for breaches.

• A buyer loses their earnest money deposit if they back out without a valid reason.

• The seller is entitled to keep the earnest money, often justified by time lost during the sale process.

• Specific Performance: This legal action forces the breaching party to fulfill their contractual obligations.

Statute of Frauds and Limitations

• Certain contracts must be in writing (Statute of Frauds), covering all transactions in real estate.

• Legal action must follow specific time limits (Statute of Limitations).

Methods of Termination

• Rescission: Returning parties to pre-contractual positions if either party decides to back out.

• Cancellation Clause: Allows for termination of lease under specified conditions.

• Assignment: Transfer of rights and interests from one party to another (assigner to assignee).

• Novation: Replacing an old contract with a new one, requiring agreement from both parties.

Offers and Counteroffers

• Only one counteroffer can be made at a time; otherwise, it's treated as a new offer.

• Buyers must know they can make multiple offers but sellers must present all received offers to the homeowner, ensuring transparency in the bidding process.

• Once both parties agree, the offer becomes a purchase agreement (ratified contract).

Addendums and Amendments

• Addendums: Documents added to contracts to include additional terms (e.g., inspection, financing contingencies).

• Amendments: Documents that modify existing terms in the contract without rewriting the original (e.g., price changes due to appraisal results).

Lease Agreements

• Lease contracts are non-ownership agreements detailing the rights and obligations of the tenant without granting ownership rights.

• Tenants can utilize the property but it is still the landlord's property to keep or sell.