Buying or selling a home is one of the most important financial decisions you will ever make. The process can be overwhelming for most people as it is risky and prone to misunderstandings. Fortunately, real estate transactions are subject to contracts or agreements outlining everyone’s rights and obligations.
Understanding Arizona real estate contracts can help you have a good home-buying or selling experience. Let’s explore what you need to know about Arizona real estate contracts, including what you need to do to avoid contract disputes and other costly mistakes.
What is a Real Estate Contract?
A real estate contract is a legally binding agreement between two or more parties for the sale and purchase of a real estate or property. In Arizona, a real estate contract is also known as a real estate purchase and sale agreement. The agreement outlines the expectations of the property buyer and seller.
The contract covers basic terms of the real estate sale including, terms of finance, description of the property, sale price, closing date, contingencies, and required disclosures.
Types of Real Estate Contracts
There are several types of real estate contracts in Arizona including:
- Purchase agreements. This is the most common type of real estate contract. It is a legally binding contract between the property buyer and seller to transfer the ownership of a property. Purchase agreements can either be state/association purchase agreements, purchase agreements for a specific property, or general purchase contracts.
- Lease agreements. This is a binding contract between a landlord (property owner) and a tenant or renter. It involves a landlord agreeing to rent their property to a tenant at a fixed monthly rate. The agreement comprises the rent amount, security deposit, and utility payment.
- Real estate assignment contract. These are agreements used when purchasing a wholesale investment property, including distressed properties or secured foreclosed homes. This type of real estate contract allows the buyer to assign the property to another buyer.
The Key Elements of an Arizona Real Estate Contract
An Arizona real estate contract contains various elements depending on the nature of the real estate transaction. But, there are four key elements without which a contract is not valid. The essential elements include:
- Consideration or exchange of value. The parties to the contract must exchange something valuable between them, including money.
- Mutual Consent. All parties to the contract must willingly agree to its terms and conditions, including the sale price.
- Legally Competent. All parties to the contract must possess the legal capacity to transact, including being at least 18 years old.
- Lawful objective. The contract should not violate any laws and regulations.
Failure to meet these key elements can render a contract void and legally unenforceable. An Arizona real estate contract must also be in writing to be enforceable.
Specific Provisions Unique to Arizona
– Disclosure requirements. Arizona law requires residential property sellers to disclose certain things about the property’s physical condition to the prospective buyer before completing the sale. This is often done through a written disclosure statement. Failure to comply with disclosure requirements means that the buyer can sue you upon discovering property defects you knew of but didn’t disclose.
– Arizona-specific contingencies and clauses. Arizona law also has some contingencies such as the inspection contingency clause, including termite inspections. Other contingencies include Homeowners’ associations (HOAs) rules. Failure to comply with these contingencies and clauses allows home buyers to legally cancel the real estate contract.
– State regulations and compliance. Some state regulations are also specific to Arizona, especially as outlined in the Arizona Department of Real Estate guidelines.
Home buyers and sellers must be aware of these Arizona-specific provisions to avoid misunderstandings and contract disputes.
Common Pitfalls and How to Avoid Them
Real estate transactions are prone to mistakes. Sometimes, these mistakes can be costly, including losing millions of dollars. Some of the most common pitfalls in Arizona real estate transactions include:
- Incomplete or inaccurate contracts. A property buyer or seller’s failure to review or understand a real estate contract can leave them with incomplete or inaccurate contracts. Since an inaccurate or incomplete contract is legally unenforceable, it can lead to huge losses for either party.
- Misunderstanding contingency clauses. Real estate contracts are filled with technical terms and clauses, including contingency clauses like financing contingencies, and inspection contingencies. Misunderstanding these terms or clauses can lead to significant losses or unnecessary disputes.
- Failure to comply with disclosure requirements. Another common pitfall is the failure of property sellers to comply with disclosure requirements, including not performing property inspections and appraisals. This often to future issues with the buyer including court cases and potential contract cancellation.
- Lack of due diligence and proper research. Most buyers fail to do proper research and due diligence when purchasing a property, including gathering information about the property and its history. They may also be unaware of local zoning regulations due lack of research. Failure to do proper research and conduct due diligence functions like title searches or property inspections often leads to costly mistakes.
Real estate transactions can be complex. However, you can avoid these and many other pitfalls by seeking professional help and guidance. A skilled real estate lawyer can help you conduct a legal review of your real estate transaction, including helping you draft a legally enforceable contract.
Besides helping you draft a contract, the lawyer can help you protect your interest and comply with the state and local real estate contract regulations.
Work With a Tucson Real Estate Lawyer
An Arizona real estate contract is a legal document with various technical terms and clauses. As a non-attorney, it can be challenging to understand most of the contents and requirements of the legal document. Since this can lead to costly mistakes, especially for a home buyer or seller, it is advisable to seek the help of a real estate attorney before signing an Arizona real estate contract.
If you are in Tucson, AZ, contact our skilled and experienced real estate attorney at St. Clair Law. Our lawyers have the necessary experience and knowledge and will help you understand the terms of your real estate contract while protecting your interest at every stage of the real estate transaction. Contact us to schedule a consultation and learn more about our services.
