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Summary Unlike an Option to Purchase, an offer to purchase is not a binding contract until it is accepted and therefore does not require separate consideration. Rather, earnest money is given by the prospective buyer with a formal offer to purchase the real estate. Therefore, in the case of an offer to purchase, the prospective seller is not bound to accept, but the prospective buyer is bound to meet the terms of his offer if the prospective seller does accept. Introductory Note Generally, the basic contents of an offer to purchase include a description of the property, the amount of earnest money, the price of the property, the expiration date of the offer, and the manner of notice for accepting the offer. The term of the offer may be limited to specific term and revocable or unlimited and irrevocable. Purchase Price The total price to be paid for the real estate and terms by which it will be paid. Often, the actual sales contract is attached to the offer to purchase or included as part of the agreement, and if the offer to purchase is accepted, all the terms and conditions of the sales contract become effective. Earnest Money This amount is usually detailed in the Purchase Price section. It may be payable to the Seller or to an escrow agent. The earnest money should be treated as a refundable deposit towards the payment of the purchase price. If the seller accepts and the buyer thereafter defaults, then the eamest money may be kept by the seller as liquidated damages. Property Description Legal description of the improved real estate and space being leased, if any.
Notice of Acceptance This will be in writing and may be included with the offer. Usually, this merely states that the seller is accepting the offer and acknowledges receipt of earnest money. The acceptance may also reference payment of a brokerage commission and deposit into an escrow trust account. Usually, notice of acceptance is required to be given within the offer to purchase term, in writing and pursuant to a method that ensures a record of receipt - e.g., certified mail, return receipt requested. Property Taxes The proposed seller usually handles expenses related to ownership until title is released. Therefore, taxes would be prorated to reflect the proportionate period of time during which each party holds title. Sale Terms Title, escrow, seller warranties, and installment loan purchase terms will generally be included in order to expedite the closing process following acceptance. Extension An offer to purchase may be extended, but additional consideration must be given for each offer to purchase period. Proposed seller must receive written notice of intent to extend. Mediation and Arbitration Mediation and Arbitration should always specify a convenient location (Preferably, in the same county where the real estate is located). Mediation is a non-binding way to settle the dispute quickly and amicably. If unable to settle in mediation, arbitration is first option available. Arbitration is the preferred alternative to litigation because of speed, cost, and ability to maintain low profile (no info is publicly available). No Modification or Waiver No modifications except those specifically agreed upon by the parties in writing. Any waiver of a term or provision will not act as a waiver of any other provision. Entire Agreement This agreement constitutes the entire agreement of the parties and may be modified only in a writing executed by both parties. Notices Notices should always list the current and best addresses where each party may contact the other for whatever reason.
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