How does the purchase agreement prevent real estate litigation?
12/20/2014 | Real Estate Blog
Anyone who has bought or sold a house will probably remember that they and the other party drew up a purchase agreement at some point in the proceedings. In commercial real estate, purchase agreements are also commonly used as a “road map” to direct the parties to closing. A well-made purchase agreement can avoid future problems by making each parties obligations clear, so that there is no confusion or misunderstanding.
The purchase agreement often begins with a document called a letter of intent. This includes the principle terms for a final written agreement. The letter of intent is a preliminary agreement, so parties would have a different time enforcing the transaction in court using this document alone, though it is possible if the parties intended it to contain essential terms and be a “convenient memorial,” according to the American Bar Association.
The contract itself can be bilateral or unilateral. A bilateral purchase agreement binds both parties to contractual provisions simultaneously. A unilateral purchase agreement only binds one party; it does not become a binding contract until the other party chooses to be bound by it.
The purchase agreement will also contain an offer, which must be accepted on “all fours,” a legal term that means the acceptance is on exactly the same terms as the offer. If the acceptance changes a material term, it is really a counteroffer, which the other party must accept for the contract to be binding.
There are other ways a purchase agreement can fail, but if litigation becomes necessary, a real estate law attorney may be able to achieve the results you want.