What Are Utah Real Estate Purchase Agreements?
A Utah real estate purchase agreement is a legally binding contract between parties that lays out the terms and conditions of a real estate transaction. The document brings together various components of a property sale and purchase, addressing details such as pricing, dates, contingencies, obligations of both parties, and specifics of the real estate transfer. Once signed by all involved parties , the Utah real estate purchase agreement can be enforced under the law as any other legally binding contract can. In the context of a real estate transaction, it is typically the buyer who submits an offer to purchase a property. The seller may accept or reject the offer, with or without changes. Once both parties have signed a Utah real estate purchase agreement, the formerly private negotiation has been completed and the contract governs the conditions under which the real estate sale will proceed.
Important Features in Utah Purchase Agreements
When preparing or reviewing a Purchase Agreement for a property located in the State of Utah, it is important that you understand the key elements of the agreement including: buyer and seller information, property details, and terms of the sale. In Utah, a Purchase Agreement is used when real property is being sold or purchased. In the agreement, these parties are identified as "Buyer" and "Seller". The Buyer is the party purchasing the property and the Seller is the property owner currently in possession of the property. Each party must provide their full legal name, whether individual or business entity, and their address for notices related to this contract. While the Buyer is not required to be a resident of Utah (or even of the United States), the Seller must be familiar with Utah law to properly execute the agreement.
The Property Information section provides a brief description of the property address, residential real property and fixtures being sold, if tenant-occupied the date lease ends and whether the tenant has the right of first refusal, and whether accessories or personal property are included or excluded in the sale. Buyer may want to conduct a comprehensive inspection of the property and/or an appraisal prior to the closing of the sale.
The Terms of Sale section includes the amount of the purchase price, financing, earnest money, items included in the offer, option for Seller financing, and terms of possession. Depending on the party lending the funds to the Buyer, the earnest money deposit may be held in escrow by the lender, title company, or an attorney. Finally, Buyer may elect to have the property appraised at any time during the offer period, which allows the Buyer to walk away from the deal if the property contains fewer improvements than anticipated. This clause typically only becomes important when the Buyer is looking for an investment property, and fails to carry out proper due diligence prior to executing the Purchase Agreement.
Commonly Found Contingencies and Provisions
**Financing Contingency:** One of the most common contingencies in a Utah REALTOR purchase contract is the financing contingency, which is pretty self explanatory, but it does set an amount of time for the Buyer to be approved for financing. Financing contingencies can also include appraisal contingencies, although a good Utah REALTOR could probably make the case that the appraisal could be a clause of its own.
**Home Inspection Contingency:** The home inspection contingency is pretty well known, because its the reason the fix-it list gets completed for the repairs in the kitchen. But in all seriousness, it does allow a Buyer time to further inspect the home and in most situations have the Seller pay for repairs or give the Buyer a credit towards financing the repair. A good Utah REALTOR would review this section of the contract or add a clause to clarify responsibilities so there is no confusion about who pays for a JACUZZI TUB MANUFACTURING ERROR.
**Purchase Agreements with Seller Financing:** Owner financing is another tool used by Sellers to sell their property. While Seller financing is not for everyone, it is beneficial to buyers with poor credit, and perhaps now that the federal government is requiring payment plans for student loans other buyers will be more receptive to paying for a home in installments. The most important consideration is to know what happens in default. Remember that the deed and mortgage should both be recorded with the county recorder’s office, and the contract should be written as a third part Contract with the Option to Purchase Real Estate. However, be aware that under Utah law, a lender in possession cannot be a landlord. The contract should be backed up by a mortgage, which should be recorded.
Legal Considerations and Requirements
Utah’s real estate purchase agreements, also known as "contracts," are governed by the laws of the state of Utah. The Utah Property Rights Ombudsman’s Office is a good place to start for advice and information on real estate laws. Utah’s Division of Occupational and Professional Licenses (DOPL) governs Real Estate Licensees and Brokers in Utah.
Real estate purchase contracts in Utah are usually written and signed using standard forms such as those provided by the Utah Association of Realtors or the Utah State Bar. Every contract should include general provisions and terms such as:
Important!: A Real Estate Listing Agreement is a contract between the seller and real estate broker. Under Utah Law, if you do not receive a Copy of this contract signed by the seller, your broker cannot obtain commission on the sale of the property and may have to return any advanced commissions received on that contract and may have to pay another broker the commissions owed.
The statutory timeframes for performance of the terms and conditions in a Utah real estate contract will vary. For example, the Earnest Money Deposit shall be deposited by the broker in the Earnest Money Account by Utah law within 5 business days after the offer is accepted. A buyer or seller may not be obligated to perform under the contract until the Earnest Money has been paid if real estate agent has not complied with this important provision.
Deadlines are often outlined in the purchase contracts and usually include the closing date, the Closing Date addendum, the negotiations period, the loan conditions, the timeframes and due dates for home inspections, home warranty conditions, delays in closing, appraisal conditions, occupancy and rental agreements, and many other issues. It is important to know if any dates in your contract have not been documented properly. Sometimes they incorrectly reflect an extra 3 days. If a deadline is missed, you may lose your earnest money and even lose the property to another buyer!
Reviewing Utah Purchase Agreements and Hiring Legal Counsel
Regardless of whether you are selling a home you’ve owned for years or purchasing a property for the first time, it is wise to have your purchase agreement reviewed by a lawyer. Even if the buyer and seller are both experienced real estate professionals, it is still important to have someone make sure that the agreement is fair for both parties and contains all of the legal language necessary to uphold its validity. The best way to avoid issues during the process is to identify potential sources of contention in the contract before the process begins. An experienced lawyer who understands purchase agreements will be able to spot items that seem questionable . These items can then be closely examined by the buyer and seller, with advice from their respective agents, before the contract is finalized. For example, one of the most common issues found in Utah real estate purchase agreements is a lack of information about the listing broker. This often results in random brokers being paid a commission, even though they had nothing to do with the sale. In other instances, the contract may not specify which party is responsible for paying the listing broker’s commission. Lawyers help to clarify these types of issues before they become a problem.
Typical Pitfalls to Avoid
One of the biggest mistakes made by both buyers and sellers with respect to Utah real estate purchase agreements is the belief that the purchase agreement is a take it or leave it document. While there is no case law specifically addressing that issue within the State of Utah, I have never heard of an instance where a buyer or seller was successful in making this argument to the court. It is the obligation of the buyer and/or seller to review the terms and conditions of the agreement and determine if it is something with which they can live. If there are any issues with respect to any of the terms and conditions of the agreement, then such issues need to be raised with the other party so that they can be addressed and either revised or removed altogether as necessary. The more issues or concerns that are raised and addressed (and provided for in writing) within the four corners of the Utah real estate purchase agreement at the time that the agreement comes into existence, the less likely there will be problems at the time of closing the transaction.
Frequently Asked Questions on Utah Real Estate Purchase Agreements
How long does a Utah real estate purchase agreement last?
A Utah real estate purchase contract typically remains in effect until the closing of the transaction. However, a buyer and seller can specify in the purchase contract for the contract to automatically terminate if closing does not occur within a set time period after acceptance of the buyer’s offer to purchase the property.
Are real estate purchase contracts legally binding in Utah?
Real estate contracts signed by a buyer and seller are normally legally binding provided that the basic requirements for a real estate sales contract under Utah law are present. These requirements require that the contract be:
• In writing, and signed by both parties
• Contain an adequate description of the property being sold
• Contain the price paid or agreed to be paid by the buyer for the property and provisions for how or when this payment will occur
• State clearly that there is an agreement to convey the property from the seller to the buyer
How do I find other Utah real estate purchase contracts?
Many real estate purchase agreements are available online for free. An example of such a contract can be found in the Utah Statutes under Title 57 with regard to real estate , and especially Title 57-3, which is entitled "The Uniform Land Sales Practices Act." Individual buyers and sellers may also obtain other real estate purchase contracts from private sources.
What if we are unable to enter into a contract for purchasing Utah real estate?
If a buyer and seller cannot agree on the purchase of a piece of Utah real estate, they do not have to sign a contract or even negotiate terms together. There are many other properties and buyers throughout Utah and the United States, so they can try again later to find one another. Generally, a buyer is not legally bound to purchase a property until they have signed a sales contract and the seller has also signed it.