UNDERSTANDING LAND DOCUMENTS
CONTRACT OF SALE
A contract of sale is one of the important documents involved in real estate transactions. However, before I explain what a contract of sale (as regards land/property transactions) is, we need to first understand what the word ‘contract’ means.
A contract can be defined as a voluntary, deliberate and legally binding transaction between 2 or more competent parties. The word ‘competent’ in this definition means in law that the parties involved are expected to be of sound minds and are mature/old enough to understand the terms and conditions of the contract.
Examples of incompetent parties in law are insane people and also minors. Contracts are usually written, but may also be spoken or implied.
A contractual relationship is evidenced by;
1) An offer
2) An acceptance of the offer
3) Valid (legal and valuable) consideration
It should however be noted that some contracts (such as sale of land/property) must be in writing to be legally binding and enforceable.
A contract of sale in real estate can thus be defined as a written, legally binding agreement between 2 competent parties (buyer and seller) concerning the terms of purchase of land/property.
Difference between Contract of sale and deed of assignment
I believe its imperative for me to explain the difference between the two in this article as I have come to realise that people often confuse the two and erroneously believe they are similar.
A contract of sale in real estate outlines the obligations of both parties (buyer and seller) entering into an agreement to buy/sell/transfer land/property.
A deed of assignment on the other hand represents the actual transfer of the land/property from the seller to the buyer, usually when full payment has been made.
CONTENTS OF CONTRACT OF SALE
*Name of the owner of the land/property (known as the Vendor)
*Name of the prospective buyer (known as the purchaser)
*Address of the land/property in question including the local government area
*Specific description of the land/property intended for sale
*Name and address of the solicitor who prepared the contract of sale
*Terms and conditions in which the owner is offering the land/property for sale to the buyer. E.g. The buyer must contribute his/her proportionate share of the infrastructure being proposed to be done in an estate scheme.
*Vendor and purchaser covenants
*Signature of the Vendor and purchaser which indicates mutual agreement to the contract of sale and thus, making it legally binding to both parties
*Names and signatures of witnesses to the contract of sale from both parties.
In summary, a contract of sale is an important document needed in real estate transactions. It outlines the obligations, terms and conditions of the proposed sale of land/property between the seller (vendor) and buyer (purchaser) and it has to be in writing to be legally binding and enforceable in law.
Credit: DR. B.A. OYENEYIN M.B.CH.B., A.C.S., A.C.S.I.(UK)