In: Finance
The following is a list of contract provisions. Do these provisions favor the seller or the purchaser?
a. Seller is to convey insurable title to the real property at closing.
b. Seller is to convey title to the real property subject to utility easements and other restrictions of record.
c. Seller shall not alter or encumber the title to the real property after the date of the contract without the prior written consent of purchaser.
d. The real estate contract is freely assignable.
e. The contract is silent as to risk of loss between date of contract and date of closing.
1) Favorable to seller : An insurable title relieves seller from any potential problem that may exist after the title has been transferred to the buyer. Some of the common defects or problems include prior owner mortgages which were not cancelled prior to transfer, questionable easements for access, and unresolved judgment liens against prior owners, etc.
2) Favorable to Buyer: Here the seller is already disclosing utility easements and other restrictions before the transfer. Any dispute occurring on behalf of these disclosures would be the diverted to the original seller. Hence this is in favor of the buyer.
3) Favorable to Buyer : Since buyer's consent is paramount to change or alter the contract after the date of contract, goes in favor of the buyer since he/she has the last word to whether a change or alteration can be implemented or not.
4) Favorable to both Buyer and Seller : Since any party can make use of this provision hence, it is favorable to both the parties.
5) Favorable to seller : Essentially, till the time contract is closed, any risk of loss should be borne by the seller as he/she is the owner of the property till the transfer has taken place. If the contract is silent about any risk of loss, it is beneficial for the seller as he/she is not obligated to anything due to such clause.