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Louisiana real estate law:
Purchase agreements, part one

In many situations oral agreements can be binding, but lead to disputes as to the terms of the agreement and even to claims of fraud. Because the law considers the transfer of real estate so important, transfers of real estate, or even agreements to transfer real estate, must be in writing. Once you have found your dream house, the first step to make sure that the sale takes place is to execute a purchase agreement with the seller.
 		 Material Facts
There is a general rule that any material fact about the property that is kept from the buyer can justify canceling the purchase agreement. Withholding a material fact can even allow the buyer to rescind after the sale takes place. An exception to this is "stigmatized property."

Related Topics

The purchase agreement affords protection to both the seller and the buyer. The seller, in return for taking his house off the market, is certain as to the price he will receive, the expenses that will be his responsibility, and the time the closing will take place. The buyer, who may have to go to some expense to find a loan, is certain as to the price he will pay, the expenses that will be his responsibility, and the time he will be able to move in.
 


 

All of the terms of the proposed sale should be included in the purchase agreement so that both sides know what to expect. If a real estate agent is involved, a standard form purchase agreement will probably be prepared by the agent for the buyer and seller to sign. Keep in mind that even though it is a pre-printed form, you are still free to alter or even cross out any terms that are not to your liking. Also keep in mind that the pre-printed forms used by real estate agents are designed to make sure that the sale goes through and to protect the real estate agent's commission. There is usually a provision in these agreements that the defaulting party, whether buyer or seller, and whether the sale actually goes through or not, is still liable for the real estate commission.

Whether you use a standard form or write your own, the purchase agreement must:

Be in writing

Accurately describe the property

Set forth the purchase price

Set a time limit within which the sale must take place

If you do not set a time limit, it will be assumed that a "reasonable time" within which to execute the sale was intended. Arguments over what constitutes reasonable time have led to many law suits. These are the minimum requirements for a valid purchase agreement.

The purchase agreement also should state:

The other items in or around the house which are included in the sale, such as drapes or appliances

The exact terms of the sale, such as assump­tion terms, the responsibility for the payment of fees, and time limits for arranging financing if the sale is contingent on finding financing;

Whether a termite certificate is required from the seller; d) how taxes for the current year are going to be paid and by whom;

Who will pay closing costs, or how they will be divided

When the sale must take place, and how soon after the buyer will be entitled to occupancy

Whether a deposit is to be given, and whether it should be considered earnest money

What extensions are to be automatically given if problems arise, such as title objections

Any other terms and conditions
Stigmatized Property
In 1991, the Legislature passed a new law that the seller does not have to inform the buyer that the property is "stigmatized" or psychologically impacted. If a buyer finds out after the sale that a prior occupant had AIDS or that a homicide or suicide occurred on the property, this would not be legal grounds to cancel the sale.

What About Termites?
Most lenders require a Wood Destroying Insect Report before approving a loan. But the report has significant limitations, and includes this boldface warning: "The inspection described herein has been made on the basis of visible evidence in readily accessible areas and this report is submitted without warranty, guarantee or representation as to concealed evidence of infestation of damage or as to future infestation. This is not a termite-free certificate. . ."
 
 Want to know more? Go to part two of Purchase Agreements --->>