Understanding Provisions of Real Estate Contracts
|Does your real estate agent know how to interpret the provisions of real estate contracts ?|
Many buyers especially foreigners who pass by the malls get enticed with real estate agents exhibiting house and lot or condominium projects at the malls. They usually make impressive presentation as they are focused on the project they are representing and spending a lot of time hunting for prospect buyers by leafleting and cold calls.
|But do they really know how to interpret the contracts and paper works to their buyers? By experience, most real estate agents leave everything to the developer when it comes to contracts and never bother to check the provisions therein. Some don’t even understand the legal terms. It’s easy to reserve a unit when buyers like it. But problems start to arise when buyers get to see the contract they are going to sign.|
Sadly, most contracts are constructed by the developer’s/seller’s lawyer to protect their interest such as penalties for delayed payments, automatic repossession of the property, payments already made become liquidated damages, and so on and so forth. And buyers do not have the liberty to check on them before making a reservation. No seller would be interested to prepare the contract papers without a reservation fee. This is the reason why it is very important that the Real Estate Agent understands the contracts and knows how to interpret them for the buyer. He should be able to check for errors and to make sure that what are stipulated therein are agreed upon by the buyer. The true and competent Real Estate Agent or broker should be like a buyer’s lawyer that will protect the latter’s interest aside from his ability to effectively negotiate for a better and favorable deal.
Some of the pertinent laws governing contracts are written below:
Article 1458. By the contract of sale, one of the contracting parties obligates himself to transfer the ownership of and deliver a determinate thing, and the other to pay therefor a price in money or its equivalent. A contract of sale may be absolute or conditional.
Article 1475. The contract of sale is perfected at the moment there is a meeting of the minds upon the thing which is the object of the contract and upon the price. From that moment, the parties may reciprocally demand performance, subject to the provisions of the law governing the form of contracts.
Article 1478. The parties may stipulate the ownership in the thing shall not pass to the purchase until he has fully paid the price.
Article 1479. A promise to buy and sell a determinate thing for a price certain is reciprocally demandable. An accepted unilateral promise to buy or to sell a determinate thing for a price certain is binding upon the promissory if the promise is supported by a consideration distinct from the price.
Article 1482. Whenever an earnest money (otherwise known as Reservation fee) is given in a contract of sale, it shall be considered as part of the price and as proof of the perfection of the contract.
Article 1497. The thing sold shall be understood as delivered, when it is placed in the control and possession of the vendee.
Article 1477. The ownership of the thing sold shall be transferred to the vendee upon the actual or constructive delivery thereof.
Article 1457. In the contract of sale, unless, a contrary intention appears, there is an implied warranty on the part of the seller that he has the right to sell the thing at the time when the ownership is to pass and that the buyer shall from that time have and enjoy the legal and peaceful possession of the thing. An implied warranty includes hidden faults or defects or any charge or encumbrance not declared or known to the buyer.
The above articles of law are just examples of laws governing contracts. If your real estate agent knows these laws at least by experience, he or she should be able to negotiate not only in terms of price, discounts or terms and conditions, but also to ensure that the buyer is protected by the laws that govern contracts between parties.
If your real estate agent is not knowledgeable about contract provisions, he or she would most likely uphold and offer you what’s exactly written by developers/sellers, lock stock and barrel. By experience, it is not true that the developer’s standard contract is fixed a format that cannot be revised. It can be revised for the buyer’s protection if it is handled well by a knowledgeable real estate agent or broker.
Hiring your own lawyer is also a good move, however in dealing with reputable developers, by experience, buyers don’t bother to make lawyers take active role due to the additional financial burdens. Less active role like simple notarization or consultation would be more prudent, and let the real estate agents handle the leg work as they are already paid for it in a form of commission by the developers.
How will you be able to detect if your real estate agent knows them? Well, you can ask them a couple of questions pertaining to the contract papers, at least some provisions thereof. If the answer appears to be weak, that’s your clue. If communication is through email, you can check on the spelling and sentence construction, and the way they answer your questions.
Knowledge on contracts is crucial especially for foreigners who are interested to own a home here in the Philippines but will have to stay abroad most of the time as their way of living. If your real estate agent knows how to effectively work online, you can keep your communications line open and you can be more confident to know that you are in good hands.
That’s the thrust of Cebubesthomes Realty. It is imbued with a strong commitment to train and develop our real estate agents to become more and more competent in dealing with clients in all aspects of the selling process including understanding of the legal documents as well as the knowledge and skills in communicating online.