When purchasing land, it`s common to come across the term “under contract.” This phrase can seem confusing and even intimidating to those who are not familiar with the real estate industry. However, understanding what it means can help you navigate the land-buying process with ease.
In simple terms, “under contract” means that a buyer and seller have agreed on a set of terms and conditions for a land sale, and a contract has been signed by both parties. This agreement outlines the legal obligations and responsibilities of each party, the purchase price, and any other relevant terms of the sale.
Once the contract is signed, the property is considered “under contract,” and the sale is pending. During this time, the buyer typically has a set period of time, known as the “due diligence period,” to conduct inspections and research the property`s title, zoning, and any potential issues that could affect the sale.
It`s important to note that “under contract” does not necessarily mean that the sale is complete. Until the closing date, the property is still technically available for other buyers to make offers. However, most sellers will not entertain competing offers once a contract is in place.
During this period, it`s crucial for both the buyer and seller to adhere to the terms and conditions outlined in the contract. Failure to do so could result in legal consequences, such as a breach of contract.
It`s also important to note that under contract is not the same as sold. Until the closing date, the sale is not final. During this pending period, both the buyer and seller have the option to cancel the sale if they are not satisfied with the terms and conditions. However, it`s important to note that canceling the sale could result in legal consequences, such as forfeiting earnest money or even being sued for breach of contract.
In conclusion, “under contract” is a common term used in the land-buying process to indicate a pending sale with a legally binding contract in place. Understanding what it means can help you navigate the process with confidence and ensure that you adhere to the terms and conditions outlined in the contract.