Common Pitfalls in Real Estate Contracts and How to Avoid Them

Real estate contracts are the foundation of any property transaction, outlining the rights, responsibilities, and conditions for both buyers and sellers. However, even minor mistakes or overlooked details can lead to costly legal disputes. Many common pitfalls can put buyers and sellers at risk if not properly addressed.

To avoid these complications, it’s essential to carefully review every aspect of a real estate contract and ensure all terms are clear and enforceable. Whether you’re purchasing or selling a property, understanding these potential pitfalls—and working with a knowledgeable real estate attorney—can help you navigate the process smoothly and protect your interests.

Unclear or Incomplete Terms

A well-drafted real estate contract should clearly outline all essential terms to avoid confusion or disputes. One common pitfall is vague language that leaves room for interpretation, leading to disagreements between buyers and sellers. Key details such as the purchase price, deposit amount, financing terms, contingencies, and closing deadlines must be explicitly stated. Ambiguities regarding repairs, included fixtures, or possession dates, can also cause misunderstandings. To prevent these issues, contracts should use precise, legally enforceable language drafted by seasoned legal counsel. Working with a real estate attorney ensures that all terms are clear, leaving no room for misinterpretation.

Undisclosed Property Defects and Inspection Issues

Buying a property without knowing its true condition can lead to costly repairs and legal disputes. One of the most common pitfalls in real estate contracts is failing to address undisclosed property defects. Sellers in Pennsylvania are legally required to disclose known material defects, but some issues may still go unnoticed or unreported. Without a thorough inspection contingency, buyers risk purchasing a property with hidden structural problems, plumbing issues, or pest infestations.

To avoid this, buyers should always include a home inspection contingency in the contract, allowing them to back out or negotiate repairs if significant defects are discovered. Working with an attorney or real estate professional can help ensure the seller meets disclosure requirements and that buyers have legal recourse if major issues arise after closing.

Earnest Money Deposit Issues

The earnest money deposit is a crucial part of a real estate contract, showing the buyer’s commitment to purchasing the property. However, failing to outline clear terms for this deposit can lead to disputes. Common issues include misunderstandings about when the deposit is refundable, under what conditions it may be forfeited, and who holds the funds.

Without specific contract language, buyers may lose their deposit if they withdraw from the deal, even for legitimate reasons like financing denial or inspection concerns. To avoid this, contracts should clearly define the conditions under which the deposit is returned or retained. Buyers should also ensure the funds are held in a secure escrow account and not directly by the seller.

Reach Out to One Oak Legal Today

These are only a few of the issues that can arise with a real estate contract. To ensure your purchase or sale goes smoothly, contact One Oak Legal today for a private consultation.