How to prevent risks in real estate contracts?
Posted: Sat Apr 05, 2025 8:00 am
We already anticipate that the first and most important step to prevent risks in real estate contracts is to have specialized legal advice .
By understanding the specificities of the business in question, the professional will know, for example, what type of problem could harm that contract and how to avoid it . In other words, he will know how to perform a risk analysis.
The professional will also be responsible for drafting a good contract , in accordance with the law and the specific needs of the parties.
Let's look at some of the most common ways to protect yourself against these risks, generally suggested and applied in real estate law.
Preliminary real estate contract
The preliminary contract is a type of contract accurate mobile phone number list provided for in the Civil Code (art. 462 et seq.) and, as the name suggests, is entered into before the main contract.
The private agreement to purchase and sell property (or exchange) is an example of a preliminary contract, as it contains all the rules of purchase and sale, but, as it is not a public instrument (deed), it is not sufficient to register the transfer of ownership.
In the preliminary contract, the parties can stipulate conditions for the completion of the transaction , such as, for example, confirmation that there are no debts linked to the property or the seller that could compromise the transaction.
Therefore, if any irregularity or pending issue is found that poses a risk to the contract, the purchaser may withdraw from the transaction without any penalty.
Compliance with legal requirements when formalizing a real estate contract
Another way to protect contractors is to ensure that the legal requirements for that type of contract are being observed .
In the case of a residential lease agreement, for example, the law provides different rules for contracts signed in writing or verbally, and with a term of less than or more than 30 months.
The purchase and sale contract, as already mentioned, depends on a public instrument (deed) to be effective.
Furthermore, although it is obvious, attention should be paid to the existence of abusive or illegal clauses, which may raise questions regarding the contract.
Once again, it is clear how important it is to only sign real estate contracts with the advice of a specialized lawyer.
How can due diligence reduce risks in real estate contracts?
Real estate due diligence is nothing more than the risk analysis of real estate transactions .
It consists of an investigation of both the property and the owners, in order to determine whether there are any risks to that business.
Through due diligence , we check whether the property has any debts linked to it , whether there are any urban or environmental restrictions , and we investigate the existence of any outstanding debts in the name of the owners , which may affect the property and compromise its sale.
In short, therefore, it is a service that aims to avoid problems and anticipate legal problems that may arise when negotiating a property. In other words, it is a way of reducing risks in the real estate contract .
By understanding the specificities of the business in question, the professional will know, for example, what type of problem could harm that contract and how to avoid it . In other words, he will know how to perform a risk analysis.
The professional will also be responsible for drafting a good contract , in accordance with the law and the specific needs of the parties.
Let's look at some of the most common ways to protect yourself against these risks, generally suggested and applied in real estate law.
Preliminary real estate contract
The preliminary contract is a type of contract accurate mobile phone number list provided for in the Civil Code (art. 462 et seq.) and, as the name suggests, is entered into before the main contract.
The private agreement to purchase and sell property (or exchange) is an example of a preliminary contract, as it contains all the rules of purchase and sale, but, as it is not a public instrument (deed), it is not sufficient to register the transfer of ownership.
In the preliminary contract, the parties can stipulate conditions for the completion of the transaction , such as, for example, confirmation that there are no debts linked to the property or the seller that could compromise the transaction.
Therefore, if any irregularity or pending issue is found that poses a risk to the contract, the purchaser may withdraw from the transaction without any penalty.
Compliance with legal requirements when formalizing a real estate contract
Another way to protect contractors is to ensure that the legal requirements for that type of contract are being observed .
In the case of a residential lease agreement, for example, the law provides different rules for contracts signed in writing or verbally, and with a term of less than or more than 30 months.
The purchase and sale contract, as already mentioned, depends on a public instrument (deed) to be effective.
Furthermore, although it is obvious, attention should be paid to the existence of abusive or illegal clauses, which may raise questions regarding the contract.
Once again, it is clear how important it is to only sign real estate contracts with the advice of a specialized lawyer.
How can due diligence reduce risks in real estate contracts?
Real estate due diligence is nothing more than the risk analysis of real estate transactions .
It consists of an investigation of both the property and the owners, in order to determine whether there are any risks to that business.
Through due diligence , we check whether the property has any debts linked to it , whether there are any urban or environmental restrictions , and we investigate the existence of any outstanding debts in the name of the owners , which may affect the property and compromise its sale.
In short, therefore, it is a service that aims to avoid problems and anticipate legal problems that may arise when negotiating a property. In other words, it is a way of reducing risks in the real estate contract .