Home Buying in New Jersey>Question Details

Costellod, Home Buyer in New Jersey

When is a contract considered 'fully executed'. After tje seller signs or after the banks agrees to the price? i want out of my contract!

Asked by Costellod, New Jersey Wed Nov 24, 2010

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You may be confusing your terminology a bit.

A contract is only fully executed (carried out)... when all of the terms of the contract have been completed. In other words, if the contract calls for an inspection, an attorney review, a mortgage contingency and then a closing. Once all of those things are complete, and you have the keys to the house in your hands, then it's been "executed".

Up until that point, as Mac points out, the contract is merely "executory"... (signed and agreed and ready to be carried out).

But I think what you're asking is "When is a contract really considered a contract?" Without knowing the particulars of your contract (which sounds like you might be attempting to purchase a short-sale), it'd be difficult to say. But in a common scenario of a short-sale, you aren't "locked-in" to the deal, until the bank agrees to accept the price that you and the owner of the house have already agreed upon.
1 vote Thank Flag Link Thu Nov 25, 2010
Alan May, Real Estate Pro in Evanston, IL
MVP'08
Contact
Hi there, from the reference to the bank approving the price I'm assuming a short sale....with short sales, the seller remains the owner of record, not the bank. That changes when a property is foreclosed upon, then the bank is the owner. Just last week we had an attorney who specializes in short sales speak at our staff meeting - she was terrific and I plan to add her to my list of preferred attorneys. As she reminded us, the short sale aspect of a transaction is best thought of as another contingency, along with the inspection and mortgage contingency. The deal can fall through as a result of any one of these contingencies, ie, bank not approving short sale, inspection contingency, or failure to secure financing.

As others have advised, in NJ we have the attorney review period during which either party can cancel a contract without recourse. If that is where you are, you are free and clear. I've had attorneys add to the contract during attorney review a clause that allows them to exit or recommt if the approval is not secured by the bank in a certain ttimeframe. I've also seen many buyers tire from the process and move on. But your question cuts to the core of your commitement at this stage and how best to exit to protect your interests. For that you need an attorney's advice.

If you have one, seek their advice. If you don't, I recommend you do - if you'd like the contact info for the attorney I mentioned, send me an email and I'll send it along. She does both short sales/foreclosures and regular transactions. I was impressed by her and plan to use her servicesin the future.

Best.
Jeanne Feenick
Unwavering Commitment to Service
Web Reference: http://www.feenick.com
1 vote Thank Flag Link Thu Nov 25, 2010
Not only does the PA agreement of sale have to be initialed, signed, dated but also delivered to the buyers or sellers to be considered executory?
0 votes Thank Flag Link Wed May 1, 2013
A contract is fully executed when it is signed and dated by both parties. If there is a contingency that the bank approves the sale, it may be a short sale. That is only a contingency, the contracts are still fully executed. If you are talking about your banks appraisal, that is something else. If you have a contingency in the contract for a mortgage and because of a low appraisal you can't get a mortgage, you would then be able to get out of the contract. You should talk to your lawyer asap and let him or her know you would like to get out of the contact. There may be language in the contract that gives you an out.

Don Mituzas
Licensed Associate Broker NY & CT
2008 PCAR Realtor of the Year
Prudential Serls Prime Properties
Web Reference: http://www.nyhomeseller.com
0 votes Thank Flag Link Thu Nov 25, 2010
It is a fully executed contract when all parties have signed and dated the contract and initialed any and all changes to the contract.
If it's a short sale, the bank approval is a contingency of the contract....just like the inspection contingency.
Web Reference: http://www.321property.com
0 votes Thank Flag Link Thu Nov 25, 2010
In New Jersey, you probably signed a sales contract that was prepared by the listing agent. Once buyer and seller sign the contract and each receive their contract in hand, there is a three day attorney review period before they are so called "binding" or fully executed (meaning fully signed in your case). However, there are contingencies that sometimes allow easy outs for everyone. It seems like this is a short sale and if there is a short sale addendum, you should have a real estate attorney review it. Many times, the contract is binding until the bank approves the purchase price as long as it is within the contract dates. However, they also have the right to take a higher offer and continue to show it allowing you, a First Right Of Refusal for a specified time period to either increase your price or terms or cancel the contract. If you are not understanding your contract, you should absolutely seek an attorney to explain it to you.

Janet Larsen, Broker/Associate
Remax Connection
856-261-6910
Web Reference: http://www.njrealtorjan.com
0 votes Thank Flag Link Wed Nov 24, 2010
It's "executed" when you buy it and they sell it to you. If you've gotten it signed by the seller, it's "executory," meaning that there's still stuff to get done, but the buyer and the seller agree on what needs to get done and within what timelines.

When it is "executory," you can only "get out" as the contract allows, and this is where your attorney comes in.

All the best,
0 votes Thank Flag Link Wed Nov 24, 2010
Hello Costellod. Do you have an attorney? Your contract needs to be reviewed by an attorney for your best interest. The attorney should be able to give you the best advice on this matter. There are many legal issues in your question. If you need me to recommend a few excellent real estate attorneys, feel free to contact me. My contact info is available by clicking on my name
0 votes Thank Flag Link Wed Nov 24, 2010
Is this a short sale? Sounds like it may be. Is there any wording like "subject to third party approval"? Is there a deposit?
0 votes Thank Flag Link Wed Nov 24, 2010
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