Episode 12: Contract Negotiations

Written By Monica Monique Embile

In this essential episode of Rock the Closing, real estate attorneys Orsolya Bartha and Dalia Zaza guide listeners through the often-misunderstood contract signing phase of real estate transactions. They reveal why this critical stage involves much more than simply putting pen to paper and why buyers shouldn't celebrate prematurely.

IN THIS EPISODE, YOU’LL LEARN:

  • When a real estate contract is truly ready for signing and what work must be completed beforehand

  • The exact order of contract signing and why the buyer always signs first

  • Critical steps beyond signing that buyers must complete simultaneously (including down payment requirements)

  • Why buyers can't celebrate yet even after signing and paying the down payment

  • Real scenarios where sellers can still back out without penalties during the signing phase

  • The precise timeline for when sellers typically countersign contracts (and what delays are normal vs. concerning)

  • The exact moment a contract becomes legally binding on both parties

  • What "fully executed contract" actually means and why it's the only time to celebrate


TRANSCRIPT

Disclaimer: The transcript that follows has been generated using artificial intelligence. We strive to be as accurate as possible, but minor errors and slightly off timestamps may be present due to platform differences.

[00:00:00] Orsolya Bartha: Good morning. Good afternoon, everyone. Welcome to our next episode on Rock the Closing. Today I'm going to talk with Dalia about contract signing. Okay, so let's dive in. Dalia, when is the contract ready to be signed?

[00:00:23] Dalia Zaza: Good morning, everyone. Yes, the contract ready to be signed. It's a very exciting time. So by the time we get to the contract being ready to sign, there's already been a ton of work. We have already conducted our due diligence. We have negotiated all the terms of the contract, the honor about closing date, the purchase price, the down payment. All of these things have been concluded and discussed between the buyer and the seller, the agents, the attorneys. And a final copy of the contract is prepared. It's reviewed one final time by both attorneys. It is reviewed with both the seller and the attorney, and the seller and the buyer, that is. And all the modifications and changes have been agreed to. Okay. We want to make sure it is as close to perfect and as close to the agreement as possible. And that's going to be when the contract is ready to be signed. A nice clean final copy. We love to see that. Okay, so once it's ready to be signed, tell me, Orsolya, who signs the contract first?

[00:01:34] Orsolya Bartha: That's an easy one. The contract is first signed by the buyer. Very important that the buyer signs the contract first and then the buyer's attorney sends the signed contract to the seller's attorney. Okay, but let me ask you back, Dalia, is that all that the buyer has to do? He only has to sign the contract and wait, that is it, or is there anything else the buyer has to do?

[00:02:05] Dalia Zaza: If only it were that simple. No. So, yes, it is a good start. We're signing the contract. We have accepted the offer to purchase the property. So that's a wonderful start. However, that's not all the buyer has to do. They also need to send the down payment. So there is going to be an amount in the contract for a down payment, and that's going to be sent essentially simultaneously with the signing. So the buyer is going to send maybe a certified bank check, maybe they're going to do a wire transfer to the seller's attorney escrow account. Whatever is agreed to between the parties. A lot of times sellers will prefer a wire because it's faster. I have been in situations where the real estate agent will come to my office or go straight to the buyer and pick up the check and drive it over to the seller's attorney's office. If everyone's within close proximity, whatever works for the parties. But definitely we need to have that down payment sent. The funds have to be available and settled because that's really what kind of seals your signing of the contract. Okay, so now we have signed the contract, we have sent the down payment, we have wired it to the seller's attorney. And so let me ask you, Orsolya, can the buyer just relax now? Like, we're good, we're in contract and all is well, I'm getting this house or this condo.

[00:03:41] Orsolya Bartha: I wish I could say yes, but the reality is somewhat different. So it's not yet time to relax for the buyer. In most cases and on most transactions, this step, signing the contract and paying the down payment will bring the buyer across the finish line having a fully signed contract, but not all the time. Things may still happen. So buyer cannot be happy until the seller countersigns the contract and it is delivered back by the seller's attorney to the buyer's attorney. So what can happen? Let's talk about that. In some cases, sellers do send out at the same time several contracts to multiple buyers with multiple offers. And they wait which comes through or even if one came through, one buyer signed and paid the down payment. The seller may decide that, hey, I have a higher offer from another buyer. I want to see if that comes through. So I'm really prolonging the signing of the contract and I just want to go and see if that happens. So that's one issue. Secondly, anything may happen. In some cases, the signing by the buyer and the down payment may take a day or two, especially if the buyer is paying by certified check. It may take a few days to clear and circumstances in life, changes in life may arise. It's the last moment to get out of the contract by the seller without any penalties. Basically, the seller may decide, oh my gosh, I agreed to this whole contract on a very low price. I have my doubts. This is the final moment. Seller still may walk and not come to sign the contract. There could be changes in circumstances. For example, seller loses his job and he's like, oh my gosh, I'm not going to sign this contract because I just lost my job. This is a comfortable place for me to live. I'm not having any mortgage, any rent that I have to pay, I cannot sell at this moment. There could be other life changing circumstances such as a disease or death in the family that may prompt the seller to pull out from countersigning the contract at the last minute. So anything from business decision to personal decisions, there could be any reason why the seller may pull out and not countersign the contract. So buyers be aware of that. Don't celebrate just yet. However, let's look at it from the positive perspective. Dalia, what happens when the seller decides to go with the buyer is happy about the deal and the transaction and actually countersigns the contract? When is that happening? When is the seller countersigning? So what can the buyer expect? When is, in a normal circumstance, seller countersigning the contract?

[00:06:56] Dalia Zaza: Yeah. So in a normal circumstance, barring any issues that you just mentioned, which are definitely real risks, we're going to try to get all of this done as quickly as possible to lower the chances of something like that happening. The longer things are sort of lingering, the more possibility there is for those risks that you had mentioned. Assuming all is fine, the contract is countersigned when the seller's attorney confirms that the down payment sent by the buyer has cleared the attorney's account. So if it was a bank check, we still want to make sure, even though it's a bank check or certified check, we still want to make sure that it's going to clear the account. Because there have been instances where there have been issues with bank checks. Okay. The safest thing to do is to wait for the check to clear, wait for the wire to appear, however the amount gets into the escrow account, once it's in there, usually within about 24 hours, that's when the seller will be given the okay to countersign. Now, sometimes it is important to remember that if you send a down payment, you wire something and then you don't get the contract countersigned by the seller on the same day, not to panic, because it just might be that the seller doesn't have an opportunity to come into their attorney's office to countersign the contract just on that day. Maybe they're going in the next day, or maybe there's some kind of issues that they're having some technical issues with a DocuSign or an electronic signature. So you definitely want to give a little bit of leeway. But if it's getting to be more than, say, two days, you want to inquire about if there are any issues or what's going on with that. But once the seller signs, we're in contract. So let me ask you, Orsolya, when is the contract binding and when are we popping the champagne, as you would say?

[00:09:06] Orsolya Bartha: I do love my champagne. That's true. So buyer signed, down payment is paid and it's cleared on the attorney's account. Seller countersigned and the seller's attorney sent back the signed contract, the fully executed contract, to the buyer's attorney. And in addition, the seller's attorney confirms that the down payment has been received in their escrow account. That is the moment for celebration and popping the champagne. And that will make the contract fully binding on both parties, on the seller and on the buyer. So that's that.

[00:09:55] Dalia Zaza: That sounds good and I think we make it sound really simple, but that's a really important process of this whole deal. And while that little part of the deal has concluded, we're now in contract, now the real fun starts. So we'll get into that in other episodes. But as for now, we thank you so much for tuning in and listening and hopefully participating. Okay, we will see you next time on Rock the Closing.

[00:10:29] Closing: Thank you for tuning in to Rock the Closing. This podcast is hosted by real estate attorneys who offer valuable insights. Please remember that the content is for educational purposes only and does not constitute legal advice. Always consult a qualified professional before making any decisions. This podcast is copyrighted by Rock the Closing and any reproduction, syndication or rebroadcasting of the content requires written permission.

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Disclaimer:

Thank you for tuning in to RTC! This podcast is hosted by real estate attorneys, who offer valuable insights. Please remember that the content is for educational purposes only and does not constitute legal advice. Always consult a qualified professional before making any decisions. This podcast is copyrighted by Rock the Closing, and any reproduction, syndication, or rebroadcasting of the content requires written permission.

Monica Monique Embile
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Episode 13: The role of The Coop and Condo Board
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Episode 11: Contract Negotiations Process