All sums paid on account of this contract, and the reason able expense of the examination of the title to said premises are hereby made liens thereon, but such liens shall not con tinue after default by the purchaser under this contract.
The risk of loss or damage to said premises by fire until the delivery of the deed, is assumed by the seller.
The stipulations aforesaid are to apply to and bind the heirs, executors, administrators, successors and assigns of the respective parties.
Witness the signatures and seals of the above parties. In presence of 2. Divisions of the form given above has four main divisions.
Date and statement of parties.
The agreement and the description of the property. The financial terms of the bargain.
Miscellaneous stipulations.
3. Date and statement of parties.—The contract is dated merely as a convenient memorandum of the time it was made. There is no legal necessity for this to be done. The names of the parties are filled in, one be ing described as seller, the other as purchaser. They might be described as vendor and vendee, or as the party of the first part and the party of the second part, but the simpler forms are always desirable when they serve the purpose equally well.
4. What the purchaser should know about the seller. —Under this contract the purchaser deposits his money with the seller as a partial payment on the pur chase price. His chief concern is to be assured that the seller is the owner of the property, and has a good right to sell it. If the seller has been introduced as the owner of the property by a broker upon whom the purchaser can rely, he takes very little chance in deal ing with him. If he wishes to be further assured he can ascertain from the records whether the seller ap pears as the owner. While it is not an easy matter for a layman to find this out from the public records, he can get from any title company, for a small fee, a card which shows the name of the last owner of record. If the seller is an executor, trustee or guardian, it is proper to inquire whether or not he has power to sell the property. It is possible that while he may not have the power to sell when the contract is signed he may obtain the necessary permission from the courts.
If the matter is at all doubtful the purchaser should have the advice of counsel before entering into the contract. It is a familiar rule of law that a person under legal age, i.e., 21, or an insane person cannot make a contract. A corporation owning the prop erty, and acting thru its duly authorized officers, may make a valid contract of sale.
5. What the seller should know about the purchaser.
—The personality of the purchaser is rarely of conse quence to the seller. He merely wants to get a large enough payment when the contract is signed to assure him that the purchaser will carry it out. This pay ment, or deposit, is often called the earnest money. The property will be withdrawn from the market when the contract is signed, and if the title is not closed, an opportunity to sell to someone else may be lost. This is especially the case on an active and ris ing market. When the bargain is made the seller oftentimes becomes liable for a broker's commission. To reimburse the owner for the commission, and to protect him against loss by withdrawing his property from the market, the purchaser should be required to pay a substantial sum when the contract is signed. Purchasers sometimes buy in the name of a dummy. If the broker knows this he should inform the seller, altho he is not obliged to impart the name of a principal especially when he has learned it in confi dence. The seller, who deals with a dummy, requires the payment of a larger amount of earnest money than when he deals directly with a person of responsibility. Sometimes a sale of land is made with an agreement that the seller will make a building loan. In this case, the personality and reputation of the purchaser, who will also be the builder, is important to the vendor.
6. Agreement.—"The seller agrees to sell and con vey, and the purchaser agrees to purchase." This promise, in exchange for a promise, is the considera tion which supports the contract. The earnest money is merely a payment on account of the purchase price. It is not the consideration. The property is sold when the contract is signed; the title, however, is to be con veyed by a proper instrument at a later date.