The Louisiana Residential Agreement Overview
Understanding the Louisiana Residential Agreement to Buy or Sell
There are many ways to buy or sell a house in Louisiana. But in order to legally bind a seller or a buyer, you have to use the Louisiana Residential Agreement to Buy or Sell. This is a standard real estate form. Such agreements are sometimes called an offer, contract or purchase agreement. In Louisiana, it is the most commonly used form for buying or selling a house.
The Residential Agreement to Buy or Sell serves as both a residential listing agreement and a residential purchase agreement. It is designed to be filled out by agents and is intended for use by members of the Louisiana Realtors and its various boards throughout the state.
Because it’s a form developed by Realtors, the Residential Agreement to Buy or Sell will be one of the first contracts reviewed by people buying or selling a home in Louisiana. Both buyers and sellers should understand how the form works, even if they don’t work directly with a real estate agent to buy or sell their home .
Agents and brokers will be far more familiar with the Residential Agreement to Buy or Sell than buyers and sellers unfamiliar with the real estate transaction process in Louisiana. The Louisiana Residential Agreement to Buy or Sell is a complete document that has been vetted by real estate professionals and is heavily influenced by years of Louisiana legal rulings on real estate transactions.
Almost all real estate transactions in Louisiana involve using the Residential Agreement to Buy or Sell. It has been determined over decades of practice by real estate professionals and decades of court rulings on real estate law that the Residential Agreement to Buy or Sell includes all necessary provisions to entitle either the buyers or sellers to judicial protection, should a party fail to follow the terms of the agreement.
As you go through the home buying or selling process, you will come across the Residential Agreement to Buy or Sell hundreds of times before you reach closing. You will sign it dozens of times in various forms while doing things like applying for a loan, paying for a home inspection or reaching an agreement with a home inspector about repairs to be carried out.
The Louisiana Residential Agreement Key Provisions
While the Louisiana Residential Agreement to Buy or Sell (Residential Agreement) is not a statutory form, it is the most widely used sales agreement in real estate transactions in Louisiana. The Residential Agreement is a contract between the seller and buyer of residential property which states the terms and conditions of the purchase and sale. The Residential Agreement’s use of clear, concise and straightforward language helps to make it easy for the seller and buyer to quickly identify their respective rights and liabilities. Louisiana Civil Code Articles 2621-2624 (Pre-sale homeless assistance requirements) and Louisiana Civil Code Article 2629 (Requirements for Disclosure to Buyer of Residential Property prior to entering into an Agreement) governs sales of residential real property. Real estate professionals, sellers and buyers must be aware of these requirements prior to entering into the Residential Agreement.
The main components of the Residential Agreement include:
Property. A description of the real estate, which will be the subject matter of the Residential Agreement.
Purchase Price. The stated price of the property.
Deposit. The amount of earnest money to be paid by the buyer upon entering into the Residential Agreement.
Closing and Possession. The stated date and time of closing.
Proration. Payment or credit of property taxes, rent and assessments at closing of the transaction.
Acceptance of the Residential Agreement is determined by the "Time of Acceptance" clause. The "Time of Acceptance" clause shall be the date and time of "mutual signature" or the later date such signatures are affixed to the Residential Agreement. The closing (or "act of sale") will occur when the parties have fully complied with their respective obligations under the Residential Agreement, and all closing documents are in order and delivered to the closing attorney.
The Louisiana Residential Agreement Legal Consequences
The Louisiana Residential Agreement to Buy or Sell, like any real estate form, is drafted with the presumption of legality in its terms. Certain acts may not be accomplished via the Louisiana Residential Agreement, and certain requirements must also be met to ensure validity of contract.
Firstly, according to Louisiana Contract Law, in order for a valid contract to be formed there must be an agreement on the object of the contract, from which both parties must confer upon an exchange. This is otherwise known as the consent requirement. This consent may also be vitiated by incapacity (minority, mental incompetence, where a party is under legal duress) or error (to the extent that the other party knew or should have known of this error), or fraud and violence. Consent cannot be gotten via violence (physical or moral). If either party is the victim of violence, the offended party may rescind the contract at any time during the duration of the Contract. It’s important to note that the vendors, or other individuals with ownership of the property, must sign the Louisiana Residential Agreement in order for it to be valid. If either the husband or wife signs the contract, but not both, a revocation of the contract will only dismiss the contract as to the spouse who did not sign the Louisiana Residential Agreement. In the event that the party with the power of attorney dies, the contract is terminated. The contract states, if signed, that the sale is "contingent upon obtaining a certificate of resale from the Louisiana Commissioner of Conservation." By signing, the purchaser "gives written consent to the seller…to make the necessary application for the said certificate…". Any alterations to this clause’s language may affect its applicability to a particular transaction.
The Louisiana Residential Agreement Common Terms, Contingencies, and Conditions
The Louisiana Residential Agreement to Buy or Sell (commonly referred to simply as the "Purchase Agreement") is a contract for the sale of real estate. The Purchase Agreement is well-known throughout the State of Louisiana as the contract form that most real estate sales in Louisiana are conducted under.
Before entering into and executing a Purchase Agreement one must understand, among other things, that the terms of the Purchase Agreement will dictate the closing of the transaction and how the purchase of the property will be conducted.
For instance, the Purchase Agreement includes several common contingencies including:
Although many contingencies in the Purchase Agreement are favorable to the Buyer, the Seller also has protections in the event that the Buyer negotiates conditions where closing of the sale is subject to the Buyer obtaining financing. Under the Purchase Agreement, a Buyer must apply for a loan within 7 days after the signing of the contract and obtain a commitment for financing within 21 days after the signing of the Purchase Agreement. If the financing is not obtained, the Seller will receive the deposit provided for under the Purchase Agreement or the Buyer might be forced to obtain the financing to close the Purchase Agreement.
How to Draft and Sign a Louisiana Residential Purchase Agreement
Steps to Drafting and Executing the Louisiana Residential Agreement to Buy or Sell
As with most legally binding agreements, the drafting and execution of the Louisiana Residential Agreement to Buy or Sell is an important process that should be handled with care to ensure that the resulting document is valid and enforceable under Louisiana law. Typically, the drafting and execution of a Louisiana Residential Agreement will commence when a property owner lists residential real estate for sale with a realtor. In most cases, the realtor will have the property owner’s attention to the need to prepare the Louisiana Residential Agreement and to execute the document prior to closing on the sale of the subject property as this document is extremely important for both parties to the transaction.
Initially, the realtor may encourage the owner of the subject property to consult with an attorney regarding the document. Depending on the sophistication of the transaction, an attorney may or may not be involved in this initial stage. In most instances, the realtor will likely provide the homeowners with access to the prepared blank Louisiana Residential Agreement to Buy or Sell . This form is typically prepared and maintained as a downloadable PDF by the Greater Baton Rouge Association of Realtors, and is offered by the Association as a download directly from its website.
Once the property owner decides to proceed with the transaction, the realtor may assist the owner in filling out the relevant information in the document, which includes the listing price, payment terms, and any other addendums that need to be included with the document. It is important for each Louisiana Residential Agreement to Buy or Sell to include any special provisions appropriate for the transaction. The Louisiana Residential Agreement will also require both the seller and buyers to consent to the terms of the agreement.
If the owner ultimately decides to list the property for sale with the realtor, the real estate agent will often have the buyer submit a formal offer to purchase the property. In this step, the may have submitted the offer to the real estate agent, who will then present the buyer’s written offer to the property owner or to the listing agent. If the terms and conditions of the offer are agreeable to both parties, they will likely sign the Louisiana Residential Agreement with the agreement’s addendums, if any. The signed document is then in full force and effect and is ready for the closing process to finalize the sale.
Louisiana Residential Agreement Amendments, Changes, and Revisions
Amendments and modifications can occur after the Louisiana Residential Agreement to Buy or Sell has been signed by both buyers and sellers. They are a useful way to clarify the intent of both parties and/or resolve issues which may arise during the pendency of the closing process. By definition, any changes to the RAS must be made in writing and signed by both sellers and buyers (or their respective authorized representatives.) If the action which is the subject of the amendment is also a legal act (for example, a written amendment which terminates or cancels the contract or an extension), the amendment must be executed in writing, signed and/or initialed by both parties, as is required for other legal acts.
It is not unusual for the parties to the RAS to modify three aspects of the agreement after the fact: delays, crediting deposits and earnest money. All three situations are discussed below:
Sections 9 and 10 of the RAS discuss time deadlines for the parties to close on the sale of the property. These sections can be modified in an amendment to allow additional time to close or to notify sellers or buyers to waive certain contingencies. In practical terms, changes to these sections most often happen when the parties need additional time to close on the property. The parties will usually sign a written agreement which amends Sections 9 and/or 10 to grant additional time to close on the transaction. The parties should keep in mind that an amendment to the contract must be executed before the original deadline date stated in Section 9 on the RAS in order to be valid and enforceable to all parties.
If the parties have agreed to the crediting of a deposit to the buyer or seller, the deposit should also be clearly identified in Section 15 of the RAS. Any changes to this amount should be included in a written agreement which is signed by the buyers and sellers so that there is no confusion regarding the amount to be credited. The parties should also keep in mind that any changes to the amount of the deposit may require additional changes to the amount of the earnest money and/or down payment, which are separately identified in Sections 4 and 5 of the RAS.
Section 11 of the RAS provides specific language for the parties to identify the amount of the earnest money deposit which is paid by the buyer as part of the purchase and sale price. The parties may wish to modify the amount of the earnest money deposit, including in an amendment to the RAS. The parties must keep in mind, are required to identify the type of earnest money deposit and the individual or entity who is holding the earnest money (the "escrow agent"). The parties should also be prepared to provide the final and immediately available earnest money to the escrow agent if there is a change in the amount or type of the earnest money deposit.
The Louisiana Residential Agreement Often Used Terms, Conditions, and Disputes
Potential challenges and disputes may arise while attempting to enforce all or part of this legal contract. The contract provides for mediation in the event of a dispute. Mediation is a form of alternative dispute resolution that promotes the finding of a solution, acceptable to all parties, without the need for all parties to engage in the adversarial process of litigation. Mediation is not binding and the terms to which the parties agree can be formalized as a consent judgment which is filed with the court under Louisiana law.
Should a disagreement remain after mediation, suit can be filed within the prescribed prescriptive period (the time limit for filing a lawsuit). While the parties to the agreement look to the terms of the contract to establish their obligations, the Louisiana Civil Code also provides rules of law that will be employed by the court to resolve certain issues. Furthermore , enforced good faith and fair dealing support the use of Louisiana law to presume that no party would attempt to "outsmart" the other.
For example, the Louisiana Civil Code provides for certain default provisions in the event that a party fails to fulfill obligations to pay. If a default occurs the aggrieved party may choose between treating the contract as a forced sale (. . . can’t do it yourself even if you had the right of rescission – the buyer does have the right to refuse the home but must file suit) or accepting the purchase price as full settlement of his right to demand specific performance. A forced sale is awarded when the court determines that it would be unjust to allow the buyer to obtain the benefits of the bargain while not fulfilling the obligations of the contract.