You don’t have to be a real estate expert to have heard of release agreements. The release is one of the most common types of contract in the world of law. They are used to allow a company to use someone’s image for commercial purposes. However, a real estate release agreement is not exactly the same. In most cases, prospective buyers use releases to release the seller from the mortgage or liens they have on a property so that the property is debt free. The form is extremely short and is often only one page long when submitted. Let’s take a look at a typical contract that requires a seller to obtain a mortgage release on a property.
The first part of the contract clearly describes the date this agreement is signed, the names of both parties involved in the transfer of property, as well as the spouses of the members involved in the agreement. The second part of the agreement describes the terms and conditions under which the property in question is located. Examine how much debt the property has and whether the property has mortgage debt or bond debt associated with it. It also describes the purchase price of the property and how that purchase price can now be used to pay off any and all debts associated with the property. This type of form is used primarily to ensure that the seller will clear all debts on a property when the sale is complete as agreed to in the original sales agreement. Some people find this form a bit redundant, but you can never be too careful when it comes to legal and property disputes.
The final part of the agreement only requires the signer to include their names, the amount of total debt still present on the property, and finally the amount that is being paid. Much of the contract will simply be prewritten text, often a template, outlining the seller’s responsibilities after the sale is complete.
If the buyer and seller of the property agree beforehand, a real estate release agreement is not necessary. It could be part of the original sales agreement that the buyer is responsible for paying any existing debt on the property and not the seller’s responsibility. Since every legal agreement is different and many have their own unique provisions, some real estate release agreements may vary considerably from what is described here.
In conclusion, the real estate release agreement is a safeguard instituted by the buyer to ensure that a property that has an associated debt is paid in full with the money earned during the sale by the seller so that when the final transfer of the property is finalized, is debt free. It is vital that this agreement be included if you are buying a property that has debt attached to it.