What Does The Term Ratified Mean In Real Estate Transactions?
Real estate is a discipline with its lingo, just like any other. But, for a layman, it is difficult to understand all the jargon. So when a Realtor says “Congratulations you have been ratified”, you may wonder what it means and politely answer, “Great, thanks so much!”
In this article, we will explain the term ratification and why you need a ratified contract when purchasing a home.
Definition of Ratification
The process of making something formally valid by signing it or otherwise giving it formal assent is referred to as “ratification.” Ratification, for example, occurs when parties sign a contract. The contract becomes formal after it is signed, and it can then be enforced by law if necessary. Consider the following ratify definition to better understand this notion;
“The act of officially validating a treaty, contract, or agreement by signing or providing formal consent to it.”
What Is A Ratified Contract In Real Estate?
When buying a house, ratification of the contract begins once it’s been handed to both the seller and the buyer and ALL the terms to purchase the home have been agreed to in writing. This is the point at which you are committed to each other and the conditions under which you have agreed to work. Also, this is when the contract’s deadlines begin to run (unless otherwise stated that they begin based on other terms).
A contract must follow these three crucial phases to be termed “ratified”:
- The buyer submits a conditional offer on the property: This document contains the buyer’s offer to buy the residence in its entirety. It is what the buyer has agreed to buy, at what price, and so on.
- The seller makes a counteroffer: The seller will make a counteroffer that will include any modifications or other information that was not included in their initial offer.
- Close the deal at the lawyer’s office: Both the buyer and the seller will sign off this ratified contract after the deal is finalized.
A “ratified contract” often includes:
- The purchase price of the property
- The Closing costs that have to be paid by the seller or the buyer.
- Inspections
- Any additional repairs that are required to be done before the closing date (also known as punch-out criteria)
- An expiration date
- Contingencies (such as finance) that may allow the contract to be terminated without penalty.
- Closing date
Besides the buyer and seller, the other parties that require access to the ratified document are: the title company, your mortgage lender, your real estate agent/broker, and the escrow company
Why Do You Need A Ratified Contract When Buying A Home?
A ratified contract is necessary for a variety of reasons. First, once everyone signs and all the processes are completed, your house purchase becomes legally binding. You will also get to know all the dates and timeframes for crucial events that will occur before closing such as home inspection, appraisal contingency, finance contingencies, and other contingencies.
Furthermore, a ratified contract makes communication between the parties easier by ensuring that everyone has a copy of the document at all times.
Finally, the conditions of a purchase agreement are not valid in most states unless they are written down. A contract that has been ratified is a guarantee. It is simple to show proof of the agreement if something goes wrong.
So, if you are looking to purchase a home soon, getting your contract ratified is an important step that you must take. Contact one of our skilled loan officers today to assist you to learn more about the process and how we can help get your ratified contract signed as soon as possible.
