Posted by E. Timmes on August 24, 2000 at 17:03:03:
You should know the maintain benefit of notarizing your sales agreement is “it can be filed.” I’m not a lawyer, but I do know that a contract is only as strong as your ability to enforce it.
Consequently, an unfiled sales agreement does nothing to prevent your seller from selling the property to someone else. At which point, your only recourse would be to sue. Since the cost of legation makes lawsuits impractical, most people don’t bother. So an unfiled sales contract really exercises little biding power over your seller.
On the other hand, a sales agreement filed in the real property records division of your county clerks office does offer greater enforceability because it deters the seller from backing out of the deal because he can’t convey unblemished title to some one else.
Once it’s filed, your sales contract acts like a “cloud” against the title.
Title companies will detect your sales agreement when they research the title and generally won’t insure until you release the sales agreement. Correspondingly, banks and prudent investors generally will not collateralize real-estate loans against property that lacks title insurance. To this end, a “filed” agreement of sale will do the job!
Bryan Wittmeyer offers an excellent book that covers the effective usage of sales agreements: “The Hidden Secrets of a Real Estate Technician” You can reach him at email@example.com.
I hope this helps!