A seller and his real estate agent told a client of mine that there was “no need for a contract” on a house he wants to buy. The agent assured him that “title is clean” and he just needs to schedule a closing and bring his money in a bank check payable to the seller.
Whoa! The contract serves two purposes here, and the fact that the seller wants to disregard both makes me very suspicious. The first is that the seller is obligated to sell the premises to the buyer if the terms of the contract are fulfilled. Without the parties’ signatures, the seller may sell the house to anyone else without any liability to the buyer. The buyer would have lost time and money, and the seller would suffer no consequence.
The second purpose is to compel the seller to prove that he is the true owner of the property who is able to deliver insurable and marketable title to the property by ensuring that all liens (including mortgages), judgments, violations and title muddying issues are removed or resolved by the time closing takes place. Without that responsibility being imposed on the seller, the buyer is expected to just shows up with a check for hundreds of thousands of dollars and hand it over to a person purporting to be the owner, who asserts as gospel that he is delivering the property urburdened and blemish-free?
The only reasons to skip the contract and title search steps are to shield the seller from accountability and/or to pass the millstone of murky or otherwise encumbered title problems along to an unprotected buyer.