A ratified contract is an important term and one that you might hear REALTORS® say with excitement in their voices.  I’m sure I’ve said it a few times and while my buyers and sellers share in my excitement, they may have been questioning exactly what I meant in the back of their minds.  Let me explain what exactly a ratified contract is.

What is a ratified contract?

A ratified contract is a contract that has been signed by both sellers and buyers.  After a contract has been ratified, the buyers will proceed with the next steps in the home buying process such as a home inspection, an appraisal, and completing the process for final approval on a mortgage.

What does a ratified contract do?

A ratified contract outlines the agreement that the sellers and buyers reached.  It designates how much the property will sell for, when closing will take place, what inspections will take place and who will pay for these inspections.   Both buyers and sellers must follow the conditions set out in the contract in order to get the home to closing.

Can a ratified contract change?

Sometimes buyers and sellers need to make small alterations to the ratified contract.  For example, the title company may need an additional day to get paperwork complete or a radon test was accidentally moved and the test needs to be redone.  In these cases, the REALTORS® can write addendums and  attach them to the original ratified contract to reflect these changes.  Both buyers and sellers must agree to the changes.

Why is a ratified contract important?

The ratified contract protects both the sellers and buyers.  It commits both parties to selling/buying the home.  Sellers can’t leave the contract just because another offer is presented afterwards that is better. (What are backup offers) and buyers aren’t able to back out of the contract simply because they find a home that they like more.  The contract does give stipulations for legally existing the agreement.  However, if buyers or sellers do not follow these stipulations then they can find themselves in a legal dispute with the other party.