What's a non-binding contract?

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Quixote
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What's a non-binding contract?

Postby Quixote » Fri Dec 10, 2010 10:37 pm

IRC §36(h) reads (or at least used to read; the July 1 deadline was changed to Oct. 1)

Application of section
(1) In general
This section shall only apply to a principal residence purchased by the taxpayer on or after April 9, 2008, and before May 1, 2010.
(2) Exception in case of binding contract
In the case of any taxpayer who enters into a written binding contract before May 1, 2010, to close on the purchase of a principal residence before July 1, 2010, paragraph (1) shall be applied by substituting “July 1, 2010” for “May 1, 2010”.


What's the difference between a contract and a binding contract? The seller had his fingers crossed when he signed? Some provisions had "jk" tacked on the end?
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bmielke

Re: What's a non-binding contract?

Postby bmielke » Fri Dec 10, 2010 11:03 pm

Quixote wrote:IRC §36(h) reads (or at least used to read; the July 1 deadline was changed to Oct. 1)

Application of section
(1) In general
This section shall only apply to a principal residence purchased by the taxpayer on or after April 9, 2008, and before May 1, 2010.
(2) Exception in case of binding contract
In the case of any taxpayer who enters into a written binding contract before May 1, 2010, to close on the purchase of a principal residence before July 1, 2010, paragraph (1) shall be applied by substituting “July 1, 2010” for “May 1, 2010”.


What's the difference between a contract and a binding contract? The seller had his fingers crossed when he signed? Some provisions had "jk" tacked on the end?


I thought offers on real estate were usually non-binding. "We'll pay you this much, but only if a whole bunch of conditions are met, one of which is we don't change our mind" that sort of thing.

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Re: What's a non-binding contract?

Postby Arthur Rubin » Sat Dec 11, 2010 5:52 am

Quixote wrote:IRC §36(h) reads (or at least used to read; the July 1 deadline was changed to Oct. 1)

Application of section
(1) In general
This section shall only apply to a principal residence purchased by the taxpayer on or after April 9, 2008, and before May 1, 2010.
(2) Exception in case of binding contract
In the case of any taxpayer who enters into a written binding contract before May 1, 2010, to close on the purchase of a principal residence before July 1, 2010, paragraph (1) shall be applied by substituting “July 1, 2010” for “May 1, 2010”.


What's the difference between a contract and a binding contract? The seller had his fingers crossed when he signed? Some provisions had "jk" tacked on the end?
For practical purposes, it is believed that being "in escrow" makes it a binding contract. Most real estate contracts have conditional clauses, but "changing your mind" is not one of them. Failure to qualify for a loan usually is one of them, and failing to turn in the documentation to qualify for the loan is one way to avoid qualifying for the loan....
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Nikki

Re: What's a non-binding contract?

Postby Nikki » Sat Dec 11, 2010 6:39 pm

Many real estate sales contracts are sort-of-non-binding.

For example, when I bought my previous home, I contracted to buy the house at a certain price and deposited a significant amount of non-refundable cash to cover the event that I changed my mind and walked away EXCEPT the contract was void if:

I couldn't obtain a mortgage at certain specified terms

The buyer-funded engineering inspection found any undisclosed flaws in the structure or systems of the house which the seller would not repair at his cost prior to closing,

There was any cloud on the title.

I or my spouse died prior to closing

and so on

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Re: What's a non-binding contract?

Postby Judge Roy Bean » Sun Dec 12, 2010 1:56 am

IMHO, one that relies on the term "reasonable." :roll:
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Brandybuck

Re: What's a non-binding contract?

Postby Brandybuck » Sun Dec 12, 2010 7:18 pm

IANAL, but it seems to me that a contract with conditions is binding. If you meet the conditions you are still bound to the contract.


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