Q: is the contract content agast the real estate laws?
the contract content includes " Settlement is 45 days from the sale date. The Purchaser will pay interest on the unpaid portion of the purchase price from date of sale to date of settlement at the rate of 10% per annum. " I have signed it, but I find that it is not reasonable for buyers at auction. what should I do to avoid the payment of this high interest (the rate of 10% per annum)?
A: Don't sign the contract? I suppose you could have a lawyer review it, but, generally, a contract for sale of real estate, particularly between commercial parties, as in an auction, is binding.
A:
The law generally allows people to agree to whatever terms they chose, whether "reasonable" or not. Maryland has usury laws which prevent excessively high rates of interest. The presumptive "legal rate" of interest in Maryland is 6% but there are numerous exceptions to this rule which allow higher interest rates. Most of the rules do not apply to federally chartered banks. If there is a written agreement, the allowable rate increases to 8% and may be higher than that. If the agreement is in writing and other conditions are met, a maximum of either 18% or 24% interest applies. Commercial loans or loans made to corporations have essentially no interest cap. Maryland's Annotated Code has these terms in the Commercial Law article, Title 12.
Practically speaking, if the contract has any contingencies a buyer may be able to exit the contract if the contingencies fail.
In foreclosure auctions, it is typical to have interest accrue at the rate in the mortgage which was foreclosed upon. In a "standard" contract, it would be very unusual to pay interest before closing.
It would be prudent to have a lawyer review any "non standard" real estate contract before signing. Certainly the best time to review and negotiate terms is before signing an agreement or contract. Once a contract is signed it becomes decidedly harder, if not impossible, to negotiate or change terms.
While I hope this general information helps, it is not designed to offer legal advice tailored to your situation or to create any kind of attorney/client relationship. You may wish to consult with a lawyer.
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