Abstract:
A system and method prepare real-estate contracts by gather information using simple questions. Based on the answers, contract clauses are selected and added to the contract. Information such as legal description, tax information, and realtor information can be pulled from outside databases and included in the contract. Signature collection is automated and recorded. Effective dates of the contract are calculated based on the signatures. The system can export deadlines and contract information to closing agents. The result is “hard” contracts that do no fail for lack of signature, improper legal description, or being improperly filled-out.

Description:
CROSS-REFERENCE TO RELATED APPLICATIONS 
       [0001]    This application claims the benefit of U.S. Provisional Application No. 61/364,588, filed Jul. 15, 2011. 
     
    
     STATEMENT REGARDING FEDERALLY SPONSORED RESEARCH OR DEVELOPMENT 
       [0002]    Not Applicable 
       THE NAMES OF PARTIES TO A JOINT RESEARCH AGREEMENT 
       [0003]    Not Applicable 
       INCORPORATION-BY-REFERENCE OF MATERIAL SUBMITTED ON A COMPACT DISC 
       [0004]    Not Applicable 
       BACKGROUND OF THE INVENTION 
       [0005]    1. Field of the Invention 
         [0006]    The invention relates to systems for drafting real-estate contracts. 
         [0007]    2. Description of the Related Art 
         [0008]    Despite the legality, real-estate contracts are often drafted by realtors, as opposed to Attorneys. The real-estate purchase agreement involves the following steps: using a preprinted un-customized generic contract of the local board of realtors or bar association, or accessing an online website to which the realtor has subscribed, selecting a basic form from a plurality of possible forms, selecting relevant provisions from a group of commonly-used provisions, tabbing through blanks in the form and typing additional information into blanks or additional provision sections; the realtors have no formal education in this task or in the issues presented. The form selection, the provision selection, and typed information are made at the realtor&#39;s discretion and are subject to error. The forms include legalese, which can confuse non-attorneys. The forms include extra provisions that are not relevant to every transaction and lead to confusion, error, and erroneous inclusion. 
         [0009]    Improper contract selection, inclusion or omission of provisions, and incorrect typed information leads to vulnerability, misunderstandings, difficult or impossible closings, forfeiture of deposits, and law suits. 
       BRIEF SUMMARY OF THE INVENTION 
       [0010]    The invention encompasses a system and method for drafting and executing real-estate contracts. The system is especially useful for preparing residential real-estate contracts. 
         [0011]    An object of the invention is to simplify the residential real-estate transaction (i.e. purchase or sale) process. 
         [0012]    A further object of the invention is to avoid confusing non-attorneys with legalese jargon that is more complex than yes/no questions. 
         [0013]    A further object of the invention is to produce contracts that do not include clauses that are not used or are not relevant to the specific contract. 
         [0014]    A further object of the invention is to produce real-estate contracts that do not contain errors, are fully executed, and have confirmed effective dates and firm dates for each of the relevant provisions of the contract. These confirmed effective dates contrast dates that must be calculated by interpreting contract provisions. 
         [0015]    A further object of the invention is to provide a system that can produce a contract that can be executed on the spot so that buyers and sellers have the opportunity to make an offer immediately without returning to a realtor&#39;s office. Submitting and/or accepting an offer immediately is useful because many contracts are initiated during the excitement of seeing or showing a property. In addition, at least one, and possibly both, parties may be available during the showing so that a contract can be mutually accepted quickly and delays for signature can be avoided. 
         [0016]    The invention encompasses a computer network accessible system to prepare real-estate contracts. The system receives information input by a user, most typically a realtor. The system then compares the information input by a user with a database of real estate legal descriptions and suggests potential matches. The user then can confirm the match, such as legal description, real-estate tax folio number. Using descriptions in the contract that match descriptions used by government agencies improves accuracy and facilitates the transfer of information throughout the closing process. 
         [0017]    Once a legal description is identified, other information regarding the property can be pulled from databases into the contract. For example, from the legal description, real-estate tax information (i.e. folio number) can be collected. The system can prorate the real-estate tax information based on the closing date and suggest real-estate tax information for the contract. The user can confirm the real-estate tax information. In addition, the identity of property owners can be pulled from the database and used as the sellers in the contract. Lien information can be pulled from outside databases to warn realtors and buyers of potential problems as early in the process as possible. 
         [0018]    The system pulls information from the MLS database to complete the contract. The MLS database can provide information about the realtors, brokers, and commissions as well as criteria for searching the recording office for legal descriptions. 
         [0019]    A further object of the invention is to provide a simple, clean, minimalist user interface. 
         [0020]    A further object of the invention is to provide a system that stores information about real estate transactions. The stored information can be used by the realtor and/or closing agent for future real-estate transactions. 
         [0021]    A further object of the invention is to provide a printable draft contract only after the client has answered a complete set of questions. The client is not able to see or print the contract until the questionnaire is completed. This prevents customers from printing contracts that may have incorrect information. The set of questions for each contract might differ depending on the answers given by the client. Once a full set of questions have been answered, the client can see a draft contract. If the client is not satisfied, the client can request to repeat the questionnaire. If the client cannot generate a satisfactory draft contract, the system can recommend that the client contact an attorney. A default attorney can be suggested. 
         [0022]    A further object of the invention is to provide a system that can prevent clients from manually editing a recommended contract. Many problems in draft contracts occur when non-attorneys draft their own provisions to the contract. If utilized, the system can prevent clients from overriding the safeguards. 
         [0023]    A further object of the invention is to provide a system that collects digital signatures that are required in the real-estate transaction. The system would request information about the buyer(s) and seller(s) of property. The system then would send electronic (i.e. across a network, typically the Internet) signature requests to each of the buyers and sellers and escrow agent(s). Each buyer and seller would execute the contract and the system receives and stores the digital signatures. 
         [0024]    Based on when the digital signatures are executed, the system will create an “effective date” of the contract. From the effective date, the contract can be released to the closing agent, buyer, seller, real-estate agents, and escrow agents to perform diligence, such as inspections, lien searches, condominium association interviews) and other closing services. 
         [0025]    Based on the effective date, the system can create a time schedule. The time schedule can generate data that of dates and deadlines that can be exported to docketing and calendaring software. The calendar data can be in a non-proprietary or standard-based format. 
         [0026]    The system can export contract information in formats that closing software (e.g. Displaysoft) can input the data. Direct output of data to the closing agent avoids spending time on data entry. In addition, because the information has been entered into the system from public records, the information being exported to the closing agent should be at least as accurate. 
         [0027]    The system can include integrated closing software. 
         [0028]    The system stores sample contract language in different languages. The user can select in which language the contract is to be written. Potential languages include, but are not limited to, the following: Spanish, Italian, and German. 
         [0029]    The system requires and stores acknowledgment of a waiver of suggestions to seek legal counsel. In addition, the system requests and records a waiver to avoid broker liability. Such clauses are only included in comprehensive, attorney-written, non-generic contracts. 
         [0030]    The system shall provide information to escrow agents and facilitate the collection, tracking, and return of escrow funds. The system will send a set of reminder dates for addition to the escrow agent&#39;s calendar. The system sends reminders to the buyer that the buyer&#39;s inspection period is expiring. The system gives the buyer the option to waive the inspection, cancel the contract, or demand a seller credit. The system facilitates the timely electronic transmission of this information to the seller, escrow agent, and realtors. The system of sending reminders eliminates errors in calculation and minimizes realtor liability. 
         [0031]    In accordance with a further object of the invention, the system generates property mapping. The property mapping can be stored in the system or pulled from an external database. 
         [0032]    The system can provide a customizable user interface to allow realtors, brokers, or other users to brand the interface. The customization can include photographs, logos, customized URLs, and other branding. The system can provide the ability to realtors to add “just sold” to online marketing materials when a contract is formed. 
         [0033]    The system can charge users based on various billing models. Users can be billed an annual fee. Alternatively, users can be charged on a per transaction basis. 
         [0034]    Completed contracts can be stored in the system. A fee can be periodically charged to maintain a contract in the system. 
         [0035]    Advertising can be sold to be displayed to users. The advertising can be tailored to purchasers and sellers of real estate, realtors, real-estate brokers, insurance agents, inspection companies, and other companies who sell to purchasers and sellers of real estate. 
         [0036]    The system includes a computerized relational database. The fields in the database include the following: 
       USERID 
     PASSWORD 
     TRANSACTION TYPE 
     REPRESENTATIVE PARTY 
     BUYER NAME 
     BUYER EMAIL ADDRESS 
     SELLER NAME 
     SELLER EMAIL ADDRESS 
     ADDRESS OF PROPERTY 
     PROPERTY TYPE 
     PROPOSED PURCHASE PRICE 
     CONSENT TO STANDARD DEPOSIT 
     SPECIFIED DEPOSIT 
     SPECIFIED DEPOSIT 
     ESCROW AGENT IDENTITY 
     ESCROW AGENT EMAIL 
     AMOUNT OF CASH TO BE PAID 
     AMOUNT TO BE FINANCED 
     HOUSING ASSOCIATION FEES 
     PARKING SPACES 
     STORAGE UNITS 
     CONDOMINIUM FEES 
     TITLE AGENT IDENTITY 
     MISCELLANEOUS PROVISIONS. 
       [0037]    A further object of the invention is to provide a system of generating “hard” contract that cannot be avoided for error or incompleteness. The system generates hard contracts by requiring signatures, mandating fields be populated and generating reminders for dates in the diligence and closing. Such a system will eliminate contracts without effective dates and prevent miscalculation of dates. 
         [0038]    Other features of the invention are set forth in the appended claims. 
         [0039]    Although the invention is illustrated and described herein as embodied in a computerized system for creating real-estate contracts, the invention is not limited to the details shown because various modifications and structural changes may be made without departing from the invention and the equivalents of the claims. However, the construction and method of operation of the invention together with additional objects and advantages thereof will be best understood from the following description of specific embodiments when read in connection with the accompanying drawings. 
     
    
     
       BRIEF DESCRIPTION OF THE SEVERAL VIEWS OF THE DRAWING 
         [0040]      FIG. 1  is a schematic view of a system according to the invention. 
           [0041]      FIG. 2  is a flowchart showing a method of creating a real estate contract according to the invention. 
       
    
    
     DETAILED DESCRIPTION OF THE INVENTION 
       [0042]    Embodiments of the invention are described below and are shown in the figures of the drawing. 
         [0043]      FIG. 1  shows a preferred embodiment of a system  30  for creating real-estate contracts. The system  30  includes a web server  31  and computerized database  32 . The web server  31  is a computer connected to a network. The computer is capable of executing computer programs and receiving input from users. The web server  31  is connected to a computerized database  32 . The computerized database  32  stores information including components of contracts, data entered for contracts, and completed contracts. 
         [0044]    The system  30  is connected to other computers via a network, preferably, the Internet  40 . The Internet  40  is a TCP/IP network. 
         [0045]    The government (for example, the county) maintains a recording office  10 . The process of recording begins when a duly executed, acknowledged, and delivered document is brought to the recording office  10  for filing in the record books in the county where the property is located. The recorder&#39;s office  10  also keeps a set of indexes containing information about each document so that the document can be discovered by a title search. A majority of states have a Grantor-Grantee Index, a set of volumes containing an alphabetical reference to the surname of the grantor followed by the name of the grantee, a brief description of the document and the property, and the location of the filed document in the official record books. The same information is contained in the “grantee-grantor index,” which is organized alphabetically by surname of the grantee. A few states use a “tract index,” which organizes all of the documents according to the location of the property. The recording office  10  is searchable online. The recording office includes a database  11  that is connected to a web server  12 . The web server  12  is connected to the Internet  40 . 
         [0046]    The tax collector  20  is a government (i.e. county) officer responsible for collecting real-estate taxes. Tax appraisals and tax amounts are published online. The database  21  of tax amounts are organized by legal description of properties. The database  21  is connected to a web server  22 . The web server  22  is connected to the Internet  40 . The web server  22  allows users to access the database  21  via the Internet  40 . 
         [0047]    A client  50  uses a computer workstation  51  to access the system  30 . The computer workstation  51  is preferably a personal computer using a web browser. The computer workstation  51  is connected to the Internet  40 . The user  50  uses the computer workstation  51  to access the system  30  via the Internet  40 . In a preferred embodiment, the workstation  51  is a mobile device such as those sold under the trade names IPHONE, IPAD, BLACKBERRY, ANDROID, and WINDOWS MOBILE. 
         [0048]    A closing agent  60  is a business, preferably, a law firm or title company, that performs the diligence and title insurance, HUD preparation, recording, and fund transfers to complete a real-estate transaction. The closing agent  60  has a computer workstation  61 . The computer workstation  61  is connected to the Internet  40 . The computer workstation  61  is connected to the system  30  via the Internet  40 . The closing agent  60  receives information about the real-estate closing from the system  30 . Real estate listings are posted in an online database known as the Multiple Listing Service (i.e. MLS Database  70 ). 
         [0049]      FIG. 2  is a flow chart showing a preferred embodiment of writing a real-estate contract using the system  30 . A client  50  uses a workstation  51  to access the web server  31  of the system  30 . The web server  31  then executes a computer program and transmits and receives information and input from the workstation  51 . 
         [0050]    In step  101 , the client  50  chooses to enter a new contract or to modify an existing contract. If a new contract is selected, a new record is created in the database  32 . 
         [0051]    In step  102 , the system  30  asks the client  50  to select a language for the contract. 
         [0052]    In step  103 , the system  30  asks the client  50  to complete a waiver that the client  50  has been recommended to use an attorney. A real-estate broker waiver can be included as well. The confirmation of waiver is stored in the database  32 . If the client  50  refuses to complete the waiver, in step  105 , the system  30  ends the program and recommends that the client  50  contacts an attorney. 
         [0053]    In step  104 , the system  30  prompts the client  50  to enter an address of the real-estate that is the res of the transaction. The system  30  then searches the recording office  10  and pulls potential matches based on the search criteria from the recording office  10  to the system  30 . 
         [0054]    In step  106 , the system  30  transmits the results from the recording office  10  to the client  50 . In step  107 , the client  50  confirms that the proper legal description has been collected. A confirmation is transmitted from the client  50  to the system  30 . If a matching record is not shown, the system  30  asks the client  50  if the client  50  desires to enter new criteria. If yes, the system returns to step  104 . If no, the system  30  requests the user  50  to enter a legal description manually in step  109 . 
         [0055]    In step  110 , the system  30  searches the database  21  in the tax collector  20 . The search can be based on the legal description. In step  111 , the system  30  confirms that a record in the database  21  matches the legal description. If no match exists, the system  30  displays to the client  50  potential matching records. In step  113 , the client  50  selects a matching record if one exists. If no matches exist, the client  50  is given the opportunity to enter tax information manually. The tax collector  20  transmits to the system  30  the estimated taxes, tax appraisal information, last tax payment date, and the existence of any tax liens. 
         [0056]    In step  115 , the system  30  prorates the taxes based on the tax information and the estimated closing date. 
         [0057]    In step  116 , the client enters data regarding the transaction. Information that can be entered includes, but is not limited to, the following: userid, password, transaction type, representative party, buyer name, buyer email address, seller name, seller email address, address of property, property type, proposed purchase price, consent to standard deposit, specified deposit specified deposit, escrow agent identity, escrow agent email, amount of cash to be paid, amount to be financed, housing association fees, parking spaces, storage units, condominium fees, title agent identity, and miscellaneous provisions. The system  30  can pull information from the MLS database  70 . The MLS database  70  includes data for a given property including realtor numbers, broker numbers, and realtor commissions. The seller information can be taken from the recording office  10 . All information taken from outside databases can be confirmed by the client  50 . 
         [0058]    In step  117 , the client  50  is prompted to determine which addenda need to be added to the contract. The system  30  can prompt the client  50  with simple or even yes/no questions to gather what addenda need to be included. 
         [0059]    In step  124 , the client  50  specifies a closing agent. A default closing agent can be automatically entered. In addition, the client  50  specifies an escrow agent. A default escrow agent can be automatically entered. 
         [0060]    In step  118 , the system  30  generates a draft contract based on the collected data, the entered data, and the answers to the questionnaire. The contract is built from prewritten clauses that are stored within the database  32 . 
         [0061]    In step  119 , the system  30  displays an unmodifiable electronic version (e.g. a Portable Document Format or *.PDF) of the draft contract to the client  50 . After reviewing, the client  50  is asked to edit the contract, which would result in the client  50  being asked to edit the answers to the preliminary questions. The client  50  can be returned to step  116  to correct or reenter data. In step  120 , the client  50  confirms the draft contract. 
         [0062]    In step  121 , the system  30  transmits signature sheets to the buyers and once electronically signed by the buyers, the system  30  transmits the executed offer to the sellers. Once the contract is executed by both the buyer and seller, the system  30  emails the now fully executed contract to the designated escrow agent and/or closing agent for processing. The signature sheets include instructions and software that comply with electronic and/or pen-and-ink signature requirement. The system  30  collects and stores the signed contracts. 
         [0063]    In step  123 , the system  30  generates an effective date of the contract based on the signatures. From the effective date, the system creates calendar dates for deadlines in the transaction. For example, the system  30  generates closing dates, inspection dates, finance deadlines, etc. The calendar dates are generated in standard format, for example, Microsoft Outlook format, and transmits the calendar events to the parties, agents, and closing agent. 
         [0064]    In step  125 , all of the information regarding the contract is forwarded to the closing agent  51 . The data can be in a format that is compatible with a given closing software such as those sold under the trade names LANDTECH and DISPLAYSOFT. 
         [0065]    In step  126 , the system  30  saves in the database  32  the contract, signatures, and all related data. 
         [0066]    Unless otherwise mentioned the reference numbers are used consistently throughout the figures.