Purchase & Sale Agreements
A purchase and sale of real property
can be a complex transaction. When making an investment as important as a home, it is sensible to consult a lawyer and have
him or her review or prepare the documents before you sign anything.
Becoming familiar with the components
of a purchase and sale agreement before you prepare one or have one presented to you puts you in a better position when
it comes time to negotiate your important real estate transactions.
People considering the purchase
of a home often sign a "purchase and sale agreement" or "earnest money receipt." These documents are contracts that legally
require the seller to sell, and, the buyer to purchase the property.
If the buyer refuses to purchase the property after signing an "earnest money
form" or "real estate purchase and sale agreement," the seller has the option of keeping the earnest money deposit or of suing
the buyer to force purchase the property.
The agreement also imposes obligations on the seller. The seller cannot give
the earnest money deposit back to the buyer and refuse to sell.
If there is a real-estate agent involved in the transaction, the earnest money
receipt or agreement will also impose an obligation on the seller to pay a real-estate commission or fee.
What are the components of a Purchase and Sale Agreement?
Although there will be some variation based
on the location of the specific property, most contracts contain some or all of the following elements:
1. A legal description of
the property as well as the street address.
2. Sale Price.
3. Financing Contingency:
Subject to obtaining a mortgage (if applicable) and the specifics of the mortgage, i.e., amount, rate and term of the loan.
Application to be made in X number of days.
4. Earnest Money Deposit:
How much money accompanies the contract and who will hold it pending close of escro.
5. Closing: When and
6. Inclusions and exclusions:
What is and is not included in the sale of the property.
7. Home inspection: Contingency
for and to be done in X number of days.
8. Warranties: Any that
are included with the house and description of the warranty.
9. Condominium: If the property
is a condo, other provisions will apply.
10. Well and Septic: If applicable,
they must be tested (and pass).
11. Termite and Pest inspection: Who will
pay and if there is infestation or damage, who will repair.
12. Possession Date: When
the buyers take possession of the house--before, at or after closing.
13. Acceptance: How long
the sellers have to respond to the offer with either acceptance or a counter-offer.
14. Arbitration: Any provisions
for arbitration of disputes.
15. Insurance: Whose insurance
covers the property up until the closing date.
16. Property Disclosures:
Notices of any property disclosures concerning the house.
Consulting an experienced lawyer to
have him or her prepare or review the documents before you sign anything can be a very wise decision and save you time and
money in the long run.
Feel free to call our office any time with questions
and to set up your appointment today.