Real Estate Purchase Agreement

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Table of Contents

• What Is a Real Estate Purchase Agreement?
• What’s Included in a Real Estate Purchase Agreement?
• Who Needs a Real Estate Purchase Agreement?
• Real Estate Purchase Agreement Required Disclosures
• Real Estate Purchase Agreement Addendums
• How to Terminate a Purchase Agreement
• Related Forms & Templates

What Is a Real Estate Purchase Agreement?

A Real Estate Purchase Agreement is a contract between a buyer and a seller outlining all terms and conditions under which a buyer will purchase real estate from a seller. This is the first step in the process of buying and selling a house.

The Purchase Agreement does not transfer ownership of the property. Instead, it outlines the terms for the transfer of the property at a specified closing date.

Generally, a buyer submits the Purchase Agreement as an “offer.” The seller can then negotiate the terms before accepting the contract.

Once a purchase agreement is signed by both parties, the property is considered “under contract” and the parties are bound by the terms of the Purchase Agreement.

A Real Estate Purchase Agreement is also known as a Home Sales Contract, Real Estate Sales Contract, or Real Estate Purchase Contract.

What’s Included in a Real Estate Purchase Agreement?

The Real Estate Purchase Agreement should include the key terms of the offer and agreement. Specifically:

• Buyer and seller details: Including the full names and contact information of the parties to the contract.
• A property description: This should include the address of the property and a legal description of the property.
• The purchase price: The purchase price should list the total price being paid for the property, including any deposits, down payments, and adjustments.
• A description of any personal property included: If any personal property is included in the sale, this should be clearly stated in the contract. Common items included are refrigerators, washers, and dryers.
• Financing details: The contract should specify how the buyer will purchase the property. If the buyer is using a loan to purchase the property, key financing terms should be included.
• Any applicable representations and warranties: The contract should state any specific claims about the property - for example, a “buyer beware” statement or available inspection reports.
• Any applicable contingencies: If there are any actions or conditions that must occur for the contract to be enforced, those should be included in the Purchase Agreement.
• Details regarding earnest money: The Purchase Agreement should specify the amount of earnest money to be paid, where that money will be held, and the terms for returning the earnest money.
• The closing date: The Purchase Agreement should specify the date, time, and location for the closing.
• The contract expiration date: The Purchase Agreement should give the other party a deadline for accepting the offer. If the Purchase Agreement is not accepted by that deadline, the offer will expire.

Who Needs a Real Estate Purchase Agreement?

Anyone who is buying or selling residential real estate needs a Real Estate Purchase Agreement. Some common examples of people that create and download this contract are:

• Buyers or sellers in private real estate transactions;
• Real estate agents representing clients ;
• Family members transferring property from one person to another; and
• Sellers that are financing a real estate transaction.

Real Estate Purchase Agreement Required Disclosures

Property disclosures provide the buyer with information about potential problems, hazards, or issues with the property. There are specific disclosures required by local, state, and federal law.

• Lead-Based Paint Disclosure: Pursuant to federal law, if a property was built before 1978, the seller must provide a lead-based paint disclosure, stating any chipping, peeling, or deterioration of paint on the property.
• Property Disclosure Statement: All states require a property disclosure statement; however, for “buyer beware” states, the seller isn’t legally liable for the information provided. The property disclosure statement discloses any defects or problems that the seller has knowledge of - for example, foundation issues, roof problems, environmental hazards, recent repairs, or boundary disputes.

Sellers should review local, state, and federal laws when entering into a purchase agreement to ensure compliance with all applicable disclosure requirements.

Real Estate Purchase Agreement Addendums

An addendum is an addition to a contract or legal document. Addendums include additional terms and details that are incorporated into the contract but not addressed in the body of the contract itself.

Some common Real Estate Purchase Agreement Addendums include:

• Receipt for Earnest Money Addendum
• Homeowners Association Addendum
• Condominium Association Addendum
• Closing Date Extension Addendum
• Third-Party Financing Addendum
• Verification of Current Lease Agreement Addendum
• Contingency for Selling Buyer’s Home Addendum

When drafting a Real Estate Purchase Agreement, buyers and sellers can add the addendums they need to provide adequate details of all terms of the sale.

How to Terminate a Real Estate Purchase Agreement

A Real Estate Purchase Agreement usually can only be terminated if either the buyer or seller breaches the contract or fails to perform according to the terms of the Agreement. Additionally, it can be terminated if certain conditions stated in the Purchase Agreement are not met.

In some cases, buyers will include a term giving them the option to terminate the Lease for any reason or no reason after the Lease is executed. When this type of clause is added, there’s usually a date by which the buyer must exercise this right to terminate. In addition, sellers usually will negotiate a termination fee when granting buyers this option.

The most common reasons for Real Estate Purchase Agreements to be terminated are:

• Failure to pay earnest money or other required deposits
• Cancellation during the inspection period
• Failure to meet state contingencies - namely, financing or sale of current home contingencies
• Mutual agreement of the parties

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Related Forms & Templates

• Quitclaim Deed: Use this quitclaim deed to quickly and informally transfer real estate ownership rights from one party to another.
• Land Lease Agreement: Customize this Land Lease Agreement to outline all terms under which a Tenant Leases a plot of Land from a Landlord.
• Residential Lease Agreement: Customize this Lease Agreement to cover all terms of your rental relationship. Guaranteed to comply with the Lease laws of your state.
• Move-In/Move-Out Walkthrough Checklist: Use this customizable form to document the condition of a rental property at the start of a Tenant’s Lease term. This is vital if you collect a security deposit.
• Security Deposit Receipt & Disclosure: Use this form to document receipt of a security deposit and to properly disclose how the security deposit will be held.

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