Understanding the Critical Elements of Real Estate Purchase Agreements

When you are purchasing a real estate property, one of the legal documents that you and the seller must have to prepare is the purchase agreement. This legal document is also known by other names such as “sales agreement,” “contract of purchase,” “agreement of sale” and “sales agreement.” The reference generally depends on the location and jurisdiction although the same principles apply.

The purchase agreement is a sales contract between the seller and buyer of a specified property of commercial value which outlines the terms and conditions of a purchase. This legal document shall define the provisions that have to be followed by both contracting parties for the transaction to proceed.

These shall include, among others the purchase price, description of the property, amount of earnest payment, time that the offer remains open and mortgage contingency clause.

In general terms, the purchase agreements are designed to protect the interest of the buyer. For instance, you may include in the terms and conditions of the sales agreement provisions that pertain to the commitment of the seller to make the necessary repairs and inclusion of specific home fixtures as part of the purchase. Buyers can also indicate in clear terms the timeline and conditions by which he can take possession of the real estate property.

Further, the real estate purchase agreement must also define the conditions where either of the contracting party can legally back out of the transaction. The most common grounds under which both parties may decide to rescind an existing purchase agreement are legal issues and financing complications. Buyers must be properly informed and advised of the legal grounds where a seller can call off an agreement as these will define the basis by which he can seek claims for damages if the transaction falls through.

Real estate attorneys as well as agents can help you prepare a purchase agreement. However, some agents may advise that you adopt a generic real estate agreement. It is crucial for you to carefully decide whether such standard form of the purchase agreement is sufficient to protect your interest in consideration of the prevailing circumstances of the real estate transaction. As much as possible, seek the advice of a lawyer to ensure that you have an air-tight sales contract.

How can you determine whether real estate purchase agreement is legally binding or not? Sadly, this type of legal document can be confusing and we have to seek legal counsel in order for us to understand all the intricacies of the terms of the contract. Unless you have some background in contract law, you will definitely be courting disaster and possible complication later if you decide to proceed with the preparation of the sales agreement without a professional legal counsel. Thus, it is extremely essential that you don’t overly rely on cheap and free real estate forms that are available online as most, if not all, will not be able to provide you with sufficient protection.

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