December 19, 2018
Getting Familiar with the Real Estate Purchase Agreement
In every residential real estate transaction, before the parties can close they must enter into a real estate purchase agreement (also sometimes referred to as a real estate contract). This is a binding document—subject to some limitations, as pointed out below—designed to protect both the buyer and seller in a given transaction. The required inclusions in these agreements differ from state to state—an agreement over a property in Florida will look a bit different from one in Rhode Island or Massachusetts—but at base, an agreement in one state shares with those in others the same fundamental purpose: It details both the duties and the responsibilities of each party to the transaction, and facilitates the process that leads to closing, when title to the property is at last transferred via changing hands of the deed.
When examining a purchase agreement, look for the following:
- Offer, acceptance, consideration (which means exchange of value: usually property in exchange for money, in this case), and legality of purpose behind the transaction. These are hallmarks of every kind of contract.
- Details about the property that is to change hands, including the property address and the agreed-upon price.
- The names of the parties to the transaction as well as their signatures.
- The closing date.
- A deadline beyond which time the offer to purchase will expire.
- Who will pay for the pre-closing procedures of inspection, appraisal, survey, title insurance, and so forth.
- The earnest money deposit amount.
- Most agreements will also contain contingencies. These are conditions that must be met by the parties for the contract to proceed, the failure of which can render the agreement void, resulting in the release of both parties from further rights and responsibilities—in other words, cancelling the contract altogether. (The inspection is a standard contingency. Once the inspection has occurred, if material issues are discovered, most agreements allow the buyer to either re-negotiate or to back out of the transaction altogether.) Once contingencies are dealt with and removed, the buyer is no longer permitted to back out of an agreement without incurring some sort of penalty for breach of contract, such as loss of their earnest money deposit.
When a purchase agreement is successful and all contingencies dealt with, a transaction moves on to the agreed-upon closing. If you’re looking for a closing attorney in Jacksonville, Florida; Rockport, Massachusetts; or Cumberland, Rhode Island, contact us to see how we can help. Topouzis & Associates, P.C., performs title searches and provides title insurance backed by multiple underwriters. We’re staffed by residential real estate specialists and ready to help avoid costly delays and to streamline residential transactions.