What is a Real Estate Purchase and Sale Agreement?

A real estate purchase and sale agreement is a relatively short and straightforward contract that you can expect to sign if you are either buying or selling a piece of property. While corporate level versions of this contract can be quite laborious, ones designed for individual home sales from one private citizen to another are usually only a few pages in length. Let’s take a look at what one of these agreements looks like so that when you are asked to sign one, you’ll know your way around.

The first part of the typical real estate purchase and sale agreement outlines the names of the buyers and sellers and usually identifies them by social security number. This section also states, in plain language, the intent of the parties involved to buy and sell particular pieces of property and then the address of the piece of property is then listed. A legal description of that piece of property (single resident home, apartment building, etc) is then listed to clarify exactly what type of property is changing hands. There is almost always a section that is used to outline any personal property, like furnishings, that are being included in the sale. It is very important that if you are buying or selling a furnished piece of property that you list every single personal belonging here, even if it is something small so there are no legal questions later on.

The next part of the typical real estate purchase and sale agreement lays out the financial terms of the agreement. There will be spaces to show the amount of the initial deposit put on the piece of property, the amount of cash that is changing hands at the time of the contract signing, any existing costs or fees associated with the property that is being bought, like liens or any debt, any new loans being taken out by the buyer and then finally the total purchase price of the property.

The rest of the contract spells out the monetary figures listed above. For instance, section one of the agreement will talk about the deposit amount, how much it was, when it was paid and how much of it figures towards the final cost of the property. The next section will talk about the balance due to the seller and how that balance will be paid (cash, cheque, etc).

There are often additional sections added on to these types of agreements that outline the official closing date of the property and when the official title transfer will occur, as well as any damage to the property or any sort of catastrophic damage that might have happened to the property over time, such as a fire or a flood.

While the real estate business is absolutely drowning in overwrought forms and legal agreements, the real estate purchase and sale agreement is one of the most simplistic and easy to follow legal forms you’ll ever see.