Real Estate Purchase Agreement Laws

A real estate purchase agreement is a type of contract created for a residence’s purchase and sale. The agreement governs the terms of the sale and establishes the various duties, rights, and responsibilities of both the buyer and the seller.

Although each state has slightly different laws regarding real estate purchase agreements, they all require one thing: it must be in writing. According to the statute of frauds, all sales involving real property must be in writing. In other words, a home sales transaction cannot be orally agreed upon, as a court would not honor such a transaction.

Buying real estate will require several contracts with different parties, including real estate agents, loan agents, zoning officials, and housing inspectors. The real estate purchase agreement is the center of all subsidiary contracts.

To learn more about real estate purchase agreements and the types of legal issues that you should look out for when entering into such an agreement, you should consult an experienced real estate lawyer for further advice. A local real estate lawyer can offer guidance on topics that are specifically related to your matter and ensure you comply with the relevant laws in your area.

What Types of Terms Should I be Aware of in a Real Estate Purchase Agreement?

There are several important contract terms that both the buyer and seller must consider when entering into a real estate purchase agreement. Details concerning these terms may vary per state or local law, but several basic terms are covered by most real estate purchase agreements. These terms include the following:

• The date of delivery and acceptance of the property, as well as the date when the offer expires
• The closing date, any costs or requirements that must be met on the day of the closing, and how the deed and title to the property will be exchanged
• The final purchase price of the property
• How the property will be paid for, including whether a mortgage loan or a lien still sits against the property, and if there are any earnest money requirements
• The terms of the sale (e.g., what needs to happen for the sale to go through. For example, this could be the completion of specific repairs to the home)
• Requirements for inspections or appraisals, including who is responsible for paying for them and how the results will be processed
• A legal description of the property that identifies the exact location, the boundaries of the property, and whether there are any easements or bodies of water on the property. A licensed surveyor will be the professional in charge of preparing these reports.
• Other terms related to encumbrances on the property, such as mortgages, liens, escrow, property taxes, homeowners’ association fees, or homeowner’s insurance, and who is responsible for paying for them or paying off remaining balances
• Various contingency clauses may permit the buyer or seller to back out of a contract if they are triggered or not fully satisfied (e.g., a clause stating that moving forward with the sale is subject to the seller putting on a new roof, or a clause stating that the buyer can back out of the sale if they cannot find affordable financing)
• An outline of every item to be included or excluded in the home’s sale, such as structures, fixtures, and appliances (e.g., window treatments, doors, built-in kitchen appliances, etc.)
• Terms regarding what to do if one of the parties does not complete their legal obligations before the closing
• Information about the type of warranty included in the deed
• The names of the seller and the buyer, the street address of the property, and signature blocks, along with a blank space for the date the agreement is signed
• Various other disclosures, contingencies, or classifications required by the laws of the jurisdiction wherein the property is located or other terms that the buyer and seller agreed to during the negotiations stage of the process

By learning about these contract provisions before entering into a real estate purchase agreement, the parties can avoid making costly errors, providing information that might be fraudulent, and preventing any forms of miscommunication or ambiguities. The parties should consult a real estate lawyer for further guidance on drafting and reviewing real estate purchase agreements and their terms.

What Should I Do Before Entering Into a Real Estate Purchase Agreement?

The parties must prepare themselves properly before entering a real estate purchase agreement. Most real estate transactions follow a “buyer beware” standard. This means it is normally up to a buyer to inspect the property and check for defects or substandard elements in and around the home. If the buyer doesn’t insist that something be done about them, the seller will have no obligation to make any repairs.

Some additional steps that a party can take to protect themselves when it comes time to sign the contract include:

• To be sure they know what they are getting, walk the perimeter lines outlined in the legal description. This may involve hiring a second surveyor
• Hiring a certified home appraiser to confirm the value of the home
• Hiring a home inspector to investigate the home’s safety and whether any defects were overlooked or concealed.
• Interviewing neighbors or the real estate broker to provide more information about the home itself, the surrounding neighborhood, and the local community
• Hiring a lawyer to draft or review the real estate purchase agreement and any other related documents
• Asking that a deadline be extended before signing if a party will not realistically be able to meet it, such as to complete one of the actions required under a specific contingency clause or if a buyer will not be able to secure financing or sell their house in time for the closing
• Hiring a title insurance company to perform a title search and check for any potential legal issues like encumbrances or easements on the property

Do I Need a Lawyer for Help With a Real Estate Purchase Agreement?

The real estate purchase agreement is the most important document in the home sale purchase process. The terms that a buyer and a seller include in the contract can impact the entire outcome of the final sale transaction.

Therefore, if you need assistance with negotiating, drafting, modifying, or reviewing a real estate purchase agreement, it may be in your best interest to hire a local real estate lawyer for further assistance.

An experienced real estate lawyer will be able to help you with all of the tasks noted above and can guide various real estate laws and protections. If you encounter a legal issue or become involved in a dispute over the agreement, your lawyer can also provide representation in arbitration or court.

Finally, if other legal documents are connected to the home sale purchase process, your lawyer can also complete these tasks.