There’s a lot of paperwork involved when it comes to buying a home. Understanding what you’re filling out and signing is especially important because of the magnitude of the purchase. The purchase and sale agreement is a main document you’ll come across in the home buying process. In this blog, we’ll cover what the purchase and sale agreement is and everything you need to know to move forward confidently.
What Is A Purchase And Sale Agreement?
A purchase and sale agreement, or PSA, is a document that will be produced and signed after the buyer and seller agree on the price and terms of their real estate transaction. Typically a real estate agent or attorney will be the one to prepare a purchase and sale agreement.
The document addresses a variety of terms including the agreed-upon purchase price, personal items to remain on the property, closing conditions, earnest money, and other financial contingencies
What Is Included In A Purchase And Sale Agreement?
Here are some items you will typically find in a purchase and sale agreement.
1) Purchase Price
The document will establish the sale price that the buyer and seller have agreed on. However, this can be changed or negotiated later on.
2) Earnest Money Details
Earnest money, also known as the good faith deposit, is what the buyer puts down to solidify the sincerity of the PSA. The agreement outlines how much the deposit will be, information about due diligence, a deadline, and any contingencies.
3) Closing Date
The purchase and sale agreement states the planned closing date, which sets the sale process in motion. A home inspection, a title search, an appraisal, and mortgage underwriting all things need to occur before the closing date.
4) Title Insurance and Escrow Company Details
The document contains information on the title and escrow company that you’re using, including the address of the company and the names of the agents involved.
5) Title Condition
The PSA contains the information on how the property title is transferred, including who pays for the title policy, how the title is insured, and how the title is conveyed.
Contingencies are the reasons a buyer or sellers can legally back out of the transaction without losing money.
Addendums are additional documents added onto the standard PSA. They contain requests from the buyer to the seller to help keep the sale on track.
Are Purchase And Sale Agreements Legally Binding?
PSAs are legally binding contracts. If either the buyer or the seller does not uphold the terms of the agreement, the other party has the right to take legal action. It’s important to note that signing a PSA does not indicate the finalization of a home sale.
DaMore Real Estate Law Services
Buying or selling a home is a significant undertaking. Our team ensures that everything moves as smoothly as possible, from checking the title is free and clear to the exchange of keys on closing day. Request a consultation and one of our skilled attorneys will be happy to discuss your real estate closing.