Purchase agreement is a legal document that outlines the terms and conditions connected with a transaction that includes the act of purchasing goods or services. Generally, the terms of a purchase agreement involve identifying specific conditions that both the buyer and the seller agree to meet and perform as part of the transaction.
It should include all of the terms of the sale, including the price, the terms of payment, the type of deed to be given, the date of possession, provisions for the furnishing of title insurance, proration of real estate taxes, what happens if the property is damaged by fire or vandalism before closing, any other matters which is important to the seller or the buyer. This may include various contingencies, such as financing, inspections, the sale of an existing residence, etc. You may also want to provide for what happens with window treatments, appliances, and sometimes even some of the furniture.
Every purchase agreement should include:
- Names of the Buyer and Seller
- Addresses of the Buyer and Seller
- Address of the property
- Description of the property
- Date the property was acquired
- Additional property included, fixtures, stand along property, etc.
- Condition of the property
- Termite inspection
- Purchase price
- Amount of deposit, if applicable
- Details of closing
- Any information the Seller needs to disclose to the Buyer
One of the most common areas where a purchase agreement is routinely used is within the real estate industry. A real estate purchase agreement serves the purpose of creating a binding contract between a buyer and the seller. The text of the agreement will specify the conditions that the buyer must meet before the seller with move forward with the sale of the property. At the same time, the seller also makes specific covenants to the buyer that must be met in order for the transaction to be completed. It is only after both the buyer and the seller have fully complied with the terms and conditions of the purchase agreement that the title is transferred and the buyer assumes ownership of the property.
The Purchase Agreement is known by various names, such as Contract of Purchase, Sales Contract, Contract For Purchase, Sales Agreement, Agreement of Sale, Purchase Contract, and many others. The different names used vary according to custom, location or jurisdiction.
Remember to never sign a purchase agreement until after it is reviewed by your attorney. Once you sign the contract, there is not much that can be done to change the contract afterwards.