Purchase and Sale Agreement
A purchase and sale (P&S) agreement is a document completed by either an attorney or real estate agent that represents a mutual acceptance of an offer. The following should always be included in a P&S agreement:
- Final Sale Price: The P&S agreement will list the "final" sale price however this term is not necessarily final. It is the original purchase price that is listed. The purchase price may change during negotiations prior to the closing date.
- Earnest Money Details: An earnest money deposit is money attached by the buyer to an offer to purchase real estate. The buyer wants the seller to know that they are serious about their offer. The P&S will include the dollar amount of the earnest money and instructions for making the deposit. Once there is a mutual agreement, the earnest money is held in trust by a third party. Upon the real estate closing, the earnest money is often credited to the buyer and held against their amount due in the transaction. However, if the contract fails to close, the earnest money is held by the third party until the buyer and seller can reach an agreement as to who shall receive the money. If you have a conflict over earnest money deposit, please call Sutton Law & Associates @ 859-916-5882.
- Closing Date: The closing date may change, even at the last minute, due to various unforeseen events, such as your financial paperwork taking longer than expected.
- Title Insurance Company: As a buyer, you always have the right to select your title company. It is advisable to have an attorney handle the title work including the title exam and closing due to any issue of title that may arise.
- Title Condition: The P&S will include an agreement that the seller will provide a clear or marketable title of ownership to the buyer. There are various types of title and their differences can be significant. If you have a question about title and what each type means, please call us immediately!
- Contingencies: Contingencies are conditions that must be met in order for the real estate purchase to be completed. If one of these conditions is not met, the sale may be canceled by the seller or buyer. Contingencies include inspection contingency (after a home inspection, the buyer may renegotiate the contract if any problems with the home exist); financing contingency (If the buyer is unable to obtained mortgage approval, after a good-faith effort, the buyer may cancel the contract); title contingency (the a title exam determines a serious defect in title, the buyer may cancel the contract; appraisal contingency (the buyer may cancel the contract if the home's appraisal reveals that the home is worth less than the buyer intended to borrow and pay for); and home sale contingency (the contract is contingent on the buyer seller their current home within a specified period of time.)
- Addendums: If there are any additional requests from the buyer to the seller that is not included in the P&S agreement, such as an agreement that the seller pay closing costs or the inclusion of appliances or furniture, they are added to the contract through an addendum or rider.
Any purchase of property, either commercial or residential, is a significant purchase that involves multiple parties and changing terms. The attorneys at Sutton Law & Associates can guide you to compose a proper Purchase and Sale Agreement.