Real estate is probably the most important transaction you will ever make. When you are buying or selling real estate, you will have to enter a purchase agreement as part of the process. This is a legal document that sets out all the rights and obligations of the parties in the transaction.
Purchase agreement makes the property transaction process official while ensuring that there is a clear understanding between the parties involved with respect to how the sale will work and what should happen if either party fails to meet their end of the deal. To be valid, a real estate purchase agreement must contain the following essential elements.
Identities of the parties in the transaction
The sales agreement must set out the names of the parties in the purchase. While most transactions usually involve individuals, especially in residential real estate, there may be a company or an entity such as a trust that should be included in the sales agreement. The sales agreement should also indicate how the buyer, or buyers, will own the property.
Description of the property on sale
Simply having the address of the property on sale in the purchase agreement is never enough. There is a more formal or legal description by which every property in New York State is known, and this legal description must be captured in the purchase agreement for it to be valid.
Price and payment terms
The purchase agreement must also include how much the property in question is being sold for as well as any additional contract terms. This includes where the funds are coming from and how they will be paid i.e cash, mortgage or installment payment.
Closing dates and contingencies
Most often, the purchase of a property is contingent upon a number of factors such as inspection and funding. A sale cannot be completed if the buyer is not satisfied with the home inspection outcome or if they cannot raise the funds in time for the purchase. A good purchase agreement must indicate the anticipated closing date.
A purchase agreement is a critical component of the real estate transaction process. Some elements in the purchase agreement are designed to meet the legal requirements while others are meant to safeguard both the buyer and the seller.