Cover Sheet — Purchase Agreement
The Two Step Process
T
he two-step process for creating a contract of sale is a respected procedure. The "Purchase
Agreement" form following this cover sheet is the first of two steps to a real estate contract.
Once the agreed terms are documented in your Purchase Agreement, this form is then used
by the seller's attorney to prepare a full-fledged "Contract for Sale of Real Estate." This process is
ideally suited to by-owner transactions. A little background will help you understand why.
Real estate agents typically use fill-in-the-blanks, one-step contract forms. Very few of these forms
have attorney approval clauses. Once signed, they cannot be changed without an agreed
amendment to the contract. This inflexibility is never desirable in our estimation, but even less so
in the by-owner situation. Many stores and internet sources offer "one-step" form contracts.
Typically these "off-the-shelf" forms include many optional paragraphs and check boxes. A layman
would have difficulty with most of them. The language is not dependable and we strongly
discourage using those forms.
The Purchase Agreement form at page 16 is especially appropriate when an agent represents a
buyer but no agent represents a seller. This form protects everyone. It requires the seller's attorney
to prepare the contract within five business days, and permits the other attorney to approve it
before it is signed. This assures you of receiving a legally sufficient, solid contract, which provides
peace of mind. When you are buying or selling a home, not a television, this just makes good
sense.
If an agent insists on using the agent's form, you have every right to ask for time to have your
attorney review the agent's form before you sign it. An agent should respect this request without
hesitation or pressure.
Observe the Obvious
Buyers should personally view a prospective home as thoroughly as possible before making an
offer. Look at windows for broken panes of glass. Open and shut the doors to see if they operate
properly. Turn faucets on and off, watch for drips and look for signs of moisture. Don’t stick your
head in the sand. If you ignore obvious defects and later demand their repair, expect to lose the
argument. Some people feel that kind of gamesmanship (ignoring the obvious and later
demanding repair of those defects) is a good tactic. It’s not, and we strongly discourage the
practice. Make a list of things you see wrong. If you want the seller to repair things you see, then
condition your offer on the seller's agreement to fix specified defects.
14
Overview — Purchase Agreement Form
A few key ingredients in the Purchase Agreement form should be recognized. Turn to the form and
take a few minutes to read it. You will see that it is straightforward and protective of both buyer
and seller, no tricks.
Each numbered section deals with a distinct issue, such as financing, inspections and personal
property which will remain in the home. You can easily find what you’re looking for using the
primary numbers. Just step through each item, complete the blanks, answer yes/no questions, and
check boxes which apply. Dates should never be left blank. It is difficult to make a mistake. Leave
the original blank in the event another copy is required later. Make extra copies.
The PA form includes your agreement to use contract terms commonly followed by real estate
professionals in the community where the property is located. The reason is simple and important.
There are hundreds of variations in standard contract language. However, local Realtor®
associations and bar associations usually have a common form widely accepted in the
community. If someone attempts to use a different form, disagreement is likely. Local customs also
vary. In some places, for example, the buyer pays for title insurance and termite inspections, while
in other places the seller bears those expenses. Despite local custom, in reality these things are
negotiable by everyone. The suggested Purchase Agreement accommodates these considerations
quite nicely by stipulating you will use the form contracts these local professionals use, but the
contract will be prepared by your attorney, to protect both the seller and the buyer.
Line items in the Purchase Agreement include parenthetical remarks to help clarify the information
sought. You will see several check boxes for miscellaneous terms and conditions. Check any
applicable boxes and leave the others unchecked. The attorney preparing the contract will use
language commonly honored in that community as applied to your checked boxes. Remember,
if your attorney is not the one who prepares the contract, she will have an opportunity to approve
the contract before you sign it.
If a buyer is represented by an agent, then before negotiating with the buyer you should resolve
the issue of the commission to be paid the agent. This subject is thoroughly described in
"Commissions on By-Owner Sales," at page 21.
The Purchase Agreement at page 16 includes a financing contingency clause (paragraph 14),
which identifies the buyer’s loan terms. Even if the buyer is pre-approved for financing, this
contingency should still be included and the blanks filled in. Pre-approval is not a valid reason to
delete the financing contingency. If the buyer must sell his own home to buy yours, a "first right"
clause should be included, so just check the box in paragraph 14.f. of the Purchase Agreement.
Much more information on the details to be considered before and during the negotiation process
and the completion of this purchase agreement is covered beginning on page 20.
15
©
Purchase Agreement
Do not use this document as your final real estate contract. Deliver this document to an attorney to prepare your contract. This Purchase
Agreement does not constitute a real estate contract: it is an agreement to make a real estate contract. Any change during negotiation to any
printed or handwritten part of this agreement must be initialed by both parties. Failure to initial all changes may void this agreement.
Buyer and Seller hereby stipulate and agree that this Purchase Agreement is a contract to make a contract for sale of this real estate. We agree
to enter into a Contract for Sale of Real Estate on the following described terms.
1. Attorney Review The seller shall, within two business days of this Agreement, deliver this Agreement to the seller’s attorney to prepare a
Contract for Sale of real estate based on the terms we agree to in this Purchase Agreement. Not more than five business days after the date this
Purchase Agreement is signed by the last of us to sign it, the Contract of Sale shall be delivered to the buyer’s attorney or, if the buyer has not
identified an attorney, then to the buyer. The attorney for the buyer or the buyer may in good faith seek proposed modifications to the Contract
of Sale. Written disapproval or request for modifications must be delivered to seller’s attorney within 3 business days following delivery of the
Contract for Sale to the buyer’s attorney or, if there is no buyer's attorney, the buyer. However, the primary terms, spirit and intent of this
Agreement may not be circumvented by either party: attorney review shall be governed by the common law covenant of good faith and fair
dealing. If disapproval or a request for modification is not timely served, then the right to seek modification expires at 5:00PM on the 3rd business
day following delivery of the Contract for Sale to the buyer's attorney or the buyer, as the case may be, and the buyer shall then immediately sign
the Contract for Sale and deliver it to the seller.
2. Form of contract All terms of this Purchase Agreement shall be subject to the standard language pertaining to these terms as exists in the
standard contract form honored in this community by the local bar association or board of Realtors® association, whichever our attorneys agree
to use, and shall be refined to language acceptable to the seller, the buyer, and our attorneys, except that anything in this agreement which is
inconsistent with that form contract shall prevail.
3. Real Estate Sold: Address _____________________________________________________________________ Unit ______________________
City ______________________________________________ State ____________ Zip code __________________________
4. Taxes and title evidence: Seller must deliver clear title on the day of closing. All tax proration and evidence of title provisions of the contract
form used by our attorneys shall apply in accord with custom in the community. The parties understand such provisions require that seller shall
pay all real estate taxes accrued and unpaid through the day before closing, by credit to buyer against the purchase price on the day of closing.
5. The cost of title evidence shall be paid on the day of closing by (check one) G Seller OR G Buyer OR G whichever party customarily pays
this expense in the community of the property sold.
6. Surveys If it is customary in this community for a boundary survey to be provided to buyer’s lender or title insurer, the parties agree a survey
will be provided at the expense of either the seller or buyer, whichever customarily pays for such boundary survey in this community. If a boundary
survey is not customarily provided in residential sales in this community, no survey need be provided by either party.
7. Other Prorations All other proration provisions of the contract form used by our attorneys shall apply to this sale. Other pro-ratable items shall
include, without limitation, rents from tenants, utilities paid in advance, and homeowner and condominium association dues and fees. All tenant
security deposits (if any) shall be remitted to buyer at closing, in trust for the tenants, subject to existing lease terms.
8.Earnest money deposit The buyer agrees to deposit earnest money with this Purchase Agreement in the amount of $ ______________________
on the date of acceptance of buyer's offer to purchase seller's real estate. We agree the earnest money will be deposited and held in escrow by
the seller’s attorney or a licensed broker, and will be deducted from the sale price and paid to seller at closing. Absent timely, good faith
disapproval by buyer or buyer's attorney of the proposed contract or timely, good faith request by the buyer or buyer's attorney for modification
of the proposed contract to be prepared by seller's attorney, if buyer fails to sign and deliver the proposed contract to seller, then the earnest
money shall be forfeited to seller as liquidated damages and this Agreement shall be void. If written Agreement on timely, proposed good faith
modifications to the contract cannot be reached within 3 business days after request for modification, this Agreement shall be void and the
earnest money shall be refunded to the buyer.
9. Other applicable terms The parties agree that each of these items which is checked shall apply to this sale. Subject to paragraph 2 "Form of
Contract" above, each of the items checked here shall be included in our contract as a material condition of this sale: (check each applicable
box) “-Property sold is a condominium. “-This agreement is contingent on cancellation of a prior pending real estate contract signed by
“-seller and/or “-Buyer.
10. Applies to New Construction Only Buyer’s and Seller’s obligations are contingent upon mutually agreeable additional terms and conditions
to be included in the Contract for Sale of Real Estate providing for a 1 year builders warranty acceptable to both parties. Builder agrees builder
will comply with all requirements necessary to deliver full ALTA owner's title insurance coverage and indemnify and hold buyer harmless from
all potential subcontractor and materialmen liens for labor and materials relevant to the construction.
11
1st price offered
Advertised price
Sale price $
$
1st counter offer
$
2nd price offered
$
Enter final agreed price
$
Each entry above should be crossed out and initialed by both seller and buyer, except the final agreed sale price Note: The agreed sale
price will be presumed to include the total of all amounts (if any) entered in 14.c., 14.d. or 14.g. below.
12. Deadlines Any specified deadline which falls on a Saturday, Sunday or U.S. federal holiday shall be extended to the next business day.
All deadlines establish the final date for delivery of the written request or notice which pertains and applies to the subject of that deadline.
The party with the burden to meet each deadline must deliver the written notice or request to the other party on or before that deadline. If
the required notice or request is not timely delivered, the relevant right or contingency is forfeited or waived. Any request for extension of a
deadline must be made in writing before that deadline expires. Extensions of time will not be enforceable unless granted in writing.
a. Possession and closing date
|
c. "Inspection" deadline date
|
b. Financing application |
d. Financing approval|
(recommended not less than 14 days
before closing)
within 5 days of acceptance of buyer's offer
30 days after acceptance of buyer's offer or 10
days before closing, whichever first occurs
13. Conditions and Limitations for Inspections
a. Wood destroying insects: A termite and other wood destroying insect inspection and report is
required:
YES
NO
|
|
b. Check one: G Seller OR G Buyer shall arrange and pay for the termite/wood destroying insect inspection and report.
c. At buyer's expense, buyer may conduct any inspections buyer chooses to conduct. If state licensing is required of any inspector chosen by
buyer, the inspector's license number must be provided to seller. All inspectors must be qualified to conduct inspections and render
opinions with respect to any item which is the subject of a repair request. No inspections may be conducted by buyer until a full contract of
sale has been signed by and delivered to both seller and buyer as required by this purchase agreement.
d.The buyer may not request repair of a condition following buyer's inspections if that condition is at this time (a) readily observable and
obvious or (b) disclosed in a writing signed by the buyer unless the seller has agreed to repair that condition in writing either in this
purchase agreement or in a separate writing specifically supplementing this Agreement.
e. Mark this item "YES" or "NO." Buyer shall have the right to ask the seller to repair or remedy
discovered conditions (subject to conditions of the standard contract form used by our attorneys).
YES
NO
|
|
f. Requests for repairs and remediation must be in made writing and must be accompanied by inspection reports. All requests for repairs or
remediation following any inspection of the premises must be timely submitted in writing to the seller and also to the seller’s attorney if the
seller is represented by an attorney. The buyer's agent may not negotiate repairs directly with the seller if the seller has an agent or an
attorney.
14.a. Financing contingency If any financing terms are entered below this paragraph, seller and buyer understand and agree that buyer's
obligation to purchase this property is contingent upon buyer receiving final loan approval from buyer's lender on or before the financing
deadline date in 12.d. above. Pre qualification or pre approval of financing is NOT final loan approval. The property sold must appraise
for the agreed sale price in paragraph 11 above as a material condition of financing, if financing is required.
Percentage of sale price which
|
will be borrowed
Check one:
Check one:
Maximum rate:
%
³ Conventional loan
³ Fixed rate
(examples: 80%, 90%, 95%)
³ VA loan
Number of years over which loan
will be repaid (5, 10, 15, 20, 25,
30 year loan?)
|
³FHA Loan
³ Adjustable rate
³ Other type of loan
³ Prevailing market rate
³ Insert the maximum rate here if the buyer wants a limit on the rate
b. If buyer will pay “points” on his loan, enter that % here (example: 1%, 2%) (this means % of buyer’s total loan):
%
c. If seller agrees to pay “points” on buyer’s loan, enter that % of buyer’s loan here (this means % of buyer’s total loan):
%
d. Enter the amount of buyer’s closing costs and prepaid expenses which seller will pay
(most commonly $0.00 but negotiable)
$
e. Check box if this applies: “- Interim (“Bridge loan”) financing on buyer's existing home will be required by Buyer.
f. Check this box if this applies (but not if 14.e. is checked): “- This agreement is contingent on the sale of Buyer’s real estate. If this box
is checked, then Seller has the right to continue to offer seller’s real estate to others, subject to a “first right” in favor of the buyer permitting
buyer to waive buyer’s sale contingency within 24 hours of written notice to buyer from seller of a subsequent agreeable offer to purchase.
g. If other financing conditions will apply — such as a government grant for buyer, a seller-paid contribution to a down payment
assistance foundation, such as the Ameridream program, or some other condition — enter that information in the following space:
15. Lead hazards
a. Was the dwelling built after 1977?
b. If the answer to 15a. is “No,” does the buyer waive the right to a lead risk inspection:
YES|
YES|
NO
|
NO
|
c. If 15a. is “No,” does the Buyer acknowledge receipt of the seller’s signed lead hazard disclosure
AND the federal lead information pamphlet “Protect Your Family From Lead in Your Home”
YES|
NO
|
d. If 15c. is “No,” the parties agree to adopt the standard lead risk assessment and lead inspection provisions of the contract form used by
our attorneys.
16. Fixtures and Personal Property All attached fixtures and structural components as well as the following items are included in the
purchase price and shall remain with the home at no additional cost to seller unless specified otherwise herein. Each item of personal
property remaining must be in operating condition by the date of closing. No item of personal property remaining shall be considered
defective if it performs the basic function for which intended and does not pose a danger if used as intended.
“ Refrigerator
“ Oven/range/stove
“ Microwave
“ Dishwasher
“ Washer
“ Dryer
“ Satellite dish and system
“ All window treatments & hardware
“ Window air conditioner(s) #
“ Fireplace screen(s)/door(s)/grate(s)
“ Fireplace gas logs
“ Outdoor Shed
“ Attached Gas Grill
“ Existing Light Fixtures
“ All existing remote control units for garage door
openers
Other items remaining (enter "none" if no other item of personal property will remain with the home):
Fixtures which will be removed by agreement(enter anything attached to real estate which seller is removing)(enter "none" if no fixtures will
be removed):
17. Specify any and all additional terms. Use a signed continuation sheet if necessary. All continuations must also be signed by both seller
and buyer:
Buyer printed name:
Buyer printed name:
Signature:
Signature:
Date
Date
Address:
Address:
City, State, Zip:
City, State, Zip:
Buyer's lender º
Buyer's Loan officer
Date of acceptance by Seller:
º
³ Date of acceptance by seller must be competed.
º
Seller printed name:
Seller printed name:
Signature:
Signature:
Date
Date
Address:
Address:
City, State, Zip:
City, State, Zip:
Seller's Attorney
Buyer's Attorney
Name:
Name:
Address:
Address:
City, State Zip
City, State Zip
Phone:
Email:
Phone:
Email:
ANY CHANGE DURING NEGOTIATION TO ANY PRINTED OR HANDWRITTEN PART OF THIS AGREEMENT MUST BE INITIALED BY
BOTH PARTIES. FAILURE TO INITIAL ALL CHANGES MAY VOID THIS AGREEMENT.