A purchase agreement contains terms, requirements and prices for the home you wish to purchase.
There are many sections filled with information in such an agreement, but here are six basic elements you should expect to find in the contract.
1. Parties and price
The first part of any purchase agreement describes the property, gives its legal address and states the offered price. As parties to the contract, the buyer and seller must be of legal age and mentally competent. As the buyer, you must use this section to state how you will pay for the property; for example, you might pay with cash or enter into a mortgage.
2. Closing date and costs
The purchase agreement will list the closing date and any associated costs, such as payment to the title company. Once the buyer and seller sign this agreement, they must submit any changes in writing.
3. Items included or excluded
This section lists items to include or exclude in the sale. For instance, the seller might want to take the window treatments but agrees to leave the kitchen appliances for the buyer.
Failure to disclose information that may pose safety concerns for the buyer or that might affect the future value of the property is illegal. Termite damage is such an omission.
A common contingency to include in the agreement is that you must sell your current residence before buying this property. Another contingency is that you can pull out of the contract if the property fails inspection.
6. Expiration and default
The purchase agreement must state exactly when your offer will expire if the seller does not accept it. Once the seller accepts the terms, the agreement becomes legally binding. Default occurs if either party to the agreement fails to uphold the terms. If one party defaults, the other may initiate litigation.