Real Estate Term of the Day: Contract for Purchase

Real Estate Term of the Day: Contract for Purchase

CONTRACT FOR PURCHASE – an agreement between competent parties to do or not to do certain things for a consideration (Barron’s Dictionary of Real Estate Terms)

Also known as a: contract, contract of sale, agreement of sale, purchase contract, purchase agreement

The contract for purchase will generally include*:

  • The address and the legal description of the property
  • Sales price
  • Payment terms of the agreed upon sales price, such as: all cash or subject to the buyer obtaining a mortgage for a given amount
  • Amount of earnest money deposit accompanying the offer (i.e. personal check, cashiers check, cash or promissory note), who holds the earnest money and how it will be returned to the buyer if the contract is rightly terminated or kept as damages by the seller if the buyer is in default
  • Seller concessions, if any given to the buyer
  • Seller’s promise to provide clear title & ownership of the property
  • Target date for closing (the actual sale)
  • Possession date (when the seller provides possession of the property to the buyer)
  • Provision that the buyer has the right to do their own inspection(s) of the property before completing the sale
  • Other conditions or contingency clauses
  • Method by which real estate taxes, HOA dues, rents, fuel, water bills and utilities payments are to be adjusted (prorated) between buyer and seller
  • Provisions for who will pay for title insurance, surveys, appraisals, inspections, gathering community documents, closing services fees, HOA transfer fees, etc
  • Type of deed given
  • Other requirements which may include disclosure of specific environmental hazards
  • Provision that the buyer has the right to do a final walk through of the property before closing
  • Fixtures and other personal property that will be included with the sale such as kitchen appliances, washer/dryer, etc
  • Items that are excluded from the sale of the property
  • How the buyer(s) will take title of the property
  • Dates & deadlines that both buyer and seller oblige to so that the contract can successfully complete

See also: Contract to Buy and Sell Real Estate (Residential)

Have a detailed question about the contract for purchase?  Contact me today and we are happy to answer your questions!

*NOTE: the above list represents some of the items found in a normal contract for purchase.  However, this there may be additional items that you encounter that are not included in this list.

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