A purchase and sale agreement is a contract between a buyer and seller that outlines the terms of a real estate transaction. In order for a purchase and sale agreement to be binding, both the buyer and seller must sign the contract. The origins of the modern-day residential real estate purchase and sale contract date back to the early 1900s.
What Are the Components of a Florida Real Estate Contract?
The purchase and sale contract contains all of the necessary terms and conditions of the transaction including:
- Disclosures
- Closing date
- Purchase price
- The contract must be in writing
- Names of parties to the contract
- Special terms and conditions (if any exist)
- Address and legal description of the property being sold/purchased
- Signatures and initials of buyers and sellers in all relevant sections
- Contingencies (if applicable; i.e. financing, inspection)
- Acceptance and counteroffer period
- Default/dispute resolution
The Importance of a Purchase and Sale Agreement
The importance of a residential real estate purchase and sale agreement is that it sets the terms of the sale of the property. It’s important to review the purchase and sale agreement carefully before signing so that you understand all of the terms and are comfortable with them.
It’s important to have a purchase and sale agreement in place because it protects both the buyer and the seller. This document establishes what is being sold and for how much, as well as any conditions that must be met before the sale can be finalized.
For the buyer, it establishes what they are buying and for how much. It also outlines the contingencies that must be met in order for the sale to go through.
For the seller, it ensures that they are getting paid the agreed-upon purchase price and that the buyer is committed to going through with the purchase.
What Are the Different Types of Residential Real Estate Contracts?
- Purchase and sale agreement
- Lease (with the option to purchase)
- Contracts for deed
- Power of attorney
Each type of contract has its own set of terms and conditions, so it’s important that you understand what you’re agreeing to before signing anything. A purchase and sale agreement is the most common type of contract used when buying or selling a home.
A lease with the option to purchase is another popular type of contract, especially for those who are looking to buy a home but are not yet ready to commit. This contract gives you the right to lease the property for a set period of time, usually one to three years, with the option to purchase it at the end of the lease.
There are also land contracts, which are often used when the buyer does not yet have the full purchase price of the property. With a land contract, the buyer makes regular payments to the seller until the purchase price is paid in full.
Whatever type of contract you’re using, be sure to read it carefully and ask your real estate agent or lawyer any questions you may have before signing. When you’re ready to purchase a home, you’ll likely enter into a contract with the seller.
The purchase contract will also include any contingencies that must be met in order for the sale to go through. For example, many purchase contracts are contingent on the buyer obtaining financing within a certain time frame.
Once both parties have signed the purchase contract, they are legally obligated to follow through with the sale. If the buyer backs out of the sale without meeting their contractual obligations, they may be sued by the seller.
What Are the Contingencies of a Residential Real Estate Contract?
The contingencies of a residential real estate contract are the conditions that must be met in order for the sale to go through. Common contingencies include:
- The buyer obtaining financing
- The property passed a home inspection
- The buyer selling their current home
What Happens If One Party Doesn’t Uphold Their End of the Contract?
If one party does not uphold their end of the purchase contract, they may be sued by the other party. For example, if the buyer backs out of the sale without meeting their contractual obligations, the seller may sue them for breach of contract.
If you’re a buyer, you’ll want to make sure there’s a clause that allows you to back out of the sale if the home doesn’t pass a home inspection. You’ll also want to make sure the purchase price is reflected accurately in the contract.
If you’re a seller, you’ll want to make sure there’s a clause that allows you to keep the earnest money deposit if the buyer backs out of the sale. You should also verify that the purchase price is accurate and that all repairs noted in the contract have been made.
It’s important to have an attorney review any purchase contract before you sign it. They can help explain your rights and obligations under the agreement and spot any potential problems.
If you’re buying or selling a home, a purchase contract is an essential step in the process. By understanding what’s included in these agreements, you can help protect your rights and avoid any potential problems.
Canceling a Real Estate Contract
To cancel a purchase contract, you’ll need to have a valid reason for doing so. You may be able to cancel if the seller breaches the contract if you’re unable to get financing.
If you’re a buyer, you should be aware that most purchase contracts include what’s called a due diligence clause. This clause gives you a set period of time-usually 10-14 days-to have the home inspected and appraised. If there are any problems with the property, you can cancel the contract and get your earnest money deposit back.
As a buyer, you also have the right to cancel the contract if you’re unable to get financing. If your loan is denied or the interest rate is too high, you can walk away.
What Are the Florida Laws and Regulations for a Purchase and Sale Agreement?
The Florida Laws and Regulations for purchase and sale agreements are as follows:
- All purchase and sale agreements must be in writing.
- The agreement must state the names of the parties involved, as well as the address, legal description, and purchase price of the property.
- The contract must be signed by both parties.
- Once the contract is signed, it becomes a legally binding document.
- If either party breaches the contract, they may be held liable for damages.
When it comes to purchasing and sale agreements, you should avoid putting anything in the contract that could be construed as an attempt to waive your rights under Florida law.
For example, you should not agree to waive your right to a home inspection or your right to cancel the contract within a certain number of days. You also should not agree to purchase the property “as is” without any warranties from the seller.
If you discover problems with the property after the contract is signed, you should consult with an experienced real estate attorney to discuss your options. You may have grounds to rescind the contract or seek damages from the seller for any hidden defects that were not disclosed before you entered into the agreement.
The purchase and sale agreement is signed by both parties before the property is transferred.
A deed, on the other hand, is a legal document that transfers ownership of property from one person to another.
Once the purchase and sale agreement has been signed by both parties, the deed is then prepared and signed by the seller. The deed is then recorded with the county clerk’s office, which officially transfers ownership of the property. While both documents are important in a real estate transaction, they serve different purposes.
What Happens After I Sign a Florida Real Estate Contract?
Once both parties have signed the purchase and sale agreement, they are legally obligated to adhere to the terms of the contract. If either party fails to do so, they may be held liable for damages.
It is important to note that while purchase and sale agreements are typically used in Florida real estate transactions, they are not required by law. In some cases, buyers and sellers may choose to use a deed instead of a purchase and sale agreement.
However, purchase and sale agreements offer several benefits over deeds, including:
- They provide more flexibility and can be customized to fit the needs of the parties involved.
- They offer more protection to both buyers and sellers.
- They are typically less expensive than deeds.
- They are simpler to understand and interpret.
The party who is selling the real estate contract is responsible for providing accurate and up-to-date information about the property. This includes disclosing any known defects or problems with the property. The seller is also responsible for ensuring that the property meets all local zoning requirements and building codes.
The buyer is responsible for paying the purchase price of the property as specified in the purchase and sale agreement. The buyer is also responsible for performing any necessary due diligence on the property, such as getting a home inspection.
If one party breaches the purchase and sale agreement, the other party may be entitled to damages. The damages will depend on the specific language of the purchase and sale agreement.
A few common contingencies in a purchase and sale agreement include:
- The property must pass a home inspection
- The buyer must obtain financing
- The property must appraise for a certain value
- The seller must provide a clear title to the property
These are just a few of the many possible contingencies that can be included in a purchase and sale agreement.
How Do Title & Escrow Companies Work with a Purchase and Sale Agreement?
A title company will work with the purchase and sale agreement to ensure that the buyer receives clear title to the property. The title company will also prepare all of the necessary paperwork for the transfer of ownership.
An escrow company may also be involved in the transaction. The escrow company will hold any earnest money deposits made by the buyer. The escrow company will also disburse all funds at closing.
If you have any questions about a purchase and sale agreement, or any other aspect of buying a home, you should consult with an experienced real estate agent or attorney. Galaxy Title & Escrow is a full-service title & escrow company willing to meet your needs. If you’re looking for quality services in Fort Lauderdale, reach out to our office today!
Mitchell has been a licensed attorney since 2014 and has practiced in both the transactional and litigation fields of law. His experience allows him to approach every transaction with a depth of knowledge and practical experience most attorneys do not possess. Mitchell prides himself on providing top notch service to his clients.