Purchasing a home or a business is a complicated affair. There is a lot of work that goes into selling something like a house or a business and so you want to have some way of ensuring that the transaction is actually occurring. There is little more frustrating than preparing for a large sale and then having one of the parties involved start changing terms and conditions.
One way of ensuring that both parties agree to the same terms and that neither party can change them at the last minute is to use a purchase and sale agreement. This is a handy document that will lay out certain details of the transaction in concrete.
To understand this useful tool, we’re going to first look at what it is and how it works. Then we’re going to look at some common conditions, which will give us a better understanding of how people use these agreements in action. Then we’ll finish with a discussion on how you go about creating a purchase and sale agreement.
What Is an Agreement of Purchase and Sale?
A purchase and sale agreement is a document, a legal contract in fact, that binds buyer and seller. Those who are interested in buying a property would start by submitting an offer to purchase. The seller has a window of time therein to negotiate their own terms and conditions. Once both parties reach an agreement, they would sign it and then the contract holds them to their word.
The conditions in an agreement of purchase and sale are selected with the goal of getting the best deal, ensuring that the transaction is actually legal, and keeping the sale moving forward in an honest and open manner.
Without an agreement of purchase and sale, things can get much trickier. It is easier to get away with swindling somebody when there is no legal documentation of what was originally offered. It may seem like an extra step but the security offered by creating an agreement makes it well worth the time and effort.
What Are Common Conditions in a Purchase and Sale Agreement?
A standard agreement begins with basic information about the buyer, the seller, and the property or asset being purchased. The price being offered by the buyer, the deposit being paid, the date and time that the offer is open.
A section of the agreement when buying a property would deal with the chattels. These are the movable objects in the property that may or may not be included in the sale. For example, a fridge would be a chattel. It wouldn’t be included unless it was mentioned in the contract.
The requisition date is another thing that the agreement would touch on. This is the window of time the purchaser has to examine the title and to do a number of searches to ensure that there are no problems with the property. This is typically done by an attorney because it involves things like searching for registered ownership of the property with the land registry, checking zoning regulations and ensuring there’s no problems there, and a number of other things.
Any number of conditions may be established through an agreement. Some of the more common conditions you’ll find it agreements are:
- That the offer is only valid on the condition that the seller is the legal owner of the property
- That the seller will provide a survey of the property
- That the agreement is conditional on the purchaser selling their current property
- The buy agrees to assume the seller’s existing mortgage
- That the entire agreement may come to an end if an unfixable problem is discovered through the buyer’s lawyer
- That the buyer can’t make complaints about problems that weren’t brought up in writing ahead of the requisition date
There are a number of clauses that would deal with technical issues in regards to things like insurance, tax arrangements, adjustments, the production of documents, future uses of the property, spousal consent, and more. This can get rather complicated, so don’t hesitate to talk to your real estate attorney about what needs to be included.
How Do I Create a Purchase and Sale Agreement?
Putting together a purchase and sale agreement is a complicated process. The best way to go about it is to work with an attorney or a real estate agent and have them draft the document for you.
Since time can be of the essence in some cases, it’s a good idea to speak to your attorney about what clauses you would want to have included ahead of time. This can allow you to figure out what you’re asking for ahead of time so you can be ready to move forward quickly should the agreement be accepted.
When Should I Work with an Attorney?
You should work with an attorney from the beginning. Purchase and sale agreements are fairly complicated if you’ve never dealt with them before. There is a lot that has to be included and it feels like a tremendous amount of pressure to have on one’s shoulders. But a professional that deals with these for a living isn’t phased and they understand the various intricacies the agreements.
Working with a professional can save you a lot of time and effort, too. Agreements need to be written carefully in order to ensure that there aren’t any cracks. While it would be nice to believe that everybody would act in an honest manner, this world is filled with far too many scam artists. Working with an attorney to draft an agreement will ensure that it is written in such a way as to offer protection against such vile characters and their machinations.
Working with an attorney is a must, especially if you don’t want to end up in legal hot water. Even a seller who believes they’re speaking honestly can have been tricked themselves, the truth only coming out because of one of your attorney’s searches.
When it comes to transactions that are large enough to require a purchase and sale agreement, an attorney should be considered necessary.