A purchase agreement is a legal document used when a buyer makes an offer to purchase real estate. Once signed, it is binding on both parties and includes the purchase price and financing terms. If either party breaches the contract, contract laws are used to resolve disputes. The seller can reject, accept, or make a counter offer, and if accepted, a valid purchase contract is created.
When a prospective real estate buyer makes an offer to purchase the property, the legal document used to make the offer is referred to as the purchase agreement. Other common names for a purchase agreement include a real estate agreement, a purchase agreement offer, and a residential or commercial purchase agreement. A type of bilateral contract, a purchase contract, once signed, is binding on both the buyer and the seller, meaning that each party is legally obligated to abide by the terms agreed in the contract. The contents of a purchase agreement usually include the required contract terms, or language, under the laws in the jurisdiction where the agreement is written, the purchase price of the property, and the financing terms for the purchase.
The sale of real estate is generally governed by contract law, as most offers to buy real estate are made on the basis of a written contract. Once both parties to the contract have agreed to the terms by signing the contract, the contract becomes binding on both parties. If either party subsequently breaches the contract or a dispute arises, the contract laws will be used to resolve the dispute in most jurisdictions. Although courts rarely require specific performance or completion of the contract, when one party to a purchase contract wants to back out, a court can order pecuniary damages to the other injured party.
In most real estate transactions, a prospective buyer will make an offer to purchase the property to the seller. The purchase offer usually includes the amount the buyer is willing to pay and the terms of the loan, and also allows the seller a specific period of time within which to respond to the offer. The money earned is often included in the purchase offer. The money earned can be thought of as a deposit, or a show of good faith, to let the seller know that the buyer is willing and able to go ahead with the purchase offer.
The seller then has three options: reject the offer, accept the offer or make a counter offer. If the seller does not respond within the time allotted in the purchase offer, it is generally assumed that the offer has been rejected. If the offer is rejected, the buyer has no further obligations under the contract. If the seller makes a counter offer, the buyer must decide whether or not to accept the counter offer. If the seller accepts the original offer or the buyer subsequently accepts a counter offer, a valid purchase contract has been created.
Protect your devices with Threat Protection by NordVPN
