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Real estate purchase contract description

1. Offer

You need to specify seller name, address and the purchase price of the real estate property. Also you can specify legal description of the property. The best description would be the exact description of the property from a previous deed. When a lot in subdivision is being sold, the legal description usually consists of the lot number and plot. Adding the approximate lot size or acreage would make the description more accurate and the contract more enforceable if the exact legal description is not known. The buyer wants to know exactly what is included. Unless the property is part of a platted subdivision the buyer should obtain a survey of the property. For extra caution, the buyer could make the contract contingent upon the survey being satisfactory. If survey was performed, then that document should be mentioned in legal description, such as “Survey given to buyer, performed by ABC Surveyors Dated December 30, 2006 for said property”.

Option #1:
This is an offer from ___________________________________________________________________
for the real estate Property located at _________________________________________________
The purchase price offer is $__________________________

Option #2:
PARTIES: _____________________________________________________________ as “Buyer” of __________________________________________________________ Phone :________________
and ___________________________________________ as “Seller” of ___________________________________________________________ Phone :________________ hereby agree that the Buyer shall buy and the Seller shall sell real property described below under the following terms and conditions:
Street Address: ___________________________________________________
Legal Description: ______________________________________________________________

2. Financing

a. The seller would prefer a large deposit of at least 1% of the sales price, held personally by his attorney. This way the buyer will not be tempted to walk away from the deal. The buyer would prefer a smaller amount, such as $100 or $500, held by a neutral party such as a title company or real estate broker.

Option #1: Deposit is due on acceptance and is to be held in trust by ____________________________ in the amount of $_________________________

b. The buyer wants to specify the terms of the mortgage that he or she wants. Otherwise, if rates go up he or she will be required to buy the property at the going rate.

Option #1: New first loan
Buyer to apply for, qualify for and obtain new first loan in the amount of $_______________ payable monthly at approximately $_______________ including interest origination not to exceed $_______________. Seller agrees to pay a maximum of ______ FHA/VA discount points.
Additional terms: _______________________________________________________________________

c. The buyer assumes the mortgage that the seller already has on the property, and then he or she agrees to be legally bound to pay it. If the buyer takes the property subject to the mortgage, he or she has no legal obligation to pay it.

Option #1: Existing first loan
Buyer to assume an existing first loan with an approximate balance of $____________________ payable monthly at $_______________ including interest at _____ % fixed rate ____ other ____________________. The fees are not to exceed $______________
Disposition of impound account ____________________________________________________
Additional terms: ________________________________________________________________________

d. This is the amount that the buyer will need to have at closing in addition to initial deposit.

Option #1: Balance to close (U.S. cash, certified or cashier’s check)
subject to adjustments and prorations, plus closing costs $____________________

e. Use this space if there is a second mortgage, a property to be used as part of a trade, or any other form of payment. If a small deposit was made, then the seller should require additional deposit money after any contingencies in the contract have been eliminated.

Option #1: Other _____________________________________________

3. Contingencies

Contingencies are conditions which must be met if a contract is to be performed.

a. Mortgage

Purchase of the real estate is contingent upon or subject to the buyer getting a mortgage loan for the purchase. Usually such a contingency calls for a buyer to apply for a loan within a certain period of time after the contract is signed.

Option #1: Loan Approval Any Time before Closing
Contingent upon Buyer obtaining a mortgage loan for a minimum of $____________ at a maximum interest rate of _____% with payments not to exceed $__________ per month and no more that $__________ in loan points and fees. If Buyer is unable to obtain said loan prior to closing, Buyer’s entire earnest money deposit shall be refunded immediately.

Option #2: Reasonable Diligence Used to Apply for Loan
Contingent upon Buyer obtaining a firm commitment within ____ days from acceptance for a loan of at least $__________. Buyer to make application within five days and use reasonable diligence to obtain said loan. Should Buyer fail to obtain said commitment or to waive this contingency within said time, either party may cancel this Contract.

Option #3: Limited Time to Apply for Loan
Contingent upon Buyer obtaining a firm commitment for a loan of at least $__________, at a maximum interest rate _________%, for a term of at least ______ years. Buyer agrees to make application for and use reasonable diligence to obtain said loan. If Buyer is unable to obtain a mortgage commitment within ____ days, Buyer may cancel this Agreement by notifying Seller within ____ days of the receipt by all parties of a fully executed copy of this Agreement.

Option #4: Another sale contingency
Purchase or sale of the real estate is contingent on a successful sale or purchase of another piece of real estate. The successful sale of another house may be needed to finance the purchase of a new one.

b. Inspection

Purchase of the real estate is contingent upon a satisfactory inspection of the real property revealing no significant defects. A licensed professional and/or the buyer can do the inspection. In many cases, especially for a personal residence, we recommend that the buyer will hire a licensed professional to inspect the property

Option #1: Inspection at Closing
Buyer shall be allowed to inspect the property within twenty-four hours of closing and at such time the Seller shall have the electrical service, water, and gas on.

Option #2: Licensed Contractor Inspection
Buyer may have the Property inspected by an engineer, builder, or home inspector to determine the presence of structural defects and to determine that all electrical, plumbing, heating, sewer/septic, well (if applicable), and air conditioning (if applicable) systems are in working order and need no major replacement or repairs. The inspection must be completed and Seller notified of the results within ___ days of the date of delivery of the signed Agreement to Buyer and Seller, otherwise Buyer waives his or her rights under this paragraph. Buyer will pay for this inspection. If structural defects are found, or if all the aforementioned systems are not in working order or are in need of major replacements or repairs, Buyer will provide Seller with a copy of the written report and Seller will be given ___ days to notify Buyer whether or not Seller agrees, at his or her own cost and expense, to correct the structural defects, put the aforementioned systems in working order, and make all needed major replacements or repairs, or Buyer may cancel this Agreement. Buyer, however, at his or her option, may waive the results of the inspection in writing and this Agreement shall become binding. Within 48 hours before closing, Buyer shall be entitled, upon reasonable notice to Seller, to inspect the premises to determine that said items are in working order.

Option #3: Property As Is
Property is being sold in as is condition with no representations or warranties of any nature being given by Seller. Buyer has personally fully inspected the property, finds it satisfactory, and does not rely on any representations not contained in this Contract.

Option #4: Major Systems to Be Working Six Days Prior to Closing
Major appliances, heating, cooling, electrical, and plumbing systems to be in working order as of six days prior to closing. Buyer may, at his or her expense, have inspections made of said items by licensed persons dealing in the repair and maintenance thereof, and shall report in writing to Seller such items as found not in working condition prior to taking possession thereof, or six days prior to closing, whichever occurs first. Unless Buyer reports failures by said date, he or she shall be deemed to have waived Seller’s warranty as to failures not reported. Valid reported failures shall be corrected at Seller’s cost. Seller agrees to provide access for inspection upon reasonable notice.

c. Roof

The roof clause calls for an inspection of the roof before the transaction is finalized and determines whether seller must make repairs or whether the buyer may cancel the transaction if the roof condition is not acceptable

Option #1: Seller Shall Repair
The Seller, within the time allowed for delivery of evidence of title and examination thereof, or no later than ten days prior to closing, whichever date occurs last, shall have the roof inspected at Seller’s expense by a licensed roofer, a licensed general contractor, or a firm specializing in presale inspections of property to determine that there is no visible evidence of leaks or damage. If repairs are needed, Seller shall have them completed at the Seller’s expense by a licensed roofer, or at Buyer’s option shall credit the Buyer for the cost of said repairs.

Option #2: Seller Shall Repair up to 2%
The Buyer, within the time allowed for delivery of evidence of title and examination thereof, or no later than ten days prior to closing, whichever date occurs last, may have the roof inspected at Buyer’s expense by a licensed roofer, a licensed general contractor, or a firm specializing in presale inspections of property to determine that there is no visible evidence of leaks or damage (including fascia and soffit). If repairs are needed, Seller shall pay up to 2% of the purchase price for the repairs, which shall be performed by a licensed roofer or licensed general contractor. If the cost of repairs exceeds 2% of the purchase price, Seller may cancel this Contract.

Option #3: Sold in As Is Condition
Property is being sold in as is condition with no representations or warranties of any nature being given by Seller. Buyer represents that he or she has inspected the property to his or her satisfaction and accepts it in as is condition.

d. Pest Infestation

The pest infestation clause provides who will pay for a termite inspection and what will be done if infestation is found

Option #1: Seller Pays—Buyer May Cancel or Require Repair
Seller, at his or her expense, shall provide Buyer with a report by a certified pest control operator acceptable to Buyer, dated within thirty days of closing, that there are no signs of infestation by wood-destroying organisms. In the event infestation is indicated, Buyer may cancel this Contract or the property shall be treated and repaired at the expense of Seller.

Option #2: Seller Pays—Treatment and Repair Limited
Seller, at his or her expense, shall provide Buyer with a report by a certified pest control operator acceptable to Buyer, dated within thirty days of closing, that there are no signs of infestation by wood-destroying organisms. In the event infestation is indicated, Buyer may cancel this Contract or the property shall be treated and repaired at the expense of Seller of up to 3% of the purchase price.

Option #3: Parties Split Cost—Either May Cancel
Within thirty days of closing, the premises shall be inspected by a certified pest control operator acceptable to Buyer and the cost of said inspection shall be paid equally by Buyer and Seller. In the event infestation by wood-destroying organisms is indicated, either party may cancel this Contract or Seller may treat the premises at his expense.

Option #4: Buyer Pays—Seller may Cancel or Repair
The Buyer, at Buyer’s expense, shall have the right to have a licensed exterminator examine the Property within ___ days of the date of delivery of the signed Agreement to Buyer and Seller. If there is evidence of live termite or other wood-boring insect infestation on said Property, or substantial damage from prior infestation, the Seller shall pay up to three (3%) percent of the purchase price for treatment and repairs required to remedy such infestation, but if the costs for such treatment or repairs exceed three (3%) percent of the purchase price, the Buyer may elect to pay such excess. If Buyer elects not to pay, the Seller may pay the excess or cancel the contract.

Option #5: Sold As Is
Property is sold in as is condition with no representations or warranties of any nature being given by Seller. Buyer represents that he or she has inspected the property to his or her satisfaction and accepts it in as is condition.

e. Radon

Radon is a naturally occurring radioactive gas that, when it has accumulated in a building in sufficient quantities, may present health risks to persons who are exposed to it over time. Levels of radon that exceed federal and state guidelines have been found in buildings in this state. Additional information regarding radon and radon testing may be obtained from your county public health unit or the Environmental Protection Agency. The radon clause provides for an inspection for radon gas on the property and allows the buyer to cancel the transaction if he or she is not happy with the results

Option #1: Buyer May Cancel
Seller, at his or her expense, shall provide Buyer at least fifteen days prior to closing with a report by a licensed inspector acceptable to Buyer, of the level of radon gas in the premises. In the event levels of radon gas are unacceptable to Buyer, Buyer may cancel this Contract.

Option #2: Buyer’s May Cancel or Seller Must Install Equipment
Seller, at his or her expense, shall provide Buyer at least fifteen days prior to closing with a report by a licensed inspector acceptable to Buyer, of the level of radon gas in the premises. In the event levels of radon gas are unacceptable to Buyer, Buyer may cancel this Contract or require that radon gas reduction equipment be installed on the property at Seller's expense, not to exceed 3% of the purchase price.

Option #3: Buyer May Inspect
Buyer may, at his or her cost and expense, have the Property inspected for the presence of Radon Gas. If Buyer elects to have this inspection, Seller must be given a written report of the results of this inspection within ____ days of the date of delivery of the signed Agreement. If Radon Gas is found to be present in the premises at levels that exceed 4.0 Picocurie per liter, Buyer shall have the option to terminate this Agreement. In the event of termination, all earnest monies shall be returned forthwith to Buyer.

4. Maintenance

A real estate contract may specify in what condition of the property should be when conveying the title or transferring possession. For example, the contract may say that the property is sold as is, especially if demolition is intended. Alternatively there may be a representation or a warranty (guarantee) regarding the condition of the house, building, or some part of it such as affixed appliances, etc

Option #1: Delivered in Good Condition
Seller agrees to deliver the premises in good condition. Until possession, Seller shall maintain the property, including the lawn and shrubbery, and the pool, if any, shall be clean and clear. All floors to be washed or vacuumed and all walls to be clean and free of holes or damage.

Option #2: Delivered in As Is Condition
Property is being sold in as is condition with no representations or warranties of any nature being given by Seller. Buyer represents that he or she has inspected the property to his or her satisfaction and accepts it in as is condition.

5. Lead-Based Paint

The Seller of residential real property is required to notify the Buyer of any known lead-based paint hazards if real estate property was built before 1978.

Option #1: Warranty Property—Lead-Based Paint Free
Seller warrants that the property is free of lead-based paint and this warranty shall survive the closing.

Option #2: Sold As Is—No Warranty
Property is being sold as is with no representations or warranties of any nature being given by Seller. Buyer represents that he or she has inspected the property to his or her satisfaction and accepts it in as is condition.

Option #3: No Knowledge—Buyer Responsible
Seller has no knowledge as to whether lead-based paint has been used on the premises. Buyer is buying the property in its present condition and agrees to be responsible for any needed lead-based paint abatement.

6. Escrow

Escrow is a type of closing in which documents and/or money are deposited with an escrow holder and released upon performance of certain conditions. Consider using an escrow, although you are not legally required to do so. The Escrow Agent can be the Seller's lawyer, the Buyer's agent, title company, independent escrow companies, title insurance companies, escrow departments of lending institutions (banks, savings and loans, and so on), or anyone the Seller and the Buyer agree on. Lenders usually require escrow as a condition of making a loan. Some states require escrow for the sale of houses only or in cases such as court sales. Check with lenders or escrow companies to determine whether law requires escrow on your home. Because of the complexity of the process involved, having an escrow holder can do much to protect you when you sell your home.

Option #1: Buyer and Seller shell deliver signed instructions to ___________________________ Escrow holder, within ___ calendar days of acceptance of the offer. The offer shall provide the Closing on or before the _____ day of _______, 20___, unless extended by other provisions of this contract. Escrow fees to be paid as follows ___________________________________________________________

7. Lien Affidavit

The lien affidavit clause guarantees the buyer that there are no financial claims against the property that will not be paid before he or she takes ownership of the property.

This will usually be required by the closing agent and often includes such bills as for water, sewer, etc. If there are hidden claims against the property, the seller would probably be sued if the buyer has to pay them.

Option #1: Seller shall, as to both the real and personal property being sold hereunder, furnish to Buyer at time of closing an affidavit attesting to the absence, unless otherwise provided for herein, of any financing statements, claims of lien, or potential lienors known to Seller, and further attesting that there have been no improvements to the property for ninety days immediately preceding the date of closing. If the property has been improved within said time, Seller shall deliver releases or waivers of all mechanic’s liens, executed by general contractors, subcontractors, suppliers in addition to Seller’s lien affidavit, setting forth the names of all such parties and further reciting that in fact all bills for work to the property which could serve as a basis for a mechanic’s lien have been paid or will be paid at closing.

8. Prorations

The proration clause explains how the continuing costs of the property will be share at the closing before deciding which option is the best, you must first figure our if the proration would cost you money or give you extra money.

Option #1:
Taxes, rents, interest, property owner dies, insurance acceptable to Buyer and _______________ shall be prorated as of closing. Any security deposits shall be turned over to Buyer

Option #2:
Taxes, rents, interest, property owner dues, and insurance acceptable to Buyer shall be prorated as of closing. Real and personal property taxes shall be prorated based upon the most recent available information. If closing occurs at a date when the current year’s millage is not fixed, and current year’s assessment is available, taxes will be prorated based upon such assessment and the prior year’s millage. If current year’s assessment is not available, then taxes will be prorated on the prior year’s tax, provided, however, if there are improvements on the property completed by January 1st of the year of closing, which improvements were not in existence on January 1st of the prior year, then taxes shall be prorated based upon the prior year’s millage and at an equitable assessment to be agreed upon between the parties, failing which, request will be made to the property appraiser or assessor for an informal assessment. Any tax proration based upon an estimate may, at the request of Buyer, be subsequently readjusted upon receipt of the tax bill. Prepaid rents and other tenant deposits shall be prorated to the date of closing.

9. Title Transfer

a. Title Evidence

The title evidence clause provides for when the evidence of the seller’s title will be provided to the buyer and who will pay for it. In some areas, such as Chicago a Torrens system is used in which a person can get a title certificate, similar to a car title. If this is the case in your county, you should substitute the appropriate wording. In many areas it is customary to charge this expense to the seller unless the buyer agrees to pay all closing costs.

Option #1: Title Evidence After Contract—Specific
Within _____ days from acceptance of this Contract, Seller shall, at Seller’s expense, provide to Buyer a title insurance commitment for a fee simple owner’s marketable title policy in the amount of the purchase price, or if it is the prevailing custom in the locality, an abstract of title, to be paid for at closing by Seller.

Option #2: Title Evidence Prior to Closing—Specific
At least ______ days prior to closing, Seller shall, at Seller’s expense, provide to Buyer a title insurance commitment for a fee simple owner’s marketable title policy in the amount of the purchase price, or if it is the prevailing custom in the locality, an abstract of title, to be paid for by Seller at closing.

Option #3: Title Evidence—Any Time Prior to Closing
Seller shall purchase and deliver to Buyer at or before closing a title insurance policy, or if it is the prevailing custom in the locality, an abstract of title.

Option #4: Buyer May Obtain Own Title Insurance
Buyer may at buyer’s expense obtain a title insurance policy or abstract of title.

b. Title Defects

The title defects clause explains what will happen if it turns out that the seller’s ownership of the property has some legal problems

Option #1: Seller Cures Defects
In the event title is found to be defective, Seller shall have sixty days within which to remove such defects. If Seller is unable to cure them within such time, Buyer may cancel this Contract and have all earnest money refunded or may allow Seller additional time to cure. Seller agrees to use diligent effort to correct the defects including the bringing of necessary suits.

Option #2: Buyer Must Notify or Waives—Seller may Cure or Cancel
In the event title is found defective, Buyer shall within three days thereafter notify Seller in writing specifying the defects or else same shall be waived. If defects render title unmarketable, Seller shall have 120 days within which to cure said defects or to cancel this Contract.

Option #3: Seller may Cure or Cancel
In the event title is found defective, Buyer shall within three days thereafter notify Seller in writing specifying the defects or else same shall be waived. If defects render title unmarketable, Seller shall have 180 days within which to cure said defects or to cancel this Contract.

10. Closing date & place

The closing is the event in which the money (or other consideration) for the real estate is paid for and ownership of the real estate is conveyed from the seller(s) to the buyer(s). Closing in escrow usually occurs in the western half of the US states. A title company (rather than a lawyer) or other trusted party holds the money and the signed deed, and arranges for the transfer. Escrow ensures an orderly transaction, or if something goes wrong, an orderly termination of the agreement. On the Eastern side of the US, settlement (as closing is called) takes place on a specified date and time during which all parties (usually including the agents involved) meet at a settlement company presided over or supervised by a lawyer. The transfer of money (in form of certified or wired funds) and the property takes place, and the deed is then recorded by the company.Transfer of possession of a house, condominium, or building is usually accomplished by handing over the key(s) to it. The contract can also specify which party pays for what closing costs. If the contract does not specify, then there are certain customary defaults depending on law, common law (judicial precedents), location, and other orders or agreements, regarding who pays for which closing costs.

Option #1: Buyer Selects Location
Closing shall be on ___________________, 20___ at a location to be selected by Buyer.

Option #2: Location in Contract
Closing shall be on ___________________, 20___ at ________________.

Option #3: Location in Contract—Time of Essence
Closing shall be on ________________________________, 20______ at ______________________________________. Time is of the essence on this Contract.

Option #4: Seller’s Attorney or Title Office
Closing shall be on ________________________, 20___ at the office of an attorney or closing agent designated by Seller.

Option #5: Seller’s Attorney or Title Office—Time of Essence
Closing shall be on ________________, 20___ at the office of an attorney or closing agent designated by Seller. Time is on the essence of this Contract.

11. Acceptance

The acceptance clause tells the party receiving the offer how long he or she has to accept the offer.

Option #1: Offer Made to Seller by Buyer
[If offer is made to seller] Seller shall have until _____________________, 20___ at ___ o’clock __m to accept this Contract.

Option #2: Neutral–Both Parties Execute
If this offer is not executed by both parties on or before _______________, 20___, it shall be void and Buyer’s deposit returned.

Option #3: Offer Made to Buyer by Seller
Buyer shall have until __________________, 20___ at _____ o’clock __m to accept this Contract.

12. Complete Agreement

The buyer will want to be sure that he or she get the signatures of all of the owners of the property. If several people own the property they all have to sign a purchase agreement, otherwise it will be impossible to force the other owner(s) to go through with the contact (however, you can sue the ones who signed if they did not mention about other owners of this property). When making the contract, the buyers should decide on how they wish to take title. If they take as tenants in common, then when one dies his or her share goes to whoever inherits from his or her estate. If they take title as join tenants with full right of survivorship, then when one dies his or her share goes to the other owner. In some states a married couple may take title as tenants by the entirety, which offers some additional protections from creditors. The seller would prefer to have the contract signed by someone with the good credit. If the buyer will pa by cash it would not matter who signed, but if the buyer has no assets, he may tie the property up for month

Option #1: This Agreement is binding upon all parties who sign it and all who succeed to their rights and responsibilities.
Signed and Agreed by:

______________________________________   ___________________
(Seller)   (Date)
______________________________________   ___________________
(Seller)   (Date)
______________________________________   ___________________
(Buyer)   (Date)
______________________________________   ___________________
(Buyer)   (Date)

For more information please read real estate forms.

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User Comments

1 comments was added to the article. Add a comment

C. Mosier posted 05/22/2007

I love what you are trying to do. I so appreciated the real estate forms. Some sites who charge more give less and even charge for the forms. Good for you!! You are going to do great because you give more for less!!! That is the reason people are trying to do the "for sale by owner" thing. To save some funds. Anyway just wanted to give you that feed back.



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