When purchasing or selling a property, most Buyers and Sellers concern themselves with the financial aspect of the transaction and not the legal aspects of the transaction. A purchase and sale agreement creates a contract or promise to purchase or sell land. This contract or promise which legally obligates both parties to perform certain tasks must be in writing to conform to the Statute of Frauds.
For the Seller this contract obligates the Seller to sell the property for a specific price, to provide a marketable title to the property, to assume the risk of loss and all taxes and insurance costs until the closing. An attorney reviewing the agreement for the Seller can advise the Seller to stipulate to certain spending limits on their exposure to title defects, repairs and in some cases closing costs. The Attorney could also advise the Seller to negotiate a different level of a deed other than a Warranty Deed if the Seller knows there is an issue with the title to the property. The Seller’s attorney will advocate in the Seller’s best interest and help to set the framework so the Seller can be comfortable with proceeding with the sale.
A Buyer signing a purchase and sale agreement is making a promise to purchase the property. Unless there are specific contingency provisions in the agreement, the Buyer may be forced to make good on the contract. The Buyer should make sure the financing contingency paragraph reflects the financing the Buyer can actually afford. The Buyer should also make sure the inspections are adequate so that if issues arise from the inspections, the Buyer can either work out an additional agreement with the Seller or negate the contract. An attorney can assist a Buyer to understand the risks and options when binding themselves to this type of contract making sure there are adequate contingencies in the contract to allow the Buyer to purchase the right property.
Both parties should understand the legal ramifications of the agreement for the transfer of real estate. An attorney will work with their clients keeping the client’s best interests in mind during the transaction. A purchase and sale agreement if drafted properly can meet the expectations of both Buyer and Seller which can lead to a very smooth transfer of property at closing.