Escrow & Title
What is a 'binder' in Rhode Island real estate and how does it differ from a purchase and sale agreement?
AThey are the same document
BA binder is a preliminary, brief agreement acknowledging an accepted offer and holding the property, while the full purchase and sale agreement is a more detailed, comprehensive contract✓ Correct
CA binder is used only for commercial properties
DA binder is the closing disclosure
Explanation
A binder (or offer to purchase/deposit receipt) is an initial, simplified agreement that memorializes the accepted offer and holds the property pending execution of a full purchase and sale agreement. In Rhode Island, many transactions proceed directly to a full P&S.
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Key Terms to Know
Earnest Money
A deposit made by the buyer when submitting a purchase offer, demonstrating serious intent and serving as consideration for the contract.
ContingencyA condition in a purchase contract that must be satisfied before the sale can proceed to closing.
Purchase AgreementA legally binding contract between a buyer and seller that outlines the terms and conditions of a real estate sale.
Title InsuranceInsurance protecting against financial loss from defects in a property's title that existed before closing but were unknown at the time of purchase.
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