Purchase Agreement
A legally binding contract between a buyer and seller that outlines the terms and conditions of a real estate sale.
Full Definition
A purchase agreement (also called a purchase and sale agreement, sales contract, or offer to purchase) is the legally binding contract that governs the sale of real property. To be enforceable, a real estate contract must satisfy the Statute of Frauds — it must be in writing, signed by all parties, contain consideration, have a legal description of the property, and identify competent parties. Key elements include: purchase price, earnest money amount, financing terms, contingencies, closing date, and which items of personal property are included or excluded. Once all parties have signed, the contract is 'executed' and both parties are legally obligated to perform.
Real-World Example
After negotiating, the buyer and seller both sign a purchase agreement for $425,000 with a 30-day closing period, subject to a financing contingency and a home inspection.
How Purchase Agreement Appears on the Real Estate Exam
Common question types, tested concepts, and what to watch out for
The Statute of Frauds requires real estate contracts to be in writing. Know the essential elements of a valid contract: offer, acceptance, consideration, legal purpose, competent parties, and written form.
Related Terms
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