If you intend to buy or sell a piece of real estate, the purchase and sale agreement will be a critical step in the process. This contract contains important details about the property, along with terms and conditions the parties have to meet to close the deal. Having an experienced attorney involved will help protect your rights and ensure you get the deal you bargained for.
That’s where Palumbo Law comes in. Our firm serves clients throughout Rhode Island who are buying or selling property, and we’re here to answer any questions or concerns you have about the process.
What Is A Purchase And Sale Agreement?
When parties agree to buy and sell a home or other piece of real estate, the purchase and sale agreement is absolutely essential to formalizing the deal. It’s a contract that obligates the seller to sell the property, and the buyer to purchase it, for the agreed-upon price. The agreement will also contain terms and conditions that the parties must meet to complete the real estate transaction. A purchase and sale agreement basically governs the deal up to the closing.
Although parties sometimes use form agreements and fill in the information as needed, this is not appropriate for all transactions. The parties may need a contract that is more customized to the exact specifications of the deal. Further, even if the buyer and seller use a form document, having an attorney review it is strongly advised. That’s because the purchase and sale agreement contains some of the most essential details of the transaction, including:
- A description of the property
- If applicable, a list of any personal property (e.g. appliances) included in the transaction
- The purchase price and deposit to be paid by the buyer
- The date the buyer can move into the property
- The time and location of the closing
- How real estate taxes and special assessments (e.g. condominium fees) will be apportioned between the buyer and seller
- Mortgage contingency, which specifies whether the purchase depends upon the buyer obtaining a mortgage
- Whether the transaction is subject to a home inspection
- A notice of any encumbrances on the property, such as liens
- How much insurance the seller must maintain on the property until closing
- The amount of damages to be paid if either party backs out of the deal
Your specific purchase and sale agreement may contain additional or different terms. Bear in mind that once the agreement is signed, it’s exceedingly difficult to alter it. That’s why having an attorney assist with the agreement is so important.
What Steps Will The Parties Take Leading Up To The Closing?
Think of the real estate closing as the end goal of the purchase and sale agreement. It controls much of what the parties will do up until that crucial date.
The buyer, for example, will be responsible for applying for and obtaining a mortgage (in most cases); conducting inspections and notifying the seller of any problems; obtaining insurance and utility accounts (e.g. gas and electric) for the property; and more.
Meanwhile, the seller’s duties leading up to closing include maintaining insurance and keeping the property in the agreed-upon condition; allowing the buyer access to the property for inspection; preparing the deed; and other responsibilities.
What Happens At The Closing?
This is the final stage of the purchase and sale of the property, although there are a few tasks to complete afterward to wrap everything up. Assuming everything goes as contemplated in the purchase and sale agreement, the closing will bring the parties together, along with the lender, to execute all necessary paperwork. The closing will result in the title being transferred to the buyer and a new deed being recorded.
Purchasers of real property have the right, under Rhode Island law, to choose their lenders and closing attorneys. Your attorney will play a crucial role in protecting your rights, up to and including at the closing.
How Can An Attorney Help With My Purchase And Sale Agreement?
Whether you use a standard form agreement or one that’s customized to your real estate transaction, you should have an attorney review your purchase and sale agreement. Because this agreement is a contract, it contains important terms and conditions that both parties need to abide by. Failure of either the buyer or seller to fulfill their end of the agreement could subject that party to damages. It could also deprive the other party of the benefit of the bargain. Your attorney will also review other important documents needed for closing, including any you need to sign.
Other tasks your attorney will perform include:
- Conduct a title search and review the title, so you understand whether you are receiving a good title to the property
- Draft a title commitment, which states the conditions that have to be met before a title insurance policy can be issued
- Obtain a title closing protection letter, for added protection for the buyer and lender
- Prepare information required by the lender, such as wiring instructions for payment
There are also a number of things your attorney will need to do after the closing, including:
- Update the title
- Record the deed, mortgage, and other documents
- Payment of city taxes, recording fees, and other expenses
- Payoff of any existing mortgages, if applicable
- Disbursement of funds to the seller
- Secure the title insurance policy
Contact Our Connecticut, Rhode Island, and Massachusetts Purchase And Sale Agreement Attorney
Have you agreed to buy or sell a piece of property, but don’t know what to do next? Do you have a real estate closing coming up, and want to make sure your rights and interests are protected? Let Palumbo Law help. We can tell you more about the purchase and sale agreement and get started with your commercial real estate matter today. Call to schedule your consultation.