Purchase and Sale Agreement FAQs
Your purchase may well be one of the most important legal transactions in your lifetime. The underlying and governing contract for that process will be your purchase and sale agreement (P & S). It is a legally binding contract, and one that you should understand well.
It is imperative to have an experienced Attorney review and counsel you on, what may very well be the biggest investment of your life.
Careful drafting of the P & S is critical. Each deal is unique and a “boilerplate” contract will not do. Your contract needs to be tailored to your specific situation, and it also needs to anticipate certain possibilities as well.
Over the years we have found that clients often asked these questions:
Question: Why do we need a P and S when we have already have an Offer to Buy?
Answer: While the Offer is also a valid and legal contract it will usually have language in it that reads, “subject to execution of a mutually agreeable purchase and sales agreement,” meaning a P & S must be signed to move forward. Additionally, there are many provisions that need to be included for your protection, that are not part of a basic Offer. The Offer is really just the first step in the process.
Question: What if I cannot get a mortgage, am I going to be required to buy the property?
Answer: Not if you had a properly crafted mortgage contingency clause in your P & S. You have no legal right to walk away from the contract if you cannot get financing. You must include language in your P & S that protects you. There will be a date by which you need to get a loan commitment, and if you could not get one, then you could get any deposit you placed back. Your Attorney will walk you through this process and keep track of these important deadlines.
Question: What if after I inspect the home, I discover several things wrong with the home that I want repaired.
Answer: In order to negotiate anything you uncover at an inspection, you need to have either the inspection completed before you sign the P & S or you need to include a provision in the contract to address how you will handle and inspection. You need to be careful because you may be buying the property in “as-is” condition.
Question: If I have already signed an offer with a buyer, but realize that I did not ask enough for my property, what can I do?
Answer: The sale price was actually set in the Offer to Purchase, which would have been signed by both buyer and seller at this point. Once the seller has signed the offer to purchase, and agreed to the terms, there is usually no more negotiating to be done.
Question: Am I required by law to tell the buyer everything about the house? What if there is something wrong that I am not aware of, will I be liable?
Answer: In short, no. There are only a handful of things you are legally required to tell a buyer. You cannot however lie through written or spoken word when asked specifically about an issue with the home. For example, if you had flooding in your basement you are not required to tell a buyer, but if a buyer sends you a P & S and it states that, “Seller has no knowledge of flooding in the basement,” you will then have to address that.
A real estate Attorney can help you determine what information you are required to give.
These are just a few examples of questions that are often asked by buyers and sellers. Call our offices today at 978-539-7500 if you have any questions.