Key Things to Review in Your Purchase Agreement

By:

Amanda Willing

On

29/12/2024

Reading time:

2 min

Summary:

Learn the key elements to look for in a purchase agreement to ensure a smooth and successful transaction for your next big purchase.
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A purchase agreement is a legal document that outlines the terms and conditions agreed upon by the buyer and seller in a real estate transaction. It is an essential document that protects both parties and ensures a smooth and successful transaction. As a buyer, it is important to thoroughly review the purchase agreement to ensure that all the important details are included and that your rights and interests are protected. In this blog, we will discuss the key things that you should review in your purchase agreement to make sure that you are making an informed decision.
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Completion Date

The first thing you should review in your purchase agreement is the completion date. This is the date when the ownership of the property will officially transfer from the seller to the buyer. It is important to make sure that the completion date is feasible for both parties and that enough time is given to complete all the necessary tasks and paperwork. You should ensure the closing date does not fall on a statutory holiday, that you will be available to sign documents with your lawyer, either virtually or in person, and that you are available to provide your lawyer with closing funds.

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Conditions

Conditions are things that must be met before the sale can be finalized. They protect the buyer in case something unexpected happens, such as a failed home inspection or inability to secure financing. It is crucial to review these conditions carefully and ensure that they are reasonable and fair. You may also negotiate for additional or more specific conditions to be added to the agreement to further protect your interests.

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Rental Equipment

When purchasing a property, buyers must carefully review any rental equipment agreements associated with the home, such as water heaters, HVAC systems, or solar panels. These agreements often require the buyer to assume ongoing rental payments upon completion of the sale, which can impact monthly expenses and the overall cost of ownership. Overlooking these obligations could lead to unexpected financial responsibilities or complications with the seller if terms aren't addressed in advance. Consulting with your lawyer ensures you fully understand and account for these agreements before finalizing the purchase.

Purchase Price

Of course, the purchase price is a crucial element of the purchase agreement. This is the amount that the buyer agrees to pay for the property. As a seller, it is important to carefully review the purchase price and make sure that you can fully payout and discharge any existing mortgages, property tax, rental contracts which the buyer is not assuming, legal fees etc. If there is a shortfall of funds available to meet these financial obligations, your lawyer will require that you personally provide these funds before closing.

PRO TIP: MAKE SURE YOUR PURCHASE PRICE AND DEPOSIT AMOUNT ARE OUTLINED IN THE APPROPRIATE LINE IN YOUR AGREEMENT OF PURCHASE AND SALE.

The purchase agreement is an important document that requires careful review before signing. Make sure to review the closing date, conditions, rental equipment, and purchase price carefully and address any concerns with the seller. Keep in mind that this is a legally binding document, so it is crucial to fully understand and agree to all the terms and conditions. Seeking the help of a professional such as a real estate agent or lawyer can also be beneficial and highly recommended! By reviewing and understanding all the key elements of the purchase agreement, you can feel confident in your decision to purchase the property.