Sales & purchase agreements are used in all sorts of business transactions but, generally, home purchase agreements are what come to mind when SPAs are mentioned. Any legal document that binds someone to buy a product or service, and obligates someone else to sell the same product or service, is a purchase & sales agreement, be it a house, a car or lawn-cutting services. Although you can execute an SPA by yourself, or between parties, the assistance of professionals — lawyers or an accountant — is advisable, especially for big-ticket items that include real estate.
Download, purchase or otherwise secure a sample SPA. You may have an old or existing SPA to which you can refer, and there are online forms available. Familiarize yourself with the components of the agreement.
Complete the first section, which usually includes the date and the names of the buyer(s) and seller(s). You’ll also need to include addresses, phone numbers and any applicable business names.
Describe the house, property or other item that is being bought and sold. You can co-opt existing language from other contracts to ensure that the wording meets legal standards, and have an attorney review the language. Describe, in detail, the house being sold, including the address and lot number. An SPA for a vehicle would have to include the car’s year, make, model, color, style, mileage and VIN (vehicle identification number). For example, you might be selling a 2009 black, Chevrolet Impala sedan with 30,000 miles and a VIN of “XXXX.”
Write down the home purchase price and the terms of sale, such as deposit or down-payment amount, interest payments, length of payment period and number of total payments to be made. For instance, you may agree to a down payment of $25,000 with monthly payments of $750 at 4 percent interest to be paid over 10 years. Any deadlines, such as for modifying the terms of the contract, should be included in this section. Describe any mortgage details, including the lender name and terms, and where the escrow will be held. Identify the date when the down payment is due, in what form (cashier’s check, for example). Include the real estate agent’s commission. Include risk and default terms in case the house is destroyed by fire during negotiations and to cover contingencies, such as the buyer being unable to secure a loan.
Include any personal property to be included in the sale. Appliances, carpeting, furniture and other such items should be listed.
Describe the condition of the property and include the name of the inspector, who paid for the inspection, and the amount paid. Include a copy of the report and add wording that commits the buyer to purchasing the property in its present state -- unless other arrangements are reached, such as that the sale is contingent upon the roof being replaced or a new hot water heater being installed.
Include information about the title and warrants. Describe the conditions of title status and transfer, such as “The Seller hereby warrants that the title is good and sufficient and shall be transferred to the Buyer pursuant to this agreement, subject to escrow, and that the Buyer shall have a title and deed free of claims of any person, lien or other encumbrances. The Seller will deliver a general warranty deed to the Buyer.”
Have an attorney review the document before signing it. Both the purchaser and seller will want to have the agreement reviewed by their own advisers.
Get the signatures of seller and purchaser, and include the date.
Although having both parties sign the agreement is a big step in closing the deal, it is only a step and there remain dangers of things falling apart before actual ownership is conveyed from the seller to the buyer. Mortgage snafus and processing delays are normally the culprits.
- Although having both parties sign the agreement is a big step in closing the deal, it is only a step and there remain dangers of things falling apart before actual ownership is conveyed from the seller to the buyer. Mortgage snafus and processing delays are normally the culprits.
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