Purchase Agreement for House for Sale by Owner

What is a house sale purchase agreement?

A house sale purchase agreement is a legal contract between a property owner and a buyer that outlines terms and conditions for a title’s transfer for a residential property. A house purchase agreement ensures that both parties have a clear understanding of their mutual rights and obligations. A simple document’s template usually defines the following:

• detailed information about the parties;
• detailed description of a residential property;
• purchase price and payment schedule;
• property’s limitations;
• seller’s representations and warranties;
• closing procedure.

The present house sale agreement form is suitable for all types of residential real estate, including detached houses, duplexes, cabins, condos, etc.

Under the sale-purchase agreement of a residential property, the owner transfers their property’s title in exchange for agreed remuneration. Thus, the sale-purchase agreement could be easily confused with a lease contract. Under a residential lease contract, an owner transfers the right of temporary usage and possession of a property. In return, a tenant, or a person that rents out a property, undertakes to make regular payments. Contrary to that, an owner under a house sale agreement transfers the full title for a property to the buyer.

The parties to a purchase agreement for house for sale by owner are the seller and the buyer. The seller is a property’s owner or a property’s management company that represents an owner. The owners of a property are individuals or legal entities. The buyer under a home purchase agreement could also be individuals or companies.

How to Draft a House Sale Agreement Template?

When creating a house sale agreement template, inclusion of certain key clauses is a must. Without them a document cannot be complete or even legally enforceable in some cases.

Details of the Parties

The agreement should clearly provide full information about the parties involved—i.e., the seller and the buyer. Full information usually includes their legal names, addresses, and contact information. If either of the parties is represented by a third party, the full legal name and address of such a third party should also be stated in the text of a contract.

Description of the Property

A well-drafted house sale agreement form should provide a detailed description of the residential property, including:

• address of a property;
• its size (square footage);
• number of floors;
• number of bedrooms;
• APN number of a land plot;
• list of all attached fixtures (if any).

Property Limitations

A house sale agreement format requires a seller to disclose all information about existing property limitations or third parties’ rights. Those limitations may include either of the following:

• existing tenancy agreements;
• contractual or state encumbrances;
• municipal liens;
• zoning rules, etc.

The existence of any property limitation may significantly limit the way a property could be used. Therefore, it is essential to disclose all those limitations prior to the closing to the buyer. If the buyer waives them, the parties can proceed to the closing. If, however, the buyer does not accept them, the parties choose either of the following solutions.

First, to end the contract. This is the easiest scenario, according to which the buyer is entitled to a 100% return of all sums paid prior to the seller (e.g., a deposit). Second, the parties may discuss fixing the issues. For instance, municipal liens in the form of unpaid electricity bills could be easily paid by the seller prior to the closing date. Third, the parties may agree to a decrease in the initial purchase price.

Responsibilities and Obligations

A solid house purchase agreement template should include mutual responsibilities and obligations for both parties. Due to the nature of a transaction, the seller has a longer list of responsibilities by default. Amongst them are the following:

• to disclose all property’s defects (if any);
• to disclose all property’s limitations (if any);
• to preserve the property till the closing date;
• to allow the buyer to perform inspections of a property;
• to inform about any environmental contingencies (if any);
• to pay in full all unpaid taxes, duties, and utilities prior to the closing date.

The buyer’s responsibilities should include the following:

• to pay the purchase price in full;
• to arrange the required financing (if a loan or mortgage is taken for the purchase);
• to perform inspection of a property;
• cover the agreed transaction costs (e.g., transfer tax, legal fees, etc.).

Payment Terms

Every house purchase agreement format contains a payment provision clause. This clause gives answers to the following questions:

• How much shall the buyer pay?
• How much is the amount of a deposit?
• When the deposit should be paid?
• When shall the buyer pay the remaining balance?
• How exactly shall the buyer pay?

Once the parties agree upon answers to all five questions above, their payment clause is ready. In some cases parties may wish to include additional provisions regarding a payment delay. This is a good practical incentive to encourage the buyer to make payments on time. However, to do so, both parties have to agree on the inclusion of such a clause directly in the text of a contract.

Closing Details

A well-drafted house purchase agreement example shall define the closing procedures. The closing procedure is the “legal heart” of a sale-purchase agreement. It defines when exactly the title should be transferred to the buyer. This moment is also known as a closing date. Apart from that, the following information should be included in the template:

• closing address (e.g., a notary’s office);
• list of documents to be exchanged between the parties;
• document defining proration of taxes and utilities;
• post-closing conditions (if any).

How to customize a purchase agreement at Faster Draft?

In order to customize your house sale agreement sample, follow a few simple steps below:

1. Click the button “Create Document.”
2. Answer simple questions in the questionnaire.
3. Select a document’s format—house sale agreement PDF or Word.
4. Make a payment.
5. Download a ready-made template.