> ## Documentation Index
> Fetch the complete documentation index at: https://learn.hometrics.ai/llms.txt
> Use this file to discover all available pages before exploring further.
# Purchase Contracts
> Key terms, standard provisions, and what to review in sales agreements
A purchase contract is a legally binding agreement between buyer and seller for the transfer of real property. Once signed by all parties, it creates enforceable obligations and sets the terms for the transaction.
Understanding contract components helps identify favorable terms, recognize risks, and negotiate effectively.
## Core Components
Every purchase contract includes fundamental elements that define the transaction.
Identifies who is buying and selling. Names must match how title will be held and how parties can legally sign.
**Watch for:**
* Correct legal names (not nicknames)
* All owners included as sellers
* Entity names if LLC or trust is involved
* Authorized signers for entities
Identifies the property being sold. Should include legal description, not just street address.
**Watch for:**
* Accurate legal description matching deed
* What's included (fixtures, appliances, personal property)
* What's excluded from sale
* Boundary clarity
The total amount buyer will pay for the property.
**Components:**
* Earnest money deposit
* Additional deposits (if any)
* Loan amount (if financing)
* Cash due at closing
**Watch for:**
* How price was determined
* Whether price is firm or subject to adjustment
* Appraisal gap provisions
Deposit demonstrating buyer's serious intent. Held in escrow until closing or contract termination.
**Watch for:**
* Amount required
* When due (typically 3 days after contract)
* Who holds it
* Conditions for refund
* When seller can claim it
When the transaction will be completed and ownership transfers.
**Watch for:**
* Realistic timeline for financing and inspections
* What happens if date is missed
* Extension provisions
* "Time is of the essence" language
When buyer takes physical possession of property.
**Common arrangements:**
* At closing
* Day after closing
* Delayed possession (seller stays temporarily)
* Early possession (buyer moves in before closing)
**Watch for:**
* Rent or fees for delayed/early possession
* Insurance responsibility during possession gaps
* Condition requirements at possession
## Contingencies
Contingencies are conditions that must be met for the contract to proceed. They protect parties from unforeseen problems.
**Common contingencies:**
| Contingency | Protects | Typical Timeframe |
| ----------- | ------------ | ----------------- |
| Financing | Buyer | 21-30 days |
| Inspection | Buyer | 7-14 days |
| Appraisal | Buyer | Tied to financing |
| Home sale | Buyer | Varies |
| Title | Both parties | Through closing |
| HOA review | Buyer | 3-7 days |
Contingencies have deadlines. Missing a deadline may waive the protection, even if the underlying issue exists. Track all contingency dates carefully.
## Financing Terms
For financed purchases, contracts specify loan parameters.
**Key financing terms:**
* Loan type (conventional, FHA, VA, USDA)
* Loan amount
* Interest rate cap (if specified)
* Financing contingency deadline
* Pre-approval requirements
**Watch for:**
* Whether financing contingency protects earnest money
* What constitutes "good faith" effort to obtain financing
* Consequences of loan denial
* Appraisal requirements and gap provisions
## Property Condition
Contracts address property condition and seller representations.
**Common provisions:**
* "As-is" vs seller warranty
* Disclosure requirements
* Condition at closing
* Risk of loss before closing
* Walk-through inspection rights
**As-is sales:**
Seller makes no warranties about condition. Buyer accepts property in current state. Does not eliminate disclosure obligations for known defects.
**Walk-through rights:**
Typically within 24-48 hours of closing to verify:
* Condition unchanged from contract/inspection
* Agreed repairs completed
* Included items present
* Property is vacant (unless otherwise agreed)
## Included and Excluded Items
Contracts should clearly specify what transfers with property.
**Typically included (fixtures):**
* Built-in appliances
* Light fixtures
* Window treatments attached to walls
* Landscaping
* Attached shelving
**Often negotiated:**
* Refrigerator
* Washer/dryer
* Window air conditioners
* Storage sheds
* Outdoor furniture
**Typically excluded:**
* Personal property
* Leased equipment (water heater, solar panels)
* Items specifically excluded in contract
When in doubt, specify in writing. Assumptions about what's included cause disputes. If an item matters, list it explicitly.
## Seller Obligations
Contracts typically require sellers to:
* Maintain property condition until closing
* Provide clear title
* Make required disclosures
* Complete agreed repairs
* Pay agreed closing costs
* Vacate by possession date
* Provide keys, codes, and access devices
## Buyer Obligations
Contracts typically require buyers to:
* Deposit earnest money by deadline
* Apply for financing promptly
* Complete inspections within contingency period
* Provide required documentation
* Obtain homeowners insurance
* Appear at closing with funds
* Accept property meeting contract terms
## Default and Remedies
Contracts specify what happens when parties don't perform.
**Buyer default:**
* Seller may retain earnest money as damages
* Seller may sue for specific performance (force sale)
* Seller may sue for damages beyond earnest money
**Seller default:**
* Buyer may receive earnest money return
* Buyer may sue for specific performance (force sale)
* Buyer may sue for damages
**Liquidated damages:**
Many contracts specify earnest money as "liquidated damages" - the agreed compensation for buyer default. This may limit seller's recovery to earnest money amount.
## Dispute Resolution
Contracts often specify how disputes will be resolved.
**Common provisions:**
* Mediation required before litigation
* Binding arbitration instead of court
* Which state's law governs
* Where disputes must be filed
* Attorney fee provisions
Read dispute resolution clauses carefully. Binding arbitration waives the right to sue in court.
## Common Contract Forms
**State association forms:**
Most states have standard forms created by realtor associations. These are widely used and familiar to all parties.
**Attorney-prepared forms:**
Some states use attorney-drafted forms, particularly in attorney-required closing states.
**Builder contracts:**
New construction typically uses builder-prepared contracts that favor the builder. Review carefully.
**FSBO forms:**
For sale by owner transactions may use various forms. Quality and balance vary significantly.
## What to Negotiate
Everything in a contract is potentially negotiable until signed. Common negotiation points:
* Purchase price
* Earnest money amount
* Closing date
* Possession timing
* Contingency periods
* Repair responsibilities
* Closing cost allocation
* Included/excluded items
* Inspection rights
* Financing terms
Negotiating leverage depends on market conditions, property desirability, and party motivations.
***
Rental contract terms for landlords and tenants
Research attorneys for contract review