S&P Agreement - Real Estate
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A Sale and Purchase agreement (or “S&P agreement”) is a binding legal contract that stipulates the terms for a financial transaction between a buyer and seller of real estate or other property.
Real Estate
If you’re purchasing a home, the S&P agreement formalizes the striking of a deal. Once you and the seller agree on a price, a closing date, and various other conditions, your real estate agent will draw up a contract for both parties to sign. In addition to the settled price and relevant deadlines, the final draft will cite any property coming with the home (furniture, appliances, etc.), the real estate agent’s commission, the amount of earnest money (the deposit after closing), as well as other pertinent details.
A proper S&P agreement will also contain provisions, or contingencies, designed to protect both parties from manipulation or fraud. The buyer and seller must demonstrate good faith by meeting certain conditions before the closing date.
Have your attorney scan the document to verify the presence of a home inspection and/or an appraisal contingency. The home inspection contingency reassures the buyer that the current homeowner has not withheld information about damages or defects in the home. The discovery of undisclosed damages may lead to a renegotiated price at closing; similarly, the presence of an appraisal clause ensures that the price of sale falls within range of the home’s market value. The appraisal will give leverage to the buyer if the homeowner has asked for an exorbitant price.
Know that your agreement might undergo important changes as a result of these conditions. The deal could still fall apart. For example, a financial contingency clause may mandate that the buyer receive approval on a mortgage plan. If the mortgage doesn’t go through before closing, the contract can be voided.
Don’t agree to terms that you’re not sure you can fulfill. Once you’ve reached the S&P stage, you are on the verge of achieving your dream of homeownership. You’ve staked a lot on the success of this deal. Have your attorney review this critical document before signing. This way, you’ll not only get what you’re paying for, but you’ll have peace of mind.
Articles contained here are not intended to provide legal advice, only providing general information. We encourage individuals to consult with an attorney regarding individual circumstances.
