A purchase agreement is a significant part of the goods and real estate industries. To ensure a smooth process, these agreements must be legally binding. However, these agreements vary from region to region and are governed by the laws of that region. Initially, anyone intending to use a purchase agreement might be overwhelmed by the number of unfamiliar terms they might come across, so it is essential to understand the contract thoroughly before using a free purchase agreement.
What Is a Purchase Agreement?
Often referred to as a sales contract or a purchase contract, a purchase agreement is a legal document that outlines the details of the sales of goods between the buyer and the seller. It enumerates the terms and conditions like pricing, terms of financing, and contingencies that should take place before the sales deed is final, and more.
An easy way to understand this document is by referring to a purchase agreement template. A purchase agreement form includes a date of possession, which mentions the exact date on which the buyer shall be a legal owner of the goods or the property and can exercise absolute control over it. Purchase agreements also protect from risk from a breach of contract to both parties.
What Does a Purchase Agreement Include?
A purchase agreement is a vital step in the buying process and spells out the prices and terms and conditions for the transaction that will take place. Each aspect of the sale is noted, be it earnest money requirements to disclosures. The ultimate aim of a purchase agreement is to protect all the parties and ensure that all expectations are well stated and discussed before. A sample purchase agreement usually includes:
- Identification of the parties and the property: A simple purchase agreement must provide detailed information about the property to be sold as well as the parties in concern. In case more than one buyer is involved, that must be stated clearly.
- Earnest Money Deposit: During the process of making an offer, a certain sum is paid by the buyer, which is called an earnest money deposit. It is done to make obvious the sincerity of their intention to purchase the property or the goods in. The money is held in an escrow account, and the document must mention whether or not it shall be credited to the final price. Another section should mention what must happen to the earnest money deposit in case the sale is not made. A purchase agreement template word comes in handy in mentioning the earnest money deposit in a purchase agreement quickly.
- Price and term information: In both purchase and sale agreements, it is essential to include the price at which the goods or the property are being sold for and if there are terms or conditions to be fulfilled. A clear description of how the amount shall be paid (like installments, mortgage, cash etc) should be mentioned too.
- Closing Date and Costs: The date of the sale must be mentioned in the buyer seller agreements, and that any changes that occur in closing should be stated and agreed to in a written manner. The closing date is the date when the ownership of the property is fully transferred from the seller to the buyer.
A free purchase agreement template or a sales agreement template helps you fill out the essential details easily and effortlessly. If you are the one selling, then you can easily customize a sales agreement template available online.
When Is a Purchase Agreement Necessary?
Purchase and sale agreement both are equally important documents. Generally, in the USA, a purchase agreement is only made when the purchase price is $500 or higher. However, they can still be made for transactions with a lower amount. Moreover, in the case of lower amounts, documents like a bill of sale or receipt are used widely. These are normally given with the sale of the goods with the payment. For example, a receipt is enough if you are purchasing one computer. However, if you are purchasing several computers, drafting a simple purchase agreement pdf is a better choice to make.
If you are buying or selling any good or property, an agreement serves as legal documentation of that transaction. Sales and purchase agreements are essential in cases when the transaction is complex. It may include several elements like the price to be paid, date of possession, a detailed section about the terms and conditions, and how it shall be taxed. It must be signed by both parties. Such agreements are mainly used in real estate and telecommunications. You can make use of an easy-to-understand, and customizable free blank purchase agreement form or a sale agreement forms to create your purchase agreement or sales agreement in no time.