What is a purchase and sale agreement?

A purchase and sale agreement is a legally binding contract that details the terms and conditions of a real estate transaction. This document serves as the foundation for the sale of a property, outlining critical elements such as the purchase price, financing terms, property description, closing date, and any contingencies that must be satisfied prior to the completion of the sale.

In real estate transactions, a formal agreement is essential to protect the interests of both the buyer and the seller, ensuring that all parties understand their rights and obligations. Unlike informal agreements, such as handshake deals or verbal contracts, a purchase and sale agreement provides a clear legal framework that can be enforced in a court of law if necessary. It is typically drafted after negotiations have occurred and reflects the mutual consent between the buyer and seller regarding all significant aspects of the sale.

By clearly detailing all terms, the purchase and sale agreement reduces the potential for disputes and misunderstandings, facilitating a smoother transaction process.