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What is a Real Estate Purchase Agreement?

The decision to purchase real estate is likely one of the most important decisions you will make. Real estate is often one of the largest purchases you will make in your lifetime, so it is important to make sure you pay close attention to the details of the sale. Whether you are buying or selling property, you must have a real estate purchase agreement in place. An experienced attorney will assist you with drafting or reviewing a real estate purchase agreement before you sign it.

What is a Real Estate Purchase Agreement?

A real estate purchase agreement is a contract between a buyer and seller of a property. This is the final document and the one that governs the transaction between parties. Although you may have discussed various things over the course of time, the only matters that are legally binding are those that are included in the agreement. Therefore, it is important to thoroughly read the contract and make certain that it contains the details that are necessary for the transaction. This document sets the terms of the transaction, and both parties must sign it.

Does a Real Estate Transaction Require a Written Purchase Agreement?

Wisconsin and other states require parties to sign a written real estate purchase agreement when buying or selling real estate. A purchase agreement is a contract. To be legally binding, both parties must agree to the terms of the contract and must sign the agreement. If a contract is not signed, it means that it is not fully executed and, therefore, is not typically legally binding. A written purchase agreement protects the buyer and the seller in a real estate transaction.

What to Include in a Real Estate Purchase Agreement

For a purchase agreement to be considered legally binding, it must include an offer made, an acceptance of the offer, and consideration. In the case of a real estate purchase agreement, the contract includes an offer made by the buyer and an acceptance of the offer by the seller. Consideration is required by both parties. The seller’s consideration is the agreement not to sell the property to anyone else. The buyer’s consideration is a monetary deposit. Although the purchase agreement may include much more, these are the most basic items that are required to make the agreement valid.

Why a Deposit is Necessary

A deposit is a necessary part of a real estate purchase agreement. It may be the most important part. The deposit is the consideration on the part of the buyer that shows they are serious about the purchase. If a buyer does not give a deposit, the purchase agreement could be considered void in some cases because there was no consideration and, therefore, no legal contract. If a buyer and seller make a purchase agreement, they must both fulfill their part of the deal. There have been cases where a buyer failed to pay a deposit that was required in the purchase agreement, and the buyer sold the property to someone else.

A real estate purchase agreement is designed to protect both the buyer and seller. The purchase agreement should be as complete as possible, and it is often best to utilize the services of an attorney. If you have problems with a purchase agreement that is in place, an experienced attorney will help you resolve the matter. To learn more about real estate purchase agreements, contact us at Moen Sheehan Meyer, Ltd. at (608) 784-8310 or online to schedule a consultation.

Published October 9, 2023
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