Since you’re reading this, you’re in one of two camps: either you want to buy a new home or sell one.
Either way, you need to sort out all the necessary legal documents to ensure that everything goes smoothly. Home purchases involve a lot of planning and thought, not to mention being replete with many potential problems. And you want to make sure that all your bases are covered, especially when you’re buying or selling a house in Massachusetts.
Whether you’re a buyer or a seller, you may have a million questions concerning the purchase and selling of the property. A home is a big responsibility, and you don’t want to put yourself in a situation where you’re getting the short end of the stick. You want the deal to be mutually beneficial for both parties for all intents and purposes.
So, let’s get to it. When buying or selling a house in Massachusetts, an important document to bear in mind is a legal document called the Purchase & Sale Agreement (P&S).
List of contents
- What is a purchase and sale agreement?
- What’s in the agreement?
- Title and Deed
- Sellers and buyers responsibilities
- How to Write a Purchase and Sale Agreement
- Disclosures
What is a purchase and sale agreement?
The Purchase and Sale Agreement is a legally binding document that lays out the terms of a home purchase.
It’s quite simple. You want to buy a property, so you speak or negotiate with the property owner about the price and terms. Once a mutual agreement on all counts is established, you make the deal. Of course, you don’t just do it verbally. For the agreement to become legally binding, a legal contract is required. This legal contract is called the purchase and sales agreement, sometimes called an agreement of sale.
The agreement has to be detailed enough so that the terms of the contract are clear. The terms must be structured to be mutually beneficial for both parties, ensuring that both will fulfill their ends of the bargain.
But before a P&S can be brought to the table, the buyer needs to issue an Offer to Purchase or OTP first (see sample form here). Once all terms are agreed upon, both parties can proceed with working out a P&S. Once approved, it will override the OTP.
Before we go any further, here’s some friendly advice. Don’t ever sign that dotted line without consulting a lawyer first. A professional attorney knows everything there is to know about P&S documents and can explain to you in plain English anything that’s giving you pause.
Okay, let’s face it: Understanding what’s written on the agreement can be confusing for most. It’s quite simple once you become familiar with its overall structure.
As to that, we got you covered.
But first…
What’s in the agreement?
For a contract to be legally binding, it needs details from both parties. The same goes for this agreement.
Here are what’s included in a P&S.
- Names of both parties
- Pertinent information about the property (taken from the current deed)
- Price of the property
- Mortgage commitment date (if the buyer is taking out a loan)
- Closing date
- Other properties included in the contract
- Seller credits
It goes without saying, but the agreement must be detailed as possible. It must include all information that may have a bearing on the home’s overall value.
For this reason, the seller must invite the buyer to inspect the property with the help of a professional inspector. Maybe the buyer finds major defects that the seller hasn’t disclosed following the purchase. The buyer may hold the right to renegotiate or cancel the contract.
Title and Deed
Since the agreement lays out the terms concerning the title and the deed, you need to recognize the subtle differences between the two before you proceed. Going over these terms is necessary even if you can tell the difference.
One important thing to remember is that any property owner has both a title and a deed in his or her possession.
Here’s the difference between the two:
The title is a legal document stating you are the property owner and have the incumbent legal rights attached to that ownership. As the property’s legal owner, you have legal access to the land. Therefore, have the right to make changes or modifications to it with the necessary permits. Being the legal owner also entitles you to transfer a portion of the property or interest to others.
The deed is a legal document showing that the title is being transferred from one person to another. In other words, it’s a document proving that a sale has been made. The deed is also otherwise known as the vehicle of the property interest transfer. In many states, the deed has to be recorded and signed in the courthouse or Assessor’s Office (or an equivalent) to be legally binding.
It bears noting that the new owner will inherit any outstanding lease or lien once the deed is finalized and signed. To protect the buyer, the seller is obligated to convey a “good clear and marketable” title before transferring the ownership of the property to him or her.
Sellers and buyers responsibilities
| Sellers responsibilities | Buyers responsibilities |
| Obtain a title insurance policy | Paying escrow fees |
| Pay escrow service fees | Paying notary fees |
| Pay notary fees | Paying deed recording fees |
| Obtain a smoke and carbon monoxide certificate | Buy an owner’s title insurance (as required in Massachusetts) |
| Pay county transfer taxes | |
| Pay for the drafting of the deed | |
| Pay the broker’s commission | |
| Pay for the drawing/recording of the reconveyance deed | |
| Obtain a 6(d) certificate for a condominium |
What are the seller’s responsibilities?
The sales and purchase agreement put in writing the terms agreed upon by both the seller and the buyer and comes with responsibilities. Once the document has been signed, both parties are obligated to follow through.
The seller has a responsibility to obtain a title insurance policy to secure the maintenance of the insurance and the upkeep until the closing. A title insurance policy protects the buyer from potential loss if something goes wrong with the title transfer. A title insurance policy is a one-time fee typically paid within the closing agreement and costs between a few hundred dollars to a couple of thousand dollars.
This person also has a responsibility to pay escrow service fees. An escrow in place is important, especially in deals involving a huge amount of money. It’s because it transfers jurisdiction to a neutral third party. This neutral third party will oversee the funding and the transfer of documents tied to the transaction. It ensures that both parties meet their obligations as stated in the contract.
How to Write a Purchase and Sale Agreement
Now that you’re more familiar with it, you’re probably wondering: who writes the P&S agreement anyway?
Traditionally, the legal document is drafted by the seller’s attorney or an Escrow agent who oversees the closing process.
If you’re selling your property, it’s perfectly fine that you draft the P&S yourself. Just hire an attorney to look over it once you’re done.
So without further ado, here are the steps to writing the agreement.
1. Overview of steps and notes
| Pt | Action | Notes |
| 1 | Outline and format the document | You want to make sure that the document leaves no stone unturned, and outlining is a good way to ensure that doesn’t happen. Refer to the items enumerated in this article’s “What’s in a Purchase and Sale Agreement” section. Make sure that you include them all as you draft your outline. Moreover, the legal document must be in a legible font. Times New Roman 12 is the standard form used for formal documents. It’s way better than Calibri, for starters. More importantly, make sure that you save the file into your hard drive or cloud storage. There’s always the probability that you’ll need to issue another one in the future. |
| 2 | Write the title | Insert the title at the top of the page, right at the center. Write the title as “Purchase and Sale Agreement, or “Agreement to Purchase Real Estate,” or simply “Purchase Agreement.” |
| 3 | Insert the names | Identity both parties by name. You can insert the following paragraph:“< name of the seller> of <complete address>, does hereby sell, assign and transfer to < name of buyer>, of <buyer’s original home address>, the following property: |
| 4 | Include the property’s legal description | Provide a detailed description of the property, as it was written on the deed. It must include the legal boundaries of the property and the county and state and an accurate description of property lines. To obtain a copy of the deed, visit the Recorder of Deeds office in your county or city. |
| 5 | Specify the agreed-upon purchase price | What’s the purchase price? Also, specify that the buyer must pay the remaining balance before closing once the down-payment is credited. |
| 6 | Specify any earnest money that has been deposited | Include the exact amount of earnest money deposited by the buyer. Earnest money is the amount paid by the buyer to prove to the seller that he’s committed to fulfilling his end of the bargain on the financial side. To put it simply, paying earnest money kickstart the funding process. If no money has been deposited yet, you can include a clause specifying the amount of earnest money to be deposited and the deadline for its payment. Sample statement: “Earnest or deposit money amounting to [total amount] shall be paid to [insert name of seller] of [insert complete address], in the form of a check or money order. Buyer shall pay the amount no later than 5:30 pm, five (5) business days after the acceptance of the agreement.” It’s also advisable to mention that the earnest money will be credited against the remaining balance and their exact amounts. |
| 7 | Lay out the source of financing | Specifying the buyer’s source of financing is critical because it shows proof that they can meet their financial obligations. You also need to describe the payment plan or identify the type of loan(if the purchaser is paying by loan. The buyer can also provide a verification letter confirming the availability of funds. |
| 8 | Describe the items included | If a buyer wants to purchase some items inside the home and the seller agrees to sell them, each must be included in the legal document. The seller can provide each item with a physical description and specify the amount being sold. If the seller expressly wants to take some items with them, they can include them in the document. |
| 9 | Specify who will be paying the taxes | Who pays the taxes is always a contentious issue when the property is being transferred from one party to another. To avoid any potential disputes, identify and explain who will be paying the taxes and how this affects the payment plan. |
| 10 | Draft a record of transactions that need to get paid | You must list any closing costs that need to be paid by both parties. Typically, the buyer has to settle the association transfer fees and loan expenses. It includes insurance fees and deed of trust recording fees, to name a few. On the other hand, the seller is obligated to settle outstanding loans and liens on the property before closing. |
| 11 | Lay out the home inspection process | Most home purchases now require that a home inspection be carried out. This ensures that both people are protected from any loopholes that may arise throughout the transaction. The seller can include a clause stating that an inspection of the premises (preferably with a professional home inspector) has been recommended. You also need to specify that the buyer has the option to default if the inspection proves to be unsatisfactory. |
| 12 | Describe the general warranty deed | A warranty deed is a type of deed confirming that the seller is the rightful owner of the property being sold. It gives him or her the right to transfer the title to another. This section shall indicate that the buyer has the right to sue if the statement turns out to be false. |
| 13 | Include a Risk of Loss clause | What happens if the property is damaged due to unforeseen circumstances before the close of the transaction? It must be stated in the legal document that the seller must bear the responsibility if such a thing occurs. |
| 14 | Add a dispute resolution clause | Any dispute on the home purchase can be disadvantageous to both parties. Hiring a private mediator can benefit both parties since the mediator is the neutral party that handles any conflict resolution if required. It’s particularly advantageous because it settles disputes outside the court and involves attorneys who will be more invested in the case. |
| 15 | Include a statement confirming that the seller agrees to the contract | This is the important part: the document needs to explicitly state that the seller agrees to all terms and conditions specified in the manuscript. It goes without saying, but a signature line must be inserted below the statement. Writing a legal document can be difficult. After all, not everybody can speak or write legalese. Thankfully, there are a ton of templates out there you can use. It includes the ones provided by LegalTemplates.com or AaronHall.com. |
Disclosures
If you’re the seller, it’s only right that you lay all the cards on the table. After all, it’s unethical to withhold property information that may impact the home’s value and the buyer’s safety. For this reason, most states have ruled it illegal for a seller not to disclose any defects with the property. It’s with a focus on those that can compromise the new homeowner’s safety. It’s advised that they conduct inspections themselves before selling the property. It’s done to ensure that there are no known defects that haven’t been accounted for.
Massachusetts requires only two types of disclosures, in particular. This is why Massachusetts is often referred to as a caveat emptor or a “buyer beware” state. It’s recommended that the buyer perform a home inspection to check for any issues that may negatively impact his finances or quality of living once he’s settled in.
According to Massachusetts law, the seller must disclose only two things: the presence of lead paint and the existence of a septic system.
A buyer can request for the seller to add disclosures on other home fixtures, such as the welland underground storage tanks. It can cover asbestos and lead paint to name a few.
For this article, let’s go over the two types of disclosures they are required to provide buyers as stated by Massachusetts law.
Lead Paint Disclosure
If you’re selling a home built before 1978, chances are it has lead-based paint. Lead is a substance that was often used as a base in paint. The problem with lead is that it’s a corrosive substance that poses health risks to those exposed to it. Massachusetts has a law stating the home seller’s responsibility to include an addendum confirming the presence of lead-based paint in the home before selling it to a potential buyer. It’s like most other states in that regard.
There are many ways for someone to confirm the presence of lead inside or outside his home. A popular method is using lead paint test kits. They are typically purchased in bulk to ensure that all areas that potentially contain lead are checked.
Septic System Disclosure
Title 5 of the Massachusetts State Environmental Code requires sellers to disclose the presence of a septic system at their home to buyers. The statute specifically requires that the septic system be inspected not more than two years before the sale. A licensed inspector must conduct the inspection, and the results of that inspection must be included in the disclosure.
It bears noting that sellers are required to disclose the presence of a septic system. Massachusetts law doesn’t require them to fix any system’s issues. However, there will be buyers who will request sellers to bring the system into compliance before they agree to purchase.
Other Disclosures Massachusetts Requires
Most prospective buyers will want to ensure that the home they’re about to purchase is a good investment. They don’t want unpleasant surprises, and it falls on the seller’s shoulders to assure them that they’re getting their money’s worth.
While Massachusetts law doesn’t require much in the way of disclosures (except for the ones mentioned above), it’s still considered good practice for every seller to provide a disclosure on the following:
Well Disclosure
Most states (Massachusetts not included) require sellers to provide the buyer with information about the presence and condition of all wells on the property being sold.
This applies to all wells, whether the well is in good condition. It also applies if they’re abandoned or unused. This law has been passed to ensure that new homeowners are protected from possible contamination.
Additional Disclosures
Here are other disclosures you can include in your P&S Agreement:
- Pest damage
- Paranormal activity
- Personal interest
- Drainage system
- Radon gas
- “Emotional defects” (past occurrence of suicide or violent crime in the home)
Now that we have you here already
You may have come to this page looking for standard agreements for the state of Massachusetts. We want to encourage you to keep browsing the various offerings on this site.
Our mission here at Check4Lead is not to entirely focus on one simple way of protecting homeowners. Instead, we prove various means that homeowners can ensure that they stay protected in whatever situation they are in.
Massachusetts has a lot of older homes spread out throughout the state. If it isn’t your first visit to this site, you will know that there are various reasons why you should be careful when you’re buying an older home.
Our main focus on the site remains lead testing. It can have devastating effects on families who move into these homes. Therefore, being equipped with the right knowledge is the first way to ensure that you are protecting yourself and your family.
We have a range of articles we encourage our readers to keep reading if they don’t feel like they are done leaving the site just yet.
Some of our most popular articles include removing plaster walls and encapsulating lead paint. We also have a topic on the best paint stripper for various types of surfaces.
If you are buying an older home, all of these topics are topics that you should consider reading upon.
First of all, you will want to make sure that you know whether or not you are buying a property that has lead in it. While simply buying this property isn’t necessarily an issue, it’s a good way to ensure that you are properly protecting yourself and your family.
