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.
Writing One
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. |
