In the world of real estate, a PSA doesn’t mean a public service announcement. PSA stands for purchase & sale agreement, which is the document used by prospective buyers when making an offer on a property.
It sounds simple enough, but there are several significant elements to understand about purchase & sale agreements.
- What is a purchase & sale agreement?
- Who prepares the purchase & sale agreement?
- What does a purchase & sale agreement include?
- What does a purchase & sale agreement not do?
Buying property is a major investment, and the closing process is one of the most critical aspects of the entire transaction. Contact the Nashville, TN, office of closing attorney Rochford Law & Real Estate Title today.
What Is A Purchase & Sale Agreement?
Because a PSA is often described as “making an offer,” it can mistakenly water-down the official nature of what is taking place.
Perhaps the most important thing to understand about purchase and sale agreement is that it is a legally-binding document. In other words, a PSA is more than documentation of the proposed purchase price; it outlines the terms, conditions, and roadmap establishing the transfer of the property from the seller(s) to the buyer(s).
Once both parties have accepted the terms of the sale and signed the document, there is an obligation for both parties to follow-through on their word.* It also protects the buyer by securing they are first in-line to the property.
*It is also worth noting that the steps required to make-good on this agreement can take weeks as the title search, inspections & appraisals, loan agreement, and preparation for the closing must all occur before the transfer of ownership.
Who Prepares The Purchase & Sale Agreement?
A real estate lawyer or real estate agent generally prepares the purchase & sale agreement for both the buyer and seller to sign simply because they understand the importance of its legally-binding implications.
Further, the types of purchase & sales agreements vary. A real estate lawyer will know the type of PSA that is appropriate for the real estate being sold, whether it is residential or commercial.
What Does A Purchase & Sale Agreement Include?
The terms of a purchase & sale agreement identifies the full legal names and contact information of both the buyers and sellers, as well as establishes:
- The purchase price and deposit amount
- A thorough description of the property, and any property included in the sale
- Contingencies, or expectations, that must be met before the transaction is complete
- Financing arrangements
- The proposed closing date for the sale (typically 30, 60, or 90 days later)
- Contract default provisions, in case one or both parties do not meet the agreement
Once the PSA is signed by the buyer, the seller can either accept or turn-down the purchase & sale agreement altogether, or they may choose to negotiate the terms through a counter-offer. If the seller takes no action, the offer will expire on a specified date and be void, and the buyer must restart the negotiation process.
What Does A Purchase & Sale Agreement Not Do?
Even though a PSA is a legally-binding document, that doesn’t mean it cannot be changed following the initial signatures of both parties. The catch is that both parties must agree to the changes.
In fact, both parties can (and often do) renegotiate some of the PSA’s terms before closing the transaction. The realtor or lawyer handling the paperwork will revise the original PSA and require the signature of both parties for the new version to take effect.
The role of a closing attorney is to help you navigate these legal documents successfully and complete the necessary research to satisfy the terms of the contract. Schedule a free, no-risk consultation with our team at Rochford Law & Real Estate Title.
