RE89R14: Purchase and Sale Agreement in Residential Transactions

Approved July 3, 2014

 This course provides a comprehensive overview of all of the customary clauses that may typically be included in the Purchase and Sale Agreement (“P & S”) for residential transactions. The P & S may include any additional clauses as agreed upon between the parties. It is important to recognize many clauses may be worded to benefit either Buyer or Seller.

1. P & S Fundamentals

a. What is purpose of P & S?

b. Binding nature of P & S

c. Differences between residential and condominium P & S

d. Who prepares P & S?

2. Parties

a. Buyer and Seller clearly identified

b. “ . . . or their nominee”

3. Description of Property

a. Clearly defined legal address and common address

4. Buildings, Structures, Improvements and Fixtures

a. What is included in sale?

b. What is not included in sale?

c. Personal property

d. Leased equipment

e. Appliances, light fixtures, window treatment, etc.

5. Title Deed

a. Type of deed

b. Opportunity for buyer to review deed

c. Provisions of existing building and zoning laws

d. Taxes for current year

e. Liens for municipal betterments

f. Easements, restrictions and reservations of record

6. Plans

a. If deed refers to a plan

b. Plat of survey by Seller or Buyer

7. Registered Title

a. If title is registered proper form for Certificate of Title

8. Purchase Price

a. Total agreed purchase price

b. Amount of previous deposit

c. Amount to be paid upon signing P & S

d. Balance to be paid at closing

e. Money at closing in good funds 

9. Time For Performance and Delivery of Deed

a. Date and time closing

b. Closing venue

c. Time is of the essence

10. Possession and Condition of Premises

a. Possession at closing

b. Free of tenants

c. Condition of premises

d. No violations of building and zoning code

e. Pre-closing inspection

11. Extension to Perfect Title or Make Seller Premises Conform

a. Extension of time if Seller unable to provide title or make conveyance or deliver possession

12. Failure to Perfect Title or Make Premises Conform

a. If Seller unable to provide title, make conveyance or deliver possession

b. Inability of Seller to apply insurance proceeds

13. Buyer's Election to Accept Title

a. Buyer shall have election to accept such title as the Seller can deliver

b. If premises damaged by fire or casualty

14. Acceptance of Deed

a. Full performance and discharge

b. Warranties may survive closing

15. Use of Money to Clear Title 

a. Use of closing proceeds to clear title

16. Insurance

a. Insurance coverage during period of Buyer’s equitable title

17. Adjustments

a. Adjustments to be added or subtracted from closing proceeds:

i. Water and sewer use charges

ii. Operating expenses (if any)

iii. Taxes

iv. Rents

18. Adjustment of Unassessed and Abated Taxes

a. Adjustment of real estate taxes not known at date of conveyance

19. Broker(s)

a. Recital of Broker(s) commission

b. Identification of Broker(s)

c. Amount of commission

d. Who pays commission (generally Seller)

e. When commission is earned, due and payable

20. Broker(s) Warranty

a. Warranty Broker(s) are currently duly licensed by Massachusetts

b. Warranty of no other Broker(s)

21. Broker as Party

a. Broker as party to P & S 22. Deposit a. Holder of deposit escrow

b. Interest or non-interest bearing

c. Payment of deposit by escrow agent

d. Disposition in event of dispute between Buyer and Seller

23. Buyer's Default

a. Liquidated damages

b. Other seller remedies

24. Warranties and Representations

a. Buyer acknowledges no warranties beyond P & S

25. Lead Paint Acknowledgments

a. Buyer acknowledges Lead Paint Law

b. Buyer acknowledges receipt of Property Transfer Notification and Certification

c. Responsibility for lead paint inspection, if any

26. Smoke and Carbon Monoxide Detectors

a. Seller’s responsibility to deliver certificate of approved smoke and carbon monoxide detectors in conformity with applicable law at closing

27. Land Bank Fee, Boston Redevelopment Authority (BRA) Resale Payment or Other

a. In applicable districts identify amount of obligation and who is responsible for payment

28. Septic

a. Acknowledgement when septic inspection due

b. What if septic system fails inspection?

c. Septic inspection following closing

d. Who is responsible for costs?

29. Home Inspection

a. Time period

b. Obligations of parties

c. Can home inspection nullify the agreement? 

30. Facsimile and Electronic Signatures a. Acknowledgement electronic signatures are acceptable

31. Authority for Extensions a. Identification and authority of attorney or attorney-in-fact to agree to extensions of contract time frame

32. Construction of Agreement

a. Signed counterparts are acceptable

b. Binding contract

c. Two or more persons joint and several liability

d. Captions not part of agreement

33. Massachusetts Real Estate Bar Association Standards

a. Contract governed by title standards or practices of the Massachusetts Real Estate Bar Association to extent applicable

34. Quality of Title

a. All buildings, structures and improvements located within boundary lines

b. No encroachments

c. Premises abut a public way

d. Title to the premises insurable by title insurance company at normal premium

35. Broom Clean Condition

a. Broom clean condition at closing

b. Delivery of keys

c. Warranty to survive closing

36. UST

a. No underground storage tanks

37. Delivery of Other Documents

a. Seller agrees to provide Buyer any documents reasonably requested by Buyer's counsel, title insurance company, or any lender granting mortgage financing including, but not limited to, the following:

i. Certificate of non-foreign status as contemplated by Section 1445(b)(2) of the Internal Revenue Code, as amended

ii. Internal Revenue Code 1099 Forms and W-9 Forms iii. Affidavits regarding mechanics' and materialmens' liens and parties in possession sufficient to eliminate any title insurance exceptions for these matters

38. Access to Premises

a. Terms of periodic access to premises by Buyer or agent of Buyer

39. Notices a. Process for notices related to P & S

i. Parties to receive notices

ii. Method of delivery

iii. Time for delivery

40. Contingencies

a. Parties may agree to contingencies

i. Home inspection

ii. Lead paint inspection

iii. Zoning requirements

iv. Financing v. Other

41. Signatures

a. Buyer

b. Seller

c. Brokerage office policy

* * *

Statutes and Regulations

M.G.L. c. 184, § 17A

Teaching Aids

Instructor should provide samples of an actual standard purchase and sale agreement

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