The agreement establishes price, deposit, due diligence and financing contingencies, title requirements, closing date, and remedies for default. Real property contracts must satisfy the statute of frauds.
Time is of the essence provisions affect closing deadlines.
Alternative Names:
PSA, Real Estate Purchase Agreement
Why it Matters?
Contingency expiration is where disputes concentrate, since a buyer that failed to terminate before a due diligence deadline may have waived the right and placed its deposit at risk. Time is of the essence clauses make closing dates strict rather than subject to reasonable extension. Remedy provisions frequently limit the seller to retaining the deposit as liquidated damages, which caps exposure but also caps recovery.
Frequently Confused with
Related terms
Frequently asked questions
Where do disputes concentrate?
What does a liquidated deposit provision do?
