Any time you make a purchase of more than $500, it is advisable to record the transaction in case there is ever a dispute about the purchase and sale. The appropriate document for this task is a purchase agreement, which you can prepare from a purchase agreement template. Generally, purchase agreements are used to record transactions in a wide range of industries, including telecommunications and real estate. This post reviews everything you need to know to prepare a purchase agreement.
What Is a Purchase Agreement?
A purchase agreement is a kind of contract that defines the terms and conditions of the sale and purchase of goods. Once signed, it is a legally binding agreement between the buyer and seller of the goods in question and outlines the roles of each party. In real estate, a purchase agreement highlights the title transfer conditions and purchase price of a property. It is also called a purchase and sale agreement, purchase contract, or sale contract.
What Is a Purchase Agreement Template?
A purchase agreement template is a model form that you can use to record the terms and conditions of the sale of high-value goods. You can download it online and fill in personalized details, such as the names of the buyer and seller, item description, and purchase price.
Purchase Agreement Templates & Examples
What Is the Main Purpose of a Purchase Agreement?
The main reason for preparing a purchase agreement is to protect the interests of the buyer and seller in the event of a dispute. It records the terms of the agreement so that each party holds up their end of the deal during the transaction. In real estate, the signing of a purchase agreement does not guarantee the sale of a property. However, it defines how the transaction will take place if it goes through.
Who Needs a Purchase Agreement Template?
Generally, a purchase agreement is useful in any transaction valued at more than $500. It is used to sell goods – not services – and can be included in the sale of a car, boat, furniture, and more. In the world of real estate, it can come in handy for the following parties:
- Home Buyer: Used when buying through a real estate agent or private sale.
- Home Seller: Used when selling with a real estate broker or in a private sale.
- Real Estate Attorney: This is the party that performs the closing and oversees the contract.
- Business Buyer or Seller: In the sale of commercial property.
Even if a sale is happening between friends or family members, a purchase agreement ensures that the terms of the transaction are not affected by emotions or sentiment.
Essential Elements of a Purchase Agreement Template
A purchase agreement should carry crucial details that describe the terms of the purchase and sale. Here are is the information you should include:
- Agreement date
- The name, addresses, and contact information of the buyer and seller
- Property or item description and quantities
- Type of sale
- Purchase price
- Payment terms
- Delivery details, including time, method, and location
- Buyer and seller signature and signature dates
- Witness signature and signature dates
- Any available warranties
- Consequences of defaulting the terms
How to Write a Purchase Agreement
When writing a purchase agreement, you can write one from scratch or use a Purchase Agreement Template, with the latter being easier. Whichever you choose, the following guide should help you create the document efficiently:
- Step 1: Indicate the current date under ‘Agreement Date’, then write down the name, contact information, and mailing addresses of the buyer and seller.
- Step 2: Next, describe the item or property that is being sold, including the quantities. If several items are being sold, describe them on individual lines.
- Step 3: Report the selling price of the property or item being sold and all applicable fees and sales taxes. If there is a deposit involved, list it here too.
- Step 4: Describe how the buyer will make payments, including the payment date, agreed-upon payment date, and date of delivery.
- Step 5: Lastly, define all the conditions, warranties, terms, and conditions that apply to the purchase and sale of the item or property.
Types of Purchase Agreement Templates
There are four types of purchase agreements, with the difference being the amount of information known at the time of the order. The four types are:
- Standard Purchase Orders – This purchase order is commonly used for infrequent, irregular, or one-time procurements.
- Planned Purchase Orders – A planned purchase order is very comprehensive. It contains details like product price and description, but the dates are considered tentative.
- Blanket Purchase Orders – This purchase order is used to buy goods or services from a given vendor but with no specific quantity defined.
- Contract Purchase Orders – A contract purchase order defines the vendor’s details, delivery, and payment terms but does not specify the goods to be bought.
Can I write my own purchase agreement?
Yes, you can prepare your own purchase agreement so long as you ensure the document contains all the necessary details and is signed by the buyer and seller
Do I need a lawyer to write a purchase agreement?
While you can write a purchase agreement without an attorney, it is advisable to have one go through the document and advise you, especially if it is for the sale of a property.
What is a buying agreement?
A buying agreement is an alternative name for a purchase agreement and is used for real estate sales.
What is the difference between a PA and a Bill of Sale?
A buyer cannot use a purchase agreement to prove that they own an item, but they can use a bill of sale. A bill of sale proves an official transfer of ownership while a PA records the terms of the sale.
When buying or selling high-value goods, a Purchase Agreement Template can help you create a purchase agreement to record the transaction. This is crucial to ensuring that your rights are protected and that the other party agrees to the terms of the sale. A purchase agreement should be signed by the buyer and seller for it to be legally binding. When using it for real estate transactions, it is advisable to involve a real estate attorney, who can review the agreement for its correctness and legal validity.