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Purchase Agreement

Free Purchase Agreement Template

Create a comprehensive, legally binding purchase agreement for real estate, businesses, vehicles, and more. Our attorney-reviewed templates cover all essential terms including contingencies, earnest money, closing procedures, and state-specific requirements.

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Last updated February 26, 2026

What Is a Purchase Agreement?

A purchase agreement is a legally binding contract that establishes the terms and conditions under which a buyer will acquire property, assets, or a business from a seller. It serves as the roadmap for the entire transaction, detailing everything from the purchase price and payment structure to contingencies, inspection rights, and the timeline for closing. Once both parties sign a purchase agreement, they are legally obligated to fulfill the terms outlined in the document or face potential consequences, including forfeiture of earnest money, litigation, or a court order for specific performance.

Purchase agreements are used in virtually every significant sale transaction. In residential real estate, the purchase agreement is the document that takes a home from "under contract" to "sold." In commercial real estate and business acquisitions, it may run dozens of pages and include complex provisions for due diligence, representations and warranties, indemnification, and post-closing adjustments. Even in simpler transactions like private vehicle sales, a well-drafted purchase agreement protects both parties by putting the deal terms in writing before money changes hands.

The purchase agreement is sometimes referred to as a purchase and sale agreement (PSA), a sales contract, a real estate contract, or simply a buy-sell agreement. While these names are often used interchangeably, they all describe the same core document: a written contract that governs the sale of property or assets from one party to another.

It is important to understand how a purchase agreement differs from related documents. A bill of sale is a receipt that records a completed transaction — it is signed at or after closing to confirm that ownership has transferred. A purchase agreement, by contrast, is signed before the sale closes and governs the process of getting to closing. A purchase agreement says "here is what we are going to do," while a bill of sale says "here is what we did." For real estate transactions, the purchase agreement is followed by a deed at closing, which is the instrument that actually transfers legal title.

Whether you are buying a first home, selling a commercial building, acquiring a business, or purchasing a vehicle through a private party sale, a purchase agreement is your most important legal safeguard. It ensures that both sides understand their obligations, creates a binding framework for the transaction, and provides legal recourse if either party fails to perform. Our attorney-reviewed templates are designed to cover the critical provisions required for each type of purchase agreement, customized to the specifics of your deal.

Legal Protection

Binding contract that protects both buyer and seller throughout the transaction

Clear Terms

Defines price, contingencies, timelines, and obligations so there are no surprises

Enforceable Rights

Gives both parties legal recourse if the other fails to perform their obligations

Purchase Agreement Form Preview

Below is a visual preview of the sections and fields included in a standard purchase agreement. This mockup illustrates the structure and level of detail our templates provide. Your completed document will be fully formatted, professionally styled, and customized for your specific transaction type and state.

Purchase Agreement

Contract for the Sale and Purchase of Property

Agreement Date:  Agreement No:  

Section 1: Party Information

Buyer

John A. Smith
01/15/1985
123 Oak Avenue, Austin, TX 78701
(512) 555-0142

Seller

Jane B. Doe
06/22/1978
456 Elm Street, Austin, TX 78702
(512) 555-0298

Section 2: Property / Item Description

Single-Family Residence
789 Maple Drive, Austin, TX 78703, Lot 14, Block 3, Sunset Hills Subdivision
Travis
01-2345-0678
2004
All permanently installed fixtures, refrigerator, washer, dryer, window treatments, garage door opener(s)

Section 3: Purchase Price & Payment Terms

$425,000.00
Four Hundred Twenty-Five Thousand Dollars
$85,000.00
$340,000.00
Conventional

Section 4: Earnest Money / Deposit

$8,500.00
3 business days
First American Title Company, 100 Congress Ave, Austin, TX

Section 5: Contingencies

Section 6: Closing Date & Location

June 15, 2026
First American Title Company
At closing, upon delivery of keys

Section 7: Representations & Warranties

The Seller represents and warrants that:

  • Seller has good and marketable title to the property, free of all liens and encumbrances except as disclosed herein.
  • There are no pending or threatened legal actions affecting the property.
  • All systems (plumbing, electrical, HVAC) are in working order as of the date of this agreement.
  • Seller has disclosed all known material defects to the Buyer.
  • The property complies with all applicable zoning ordinances and building codes.

Section 8: Signatures

Buyer Signature

Seller Signature

Types of Purchase Agreements

Different transactions call for different purchase agreement structures. A residential home sale has very different requirements than a business acquisition or stock purchase. Select the agreement type that matches your transaction to get a template with the right provisions, contingencies, and legal language for your specific deal.

How to Write a Purchase Agreement: A 10-Step Guide

Writing a thorough purchase agreement requires careful attention to detail. Each section of the document serves a specific legal purpose, and omitting key provisions can leave you exposed to risk. Follow these ten steps to create a comprehensive purchase agreement that protects both buyer and seller.

1

Identify the Parties

Begin by clearly identifying the buyer and seller using their full legal names. If a party is an individual, use their name as it appears on their government-issued ID. If a party is a business entity, use the exact legal name of the entity (LLC, Corporation, Partnership) along with the state in which it is organized and the name of the authorized representative signing on its behalf.

Include the current mailing address, phone number, and email address for each party. For real estate transactions, some states also require the parties' marital status, as a spouse may have community property rights or homestead rights that affect the sale. If multiple buyers or sellers are involved, each person must be named individually.

Tip: Always verify the legal names against official documents. A misspelled name can create title issues and delays at closing.

2

Describe the Property or Assets

Provide a detailed description of what is being sold. For real estate, this includes the street address, legal description (lot, block, subdivision, or metes and bounds), county, and parcel or tax ID number. A legal description obtained from the deed or title company is more precise than a street address and is preferred for the agreement.

For business purchases, list all assets included in the sale — equipment, inventory, intellectual property, customer lists, goodwill, trade names, and contracts being assigned. For vehicle sales, include the year, make, model, VIN, odometer reading, and color. The more specific you are, the less room there is for disputes about what was included in the sale.

Equally important is specifying what is excluded from the sale. In a home purchase, for example, the seller may want to exclude a custom chandelier or built-in shelving. In a business sale, certain assets or liabilities may be excluded. List exclusions clearly to avoid misunderstandings.

3

Set the Purchase Price and Payment Terms

State the total purchase price in both numerical and written form to avoid ambiguity. Specify the payment structure: will the buyer pay the full amount in cash at closing, finance the purchase with a mortgage or loan, use seller financing, or pay in installments? If financing is involved, include the type of loan (conventional, FHA, VA), the expected interest rate range, and the loan term.

Break down the payment into components: earnest money deposit, additional down payment at closing, and the financed amount. Specify the acceptable payment methods for the closing payment (wire transfer, certified check, cashier's check). If the seller is providing financing, include the note terms, interest rate, monthly payment amount, and any balloon payment provisions.

Warning: Never accept personal checks for real estate closings. Wire fraud is increasingly common — always verify wiring instructions by phone using a known number, not the number in an email.

4

Define the Earnest Money Deposit

Earnest money shows the buyer's good faith commitment to the purchase. Specify the exact amount, the deadline for delivering the deposit (typically 1 to 3 business days after acceptance), and the entity that will hold the funds in escrow (usually a title company, real estate brokerage, or attorney). The standard amount ranges from 1% to 3% of the purchase price, though competitive markets may warrant higher deposits.

Clearly define under what circumstances the earnest money is refundable versus non-refundable. Typically, the buyer gets their earnest money back if they cancel during a contingency period (such as a failed inspection or denied financing). If the buyer backs out without a valid contingency, the seller usually keeps the earnest money as liquidated damages. Spell out these terms explicitly to avoid disputes.

5

Include Contingencies and Conditions

Contingencies are conditions that must be met before the sale can proceed to closing. They function as exit ramps that allow the buyer (or sometimes the seller) to cancel the agreement without penalty if certain conditions are not satisfied. Common contingencies include financing approval, satisfactory home inspection, acceptable appraisal, clear title, and the buyer's ability to sell their existing home.

Each contingency should include a specific deadline by which it must be satisfied or waived. For example, "Buyer shall have 10 calendar days from the date of acceptance to complete a professional home inspection." If the contingency is not satisfied within the stated timeframe, the agreement typically gives the affected party the right to cancel and receive a refund of their earnest money.

Best practice: Buyers should include contingencies for anything that would cause them to walk away from the deal. Sellers should set reasonable deadlines so the property is not tied up indefinitely.

6

Specify the Closing Date and Procedures

The closing date is when ownership officially transfers from the seller to the buyer. Set a specific date that allows sufficient time for all contingencies to be satisfied, financing to be approved, and title work to be completed. Residential closings typically occur 30 to 60 days after the agreement is signed. Include provisions for what happens if closing is delayed — for example, a per-day penalty, an automatic extension, or the right to cancel.

Identify the closing agent (title company, escrow company, or attorney) and the closing location. Specify who is responsible for each closing cost, including title insurance, recording fees, transfer taxes, survey costs, and attorney fees. In many markets, the allocation of closing costs is negotiable — document the agreed-upon split clearly.

7

Address Representations and Warranties

Representations and warranties are statements of fact made by the seller (and sometimes the buyer) about the property and the transaction. The seller typically represents that they have clear title to the property, there are no undisclosed liens or encumbrances, the property complies with applicable laws and zoning requirements, and all known material defects have been disclosed. These statements survive closing, meaning the buyer can seek recourse if they later discover a representation was false.

In business purchase agreements, representations and warranties are significantly more detailed, covering the financial condition of the business, tax compliance, employment matters, environmental liabilities, intellectual property ownership, customer contracts, and pending litigation. The scope and survival period of representations and warranties are among the most heavily negotiated provisions in any purchase agreement.

8

Include Required Disclosures

Federal and state laws require certain disclosures in purchase agreements. For residential real estate, federal law requires a lead-based paint disclosure for homes built before 1978. Most states require sellers to complete a property condition disclosure form covering the condition of major systems (roof, plumbing, electrical, HVAC), known defects, environmental hazards, and neighborhood nuisances.

Additional disclosures may be required depending on the property type and location. These can include flood zone disclosures, sex offender registry notifications, HOA documents, mold disclosures, seismic hazard zones, and agricultural land notices. Failure to provide required disclosures can give the buyer the right to cancel the agreement and may expose the seller to liability.

Warning: Sellers who fail to disclose known material defects can face lawsuits for fraud or misrepresentation, even after closing. When in doubt, disclose.

9

Define Default and Remedies

Your purchase agreement should clearly define what constitutes a default by either party and what remedies are available. Common defaults include failure to close by the specified date, failure to deliver clear title, failure to make the earnest money deposit, or breach of any representation or warranty. The consequences of default may include forfeiture of earnest money, the right to sue for specific performance (forcing the sale to proceed), or the right to seek monetary damages.

Many purchase agreements include a liquidated damages clause that limits the seller's remedy to retaining the earnest money if the buyer defaults. This cap provides predictability for the buyer while still compensating the seller. Some agreements also include provisions for mediation or arbitration before litigation, which can save both parties time and money.

10

Execute the Agreement Properly

Both the buyer and seller (and their spouses, if required by state law) must sign and date the agreement. If a party is a business entity, the person signing must have the authority to bind the entity. Include a line for printed names below each signature. Both parties should receive a fully executed copy of the agreement — "fully executed" means all parties have signed.

While most purchase agreements do not need to be notarized, notarization is recommended for high-value transactions and may be required in some states for the agreement to be recorded. Electronic signatures are legally valid under the federal ESIGN Act and the Uniform Electronic Transactions Act (UETA) adopted by most states. Our platform supports e-signatures for convenient, legally binding execution.

Best practice: Deliver the executed agreement and earnest money to the escrow agent or title company promptly. Delays in delivering earnest money can constitute a default under some agreements.

Key Components of a Purchase Agreement

A comprehensive purchase agreement addresses every aspect of the transaction. Missing critical components can render the agreement unenforceable, create loopholes, or leave both parties exposed to unnecessary risk. The table below outlines the essential elements every purchase agreement should include.

ComponentDescription
Buyer InformationFull legal name, address, contact details, and marital status of the buyer
Seller InformationFull legal name, address, contact details, and marital status of the seller
Property DescriptionLegal description, street address, parcel ID, and included/excluded items
Purchase PriceTotal price in numbers and words, payment structure, and financing terms
Earnest MoneyDeposit amount, delivery deadline, escrow agent, and refund conditions
Financing ContingencyLoan type, amount, interest rate, and deadline for mortgage approval
Inspection ContingencyInspection period, scope of inspections, and buyer's remedies for defects
Appraisal ContingencyRequirement for property to appraise at or above the purchase price
Title RequirementsCommitment to deliver clear, marketable title free of liens and encumbrances
Closing Date & LocationWhen and where the closing will occur, with provisions for extensions
Closing Costs AllocationWhich party pays for title insurance, transfer taxes, recording fees, and other costs
Possession DateWhen the buyer takes physical possession — at closing, before, or after
Representations & WarrantiesSeller's statements of fact about the property, title, and disclosures
DisclosuresLead paint, property condition, flood zone, HOA, and other required disclosures
Default & RemediesConsequences of breach, including liquidated damages, specific performance, and dispute resolution
Prorations & AdjustmentsHow property taxes, HOA dues, utilities, and rent are split between buyer and seller at closing
Signatures & DateDated signatures of all parties, with witness or notary lines if required

Common Purchase Agreement Contingencies

Contingencies are protective provisions that give the buyer or seller the right to cancel the agreement without penalty if certain conditions are not met. They are one of the most important features of any purchase agreement. Here are the six most common contingencies and why they matter.

Financing Contingency

Allows the buyer to cancel if they are unable to secure mortgage approval within a specified timeframe (typically 21 to 30 days). This is the most common contingency and protects the buyer from being forced to purchase a property they cannot finance. Without this contingency, the buyer risks losing their earnest money if their loan falls through.

Inspection Contingency

Gives the buyer a specified period (usually 7 to 14 days) to have the property professionally inspected. If the inspection reveals significant defects, the buyer can negotiate repairs, request a price reduction, or cancel the agreement. This contingency protects buyers from purchasing a property with hidden structural, electrical, plumbing, or environmental issues.

Appraisal Contingency

Requires the property to appraise at or above the purchase price as determined by a licensed appraiser, typically ordered by the buyer's lender. If the appraisal comes in below the purchase price, the buyer can renegotiate, make up the difference in cash, or cancel the agreement. Lenders will not finance more than the appraised value, making this contingency essential for financed purchases.

Title Contingency

Requires the seller to deliver clear, marketable title to the property — meaning the title is free of outstanding liens, judgments, easements, or other encumbrances that were not disclosed. A title company or attorney conducts a title search and issues a title commitment. If title defects are found that the seller cannot cure, the buyer can cancel. Title insurance protects against undiscovered claims.

Home Sale Contingency

Makes the purchase contingent on the buyer selling their existing home by a specified date. This protects buyers from owning two properties simultaneously. Sellers often resist this contingency because it introduces uncertainty, and some markets make it impractical. A "kick-out clause" may allow the seller to continue marketing the property and give the buyer a short period to waive the contingency if another offer comes in.

Insurance Contingency

Allows the buyer to cancel if they are unable to obtain acceptable homeowner's insurance at a reasonable cost. This is increasingly relevant in areas prone to natural disasters (floods, hurricanes, wildfires) where insurance may be expensive, limited, or unavailable. Lenders require homeowner's insurance, so the buyer cannot close without it. This contingency ensures the buyer is not locked into a purchase they cannot insure.

Purchase Agreement vs Other Documents

A purchase agreement is often confused with other transaction-related documents. Understanding the differences is important for choosing the right document for your situation and knowing when you may need more than one.

Purchase Agreement vs Bill of Sale

Purchase Agreement

  • - Signed before the sale closes
  • - Outlines terms, contingencies, and conditions
  • - Creates a binding obligation to perform
  • - Governs the process from offer to closing
  • - Used for complex, high-value transactions

Bill of Sale

  • - Signed at or after the transaction
  • - Records that the sale occurred
  • - Serves as a receipt and proof of transfer
  • - Documents the completed exchange
  • - Used for personal property, vehicles, goods

When to use both: In a vehicle purchase with financing or installment payments, you may use a purchase agreement to set the terms and a bill of sale at closing to document the transfer. In real estate, the purchase agreement governs the deal and a deed (not a bill of sale) transfers title.

Purchase Agreement vs Letter of Intent (LOI)

Purchase Agreement

  • - Legally binding and enforceable
  • - Contains all final negotiated terms
  • - Signed when both parties are ready to commit
  • - Includes detailed contingencies and provisions

Letter of Intent

  • - Generally non-binding (except certain clauses)
  • - Outlines proposed terms for negotiation
  • - Signed early in the process as a framework
  • - High-level overview without full legal detail

When to use both: LOIs are commonly used in business acquisitions and commercial real estate. The parties sign an LOI to agree on basic terms, then negotiate the detailed purchase agreement. The LOI may include binding exclusivity and confidentiality clauses while the purchase agreement is being drafted.

Purchase Agreement vs Option to Purchase

Purchase Agreement

  • - Both parties are obligated to perform
  • - Buyer must buy and seller must sell
  • - Mutual commitment with defined closing date
  • - Default by either party has consequences

Option to Purchase

  • - Only the seller is obligated; buyer has a choice
  • - Buyer pays for the right (option fee) to buy later
  • - Buyer can exercise or let the option expire
  • - Common in lease-to-own and land banking

Key difference: An option gives the buyer the right but not the obligation to buy, while a purchase agreement creates a mutual obligation. Options are common in lease-option (rent-to-own) arrangements and developer land assemblages where the buyer needs time to secure zoning or permits before committing.

Purchase Agreement vs Sales Contract

Purchase Agreement

  • - Term commonly used in real estate
  • - Emphasizes the buyer's perspective
  • - May include real estate-specific provisions
  • - Typically a single, specific transaction

Sales Contract

  • - Term commonly used in commercial/goods sales
  • - Emphasizes the seller's perspective
  • - May be governed by UCC for goods
  • - Can cover one-time or ongoing sales

In practice:These terms are largely interchangeable. The name used often depends on industry convention and regional preference rather than any legal distinction. In real estate, "purchase agreement" or "purchase and sale agreement" is standard. For goods and commercial transactions, "sales contract" may be more common.

Sample Purchase Agreement

Below is a condensed preview of our residential real estate purchase agreement template. This sample shows the structure, language, and sections included in our attorney-reviewed documents. Your completed agreement will be fully customized for your transaction type, state, and specific terms.

PURCHASE AND SALE AGREEMENT

Residential Real Estate

This Purchase and Sale Agreement ("Agreement") is entered into as of[Date], by and between:

SELLER:

Name: [Seller Full Legal Name]
Address: [Seller Mailing Address]
Phone: [Phone]Email: [Email]

BUYER:

Name: [Buyer Full Legal Name]
Address: [Buyer Mailing Address]
Phone: [Phone]Email: [Email]

1. PROPERTY DESCRIPTION

Seller agrees to sell and convey, and Buyer agrees to purchase, the real property located at[Street Address], City of [City], County of [County], State of [State], together with all improvements, fixtures, and appurtenances thereto, legally described as:[Legal Description](the "Property").

2. PURCHASE PRICE

The total purchase price for the Property shall be $[Amount]([Amount in Words] Dollars), payable as follows:

  • Earnest Money Deposit: $[Amount]
  • Additional Down Payment at Closing: $[Amount]
  • Balance Financed by Mortgage: $[Amount]

3. EARNEST MONEY

Within [3] business days of the Effective Date, Buyer shall deposit earnest money in the amount of $[Amount] with[Escrow Agent / Title Company]. Said deposit shall be applied toward the purchase price at closing or refunded to Buyer in accordance with the contingency provisions herein.

4. FINANCING CONTINGENCY

This Agreement is contingent upon Buyer obtaining a commitment for a[Conventional/FHA/VA]mortgage loan in the amount of $[Amount]at a fixed/adjustable interest rate not to exceed [%]per annum, for a term of [30] years. Buyer shall apply for such financing within [5]business days of the Effective Date and shall diligently pursue approval...

5. INSPECTION CONTINGENCY

Buyer shall have [10]calendar days from the Effective Date to conduct or have conducted, at Buyer's expense, inspections of the Property including but not limited to: general home inspection, termite/pest inspection, radon testing, mold testing, and environmental assessment. Seller shall provide reasonable access to the Property for such inspections...

6. CLOSING

Closing shall take place on or before [Date]at the offices of [Title Company / Attorney], or at such other time and place as the parties may mutually agree in writing. At closing, Seller shall deliver a general warranty deed conveying the Property to Buyer, free and clear of all liens and encumbrances except as otherwise provided herein...

7. REPRESENTATIONS AND WARRANTIES

Seller represents and warrants that: (a) Seller has good and marketable title to the Property; (b) there are no pending or threatened actions, suits, or proceedings affecting the Property; (c) all mechanical systems are in working order; (d) Seller has disclosed all known material defects; (e) there are no violations of building codes, zoning ordinances, or restrictive covenants...

8. DEFAULT AND REMEDIES

If Buyer defaults under this Agreement, Seller's sole remedy shall be to retain the earnest money deposit as liquidated damages. If Seller defaults, Buyer may (a) seek specific performance, (b) terminate this Agreement and recover the earnest money deposit, or (c) pursue any other remedy available at law or in equity...

Frequently Asked Questions

Find answers to common questions about purchase agreements, contract terms, contingencies, and the process of buying and selling property.

Official Resources

For additional information on purchase agreement requirements, real estate regulations, and consumer protections, consult these official government and industry resources.

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