PA Agreement of Sale Part 9

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Part 8

The three paragraphs that start this page are all important to understand as they impact the agreement, its breach and any damages the seller can recoup.

Paragraph 28 deals with Representations. How I usually sum sub-paragraph A up is that everything needs to be written down and signed by everyone that they agree with what is written down. Don't accept anyone's word, the seller, the buyer or either of the agents in the transaction, any brochures or promotional material or even advertising. Only what is in this agreement or made part of it is a part of the agreement. Sub-paragraph B is a statement that unless stated elsewhere in the agreement Buyer has inspected the property or has waived the right to do so and agrees to purchase it in its present condition, That is why it is important to make sure you select your inspection contingencies throughout the agreement and not forget to mark one and by missing it have accepted the present condition relating to that inspection contingency. It also acknowledges that Brokers etc have not made an independent examination or determination of the soundness of the property, permitted uses nor have they made a mechanical inspection of any of the systems at the property. Sub-paragraph C is a statement that all repairs required by the agreement will be completed in a workmanlike manner. Sub-paragraph D is a notification that Brokers may offer services to assist un-represented parties in complying with this agreement.

Paragraph 29 deals with Default. If the buyer defaults this paragraph deals with the options open to the seller. Seller has the option of retaining all sums paid by the buyer, including deposit monies if the buyer fails to make any additional payments as specified in paragraph 3 or gives false or incomplete information to the seller, brokers, or any party identified in the Agreement concerning the buyer's financial or legal status or the buyer violates or fails to fulfill any other terms of this Agreement. Unless sub paragraph C is marked seller may retain the sums paid by the buyer including the deposit monies on account of purchase price or as monies applied to seller's damages or as liquidated damages for such breach. Sub-paragraph C IS VERY IMPORTANT that is why they print it in capitals and bold it. Simply put as a buyer the box here needs to be marked. It limits the seller to retaining any sums paid by you including deposit monies as liquidated damages. The final sub-paragraph here D states that if the seller retains all sums paid by the buyer, including the deposit monies as liquidated damages pursuant to what was stated in B and C above buyer and seller are released from further obligation or liability and the agreement is VOID.

Paragraph 30 handles Termination and Return of Deposits. As noted this paragraph is referenced throughout the agreement when ever the agreement is terminated by the buyer and the parties are in agreement that it should end and also what happens if they are not in agreement. It handles who gets what. Sub-paragraph A deal with the buyer terminating the agreement where he has a right to by the agreement, all deposit monies paid are returned to the buyer and the Agreement is VOID. The broker holding the deposit may only release the deposit monies according to the terms of a fully executed agreement between buyer and seller and as allowed by the Rules and Regulations of the State Real Estate Commission. If there is a dispute over who gets the deposit monies sub-paragraph B states a broker is not allowed to decide if there was a breach or which party is entitled to the money. The deposit monies are held in escrow until the dispute is resolved. In the case where it goes to litigation the broker will distribute the deposit monies according to the final order from the court or a written agreement between the parties. Both buyer and seller agree if any broker and licensee is joined in litigation regarding deposit monies, the attorneys fees and costs will be paid by the party joining them.

Paragraph 31 is my favorite paragraph as it explains about the Real Estate Recovery Fund. A phone number is given here and the paragraph is a statement about how if you litigate against a licensee or broker and win your case but cannot get your settlement, after exhausting all legal and equitable remedies, the Fund will pay you out. What happens is that they then stop the licensee from working till that judgment is paid with interest. The phone number of the fund is (800) 822-2113.

Paragraph 32 handles Mediation. Unless Mediation is waived in this paragraph buyer and seller agree to submit to mediation in the case of a dispute or claim arising out of the agreement. Any agreement reached through mediation is binding. The agreement of sale contains Rules and Procedures of the Home Sellers/Home Buyers Dispute Resolution System. Any agreement to mediate disputes or claims arising from the agreement survives settlement. Whilst you can waive mediation it does not stop you later deciding to choose mediation.

Paragraph 33 is a Lead Paint Hazard Reduction Act Notice. This is required for all properties built before 1978. Basically any property built before 1978 was probably painted with paint containing lead. Although it may have been painted over by now, should you sand or do rehab work you may release lead particles into the air. You need to be aware of this and you may elect to test for lead if you feel strongly about this. There is an additional addendum if the property is built before 1978 that deals with and handles this situation. The buyer also indicates they have received the booklet Protect your family from lead in your home and whether the addendum mentioned is part of the agreement. That addendum is very similar to the contingencies mentioned under the home inspection with similar choices for buyers and sellers as mentioned previously

This brings us to the final page of the agreement where any specific addendums or paperwork, such as the MLS sheet, Seller's Disclosure may be made part of the agreement. Any special clauses are also added, such as the home needing to appraise for the purchase price.

In the middle of the page is a notice to the parties to the Agreement that once signed this becomes a binding contract. If you have questions consult an attorney before signing.

It also states that return by fax of this agreement and any addenda or amendments signed by all parties mean acceptance by the parties.

That completes the explanation of the PA Agreement of Sale

 PA Agreement of Sale Part 8

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Part 4

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Part 6

Part 7

Part 9

Paragraph 21 deals with Maintenance and Risk of Loss. I have actually blogged on this and a good example of this is Why you need to keep your home insured until settlement. There are three parts to this paragraph.

Sub-paragraph A states that seller will maintain the property, grounds and fixtures specifically listed in this agreement in their present condition excepting normal wear and tear. Sub-paragraph B deals with any system or appliance breaks or fails before settlement. The seller has two basic choices. 1) Repair or replace the system before settlement. 2) Provide the buyer with written notice of the sellers decision to credit the buyer at settlement with fair market value of the failed system or appliance, as acceptable to the mortgage lenders or not repair or replace or give any credit to the buyer. If the seller chooses not to make any repair or replace or give any credit or the seller fails to notify the buyer of his choice; the buyer will in writing within 5 days or before settlement whichever is sooner that the buyer will accept the property and agree to the now famous paragraph 27 release, or terminate the agreement with all deposit monies returned to the buyer according to the terms of the equally famous paragraph 30.

Sub-paragraph C states that the seller bears the risk of loss from fire or other casualties until settlement. This means keep the property covered by insurance and if you move out several days before settlement, let your insurance company know in writing. If any property included in this agreement is destroyed and not replaced Buyer may accept the property in its current condition together with any proceeds of any insurance recovery obtainable by the seller or as usual terminate the agreement in writing with all deposit monies returned to the buyer according to the terms of paragraph 30.

Paragraph 22 is only applicable in certain parts of Pennsylvania and it states "where applicable". You cannot transfer rights to coal and rights of support beneath ground and the owners of those rights have the complete legal right to remove all such coal and this may cause damage to the surface of the land and any house or structure on the land. The buyer needs to satisfy himself that there is no mining going on below the surface of his land to know if this paragraph is applicable.

Paragraph 23 deals with taking possession of the property. Possession is to be delivered by deed, signed at the settlement table, keys, given usually at the settlement table and 1) physical possession to vacant property FREE of debris, with all structures broom clean at day and time of settlement. The seller needs to be out of and off of the property and their things need to be out of and off of the property. If the property is being leased this needs to be transferred at settlement to the buyer unless stated otherwise elsewhere in this agreement. Buyer acknowledges any existing leases by initialing the leases at the execution of the agreement of sale unless specified in the agreement of sale. Seller also will not enter into any new leases, extensions of leases without the written consent of the buyer.

Paragraph 24 talks about Recording. The Agreement of Sale is not recorded in the Office of the Recorder of Deeds or in any other public office. If the buyer allows this to happen, the seller can consider this a breach of the agreement.

Paragraph 25 deals with Assignment. The Agreement is binding upon the parties, their heirs, personal representatives etc and to the extent assignable, on the assigns of the parties. Buyer will not transfer or assign the Agreement without the written consent of Seller unless stated in the agreement. If you are conducting a 1031 exchange you need to take legal advice if this paragraph needs to be struck from the agreement to allow you to assign the agreement to the company handling the 1031 exchange for you.

Paragraph 26 addresses the issues of Governing Law, Venue and Personal Jurisdiction. The laws of the Commonwealth of Pennsylvania apply to the rights and duties of the parties and the validity and construction of the agreement. As an example, if you use an agent who works in New Jersey and Pennsylvania make sure they are using a PA Agreement of Sale, not a NJ Agreement of Sale. If there is a dispute under the PA agreement of sale the parties are agreeing that any dispute, controversy or claim arising shall be decided by the state and federal courts of Pennsylvania.

Finally we come to the now famous Paragraph 27 Release. Read this paragraph carefully and if you do not understand it, ask a lawyer. My understanding is the buyer releases, quit claims and forever discharges everyone involved in the transaction, seller, all brokers, their licensees, employees and any officer or partner of any one of them and any other person, firm or corporation who may be liable through them from any and all claims, losses or demands. This relates to just about any damage to the buyer from every contingency stated in the agreement. BUT it does not remove the sellers duties under the terms of the agreement or remove the buyers rights should seller be in default under the terms of the agreement or in violation of any seller disclosure law or regulation to any right to pursue remedies that may be available under law. The release does survive settlement.

PA Agreement of Sale Part 6

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Part 7

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Part 9

We are nearing the end, I promise. Sorry this has taken so long to post in its entirety, let me know if this helps. Sometimes trying to explain it is as wordy as what you are trying to explain or worse. There is an official explanation that you can purchase which is available from Pennsylvania Association of Realtors.

Page 6 continues with Paragraph 15 dealing with the Status of Sewer. The type of sewer system is marked in part A. Part B deals with Individual On-Lot Sewage Disposal Inspection Contingency. The contingency is waived or elected. If elected an inspection period is selected. The inspection is carried out at the buyer's expense. However, the seller will at his expense will locate and provide access, and if required by the inspection company will empty the sewage system. Seller is also responsible to restore the property prior to settlement. If the inspection reveals defects the buyer within the inspection period selected has the options we have discussed before; Option 1 and Option 2. Under this contingency Option 2 gives the seller 25 days from receiving the report to give the buyer a written corrective proposal. The buyer then has 5 days to respond after receiving the proposal or if the buyer does not receive a proposal the buyer will notify the seller of his choice in writing. These choices are to agree to the terms of the proposal and agree to our now famous release in paragraph 27. Or terminate the agreement in writing with all deposit monies returned to the buyer per the terms of paragraph 30 of this agreement. Alternatively, the buyer can accept the property and the existing system and agree to the release in paragraph 27 and correct any defects before settlement if required by any government agency or mortgage company. This is done at the buyers expense but the seller will give permission and access to the property. If seller denies permission or access to correct the defects Buyer may within 5 days terminate the contract in writing with all monies returned to the buyer per paragraph 30 of this agreement.

Paragraph 16 is a statement about Home Warranties. At or before settlement either the buyer or seller has the opportunity to buy a home warranty for the property from a Third party vendor. This home warranty does not alter responsibility to disclose defects by the seller and do not cover any pre-existing defects. Neither does it alter. Waive or extend any of the time periods of the contingencies in the agreement. It also states that the broker ordering the home warranty may possibly be paid a fee by the home warranty company.

Paragraph 17 deals with Zoning classification and verification of use contingency. Paragraph A states that failure to state the zoning classification will render the agreement VOIDABLE at buyer's option and if voided all deposits will be returned to the buyer without any requirement for court action. This applies except if the property, and each parcel if sub-dividable is zoned primarily to permit single family dwellings. So make sure this is completed if you are selling a town home, condo, multi-family building or multi-use property. Paragraph B specifies the contingency period the default of which is 7 days and that verification is carried out at buyer's expense to verify the present use of the property is permitted. In the event the use is not permitted buyer will notify the seller within the contingency period in writing that the present use is not permitted and that the buyer will either accept the property according to the release of paragraph 27 or terminate the agreement with all deposit monies returned to the buyer according to the terms of paragraph 30 of the agreement. If the buyer does not  respond within the contingency period or does not terminate the agreement in writing to the seller within the contingency period they accept the property according to the terms of paragraph 27.

The bottom of the page starts Paragraph 18 Notices, Assessments & Certificates of Occupancy but as most of this is on the following page we will deal with it in  part 7.

PA Agreement of Sale part 5

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Page 5 of the Agreement of Sale is quite simple. I always find that pages 1 thru 4 take the longest to complete, after that it moves much faster.

Paragraph 12 handles Wood Infestation inspection contingency. Obviously this can be waived or elected. If waived our usual paragraph 27 the Release is agreed upon as well.

If elected the number of days is selected again running from the execution of the contract. Paragraph A says the inspection is at the buyer's expense and will be carried out within the contingency period selected. It is limited to all readily visible and accessible areas of all structures on the property except fences and any structures which are identified. If there is active infestation Paragraph B states buyer can at their own expense obtain within the contingency period a proposal for treatment. Paragraph C states buyer again at his own expense may obtain a written report and proposal for repair if there is any damage from active or previous infestation dealing with repairs limited to that damage caused by the infestation all to be done in the contingency period. Paragraph D handles the options if the buyer is not satisfied with the report and again within the contingency period selected, they proceed according to the choice they make from our friends from earlier Option 1 and Option 2.

Paragraph 13 is dealing with the Status of Radon. Paragraph 13 A allows any information the seller knows about previous tests and results to be entered. Or if the seller has no knowledge this choice can be selected. This information can be found and entered from the sellers disclosure form or can be completed by the seller on receipt and as part of their response to the agreement of sale. Paragraph B handles the inspection contingency, again waived with the usual acceptance of the release in paragraph 27 or elected with a number of days chosen for the contingency period. Tests are done again at the expense of the buyer and need to be carried out by a certified inspector. If seller performs any remediation they will provide certification it was performed by a properly licensed and certified radon mitigation company. However, if the test reads 4 picoCuries per liter or less the Buyer accepts the property. If the reading is above 4 picocuries per liter then the buyer will proceed according to their choice between Option 1 and Option 2.

This page is completed by Paragraph 14 dealing with Status of Water and allowing a water inspection contingency. Paragraph A indicates what service the seller represents  the property is served by, Public Water, On site Water, Community Water, None or space is left for other options. Paragraph B handles the water service inspection contingency. Again buyer can choose to waive and accept the release in paragraph 27, or elects to inspect stating the contingency period. Tests are performed at buyer's expense by a properly licensed or otherwise qualified water/well testing company and may test quantity and quality. Seller is required at his expense to locate and provide access to the on-site or individual water system. Seller also agrees to restore the property at sellers' expense prior to settlement. If buyer is not satisfied with the results, within the contingency period they will proceed according to the option they choose between Option 1 and Option 2.

PA Agreement of Sale Part 4

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Paragraph 10 headed Inspection Contingency Options is the controlling paragraph for the 4 following paragraphs. It describes the 2 options available between the buyer and seller and the possible results under these options.

Option 1 applies within the contingency period as selected and stated in paragraphs 11-15. There are three possible results of the inspections.  1) The buyer can accept the property as it is and release all parties under paragraph 27. 2) If the buyer is not satisfied with the inspections the buyer can terminate the agreement by written notice with all monies returned to the buyer as per the terms of paragraph 30 of the agreement. 3) The buyer enters into a mutually acceptable agreement with the seller in relation to repairs or credits towards closings costs that are acceptable to the mortgage lenders if the agreement is conditional upon a mortgage.

If the buyer and seller cannot reach mutually acceptable terms within the time stated for the inspections in paragraphs 11-15 and the buyer does not terminate the agreement in writing and give it to the seller within the time specified, the buyer will accept the property and agree to the release in paragraph 27. THIS IS VERY IMPORTANT. Even if you are in the process of negotiating a mutually acceptable deal, if the period has not been extended by an addendum and signed by all parties, as the buyer you MUST terminate the agreement before the inspection period expires. Option 1 is often thought as a more buyer friendly option, however, some sellers prefer option 1 as there is a shorter time period with the various options. It gives the buyer the option to pull out of the deal if they do not like the results of the inspections.

Option 2 like option 1 applies within the period defined for the inspections in paragraphs 11-15.  Here you have two possible results. 1) The buyer as in option 1 can accept the property. 2) If the buyer is not satisfied will present the report to the seller with a written proposal of corrections or credits desired by the buyer. It also goes into details of what the proposal can include, such as names of professionals selected by the buyer but is not required. This is where the major difference arises between the two options. If the seller accepts the buyer cannot terminate the agreement. The seller also has a specific number of days as selected by the buyer and stated in the agreement to reply to this proposal, to give them time to get their own estimates. The seller notifies the buyer of the sellers choice in writing; to either agree, or to credit the buyer at settlement for the costs to satisfy the buyer's proposal, as acceptable to the mortgage lender, or to not agree to the buyers proposal.

If the seller agrees to the proposal or to credit the buyer at settlement the buyer accepts the property and accepts the release in paragraph 27.

However the buyer has three options if the seller chooses not to accept the terms of the buyer's proposal or not to offer a credit or does not respond within the time specified then the buyer will within a state number of days 1) accept the property as per their inspection reports and accept the release in paragraph 27; 2) Terminate the agreement in writing and notify the seller with all deposit monies returned to the buyer according to the terms of paragraph 30. 3) Or enter into a mutually acceptable written agreement between the buyer and seller which is acceptable to any mortgage company.

Like Option 1 if no agreement is reached within the time period as stated in option 2.2.c and buyer does not terminate the agreement in writing it is the same as if the buyer is accepting the property and agrees to the release of paragraph 27.

As you are probably already seeing, many paragraphs use similar language and repeat choices stated in other paragraphs as well as making reference to paragraphs 27 and 30, so you need to make sure you understand those paragraphs particularly.

The page continues with paragraph 11 which relates to the Property Inspection Contingency.  There is a long description of what you can have inspected and by whom whilst not limiting you to those mentioned; and there are suggestions about what you should investigate such as deed and use restrictions plus many others that may apply to the property.

The buyer then selects to waive this option and agree to the release in paragraph 27, or to elect to make inspections within a specific specified time which runs from the date of execution of the agreement, not the date it is written. All inspections are carried out at the buyer's expense, and the inspector must be a full member in good standing of a national home inspection association or a person supervised by a member, or be a properly licensed or registered engineer or architect. The contingency can state if any existing conditions are exempt from the contingency.

It then continues by defining what the buyer's options are if they are not satisfied with the results of the inspection. Paragraph 10 is referenced as explained above, Option 1 with no further explanation and Option 2. Under Option 2 on the property inspection contingency there is also the choice of entering a deductible where if the repairs specified in the report are equal to or less than this amount, the buyer will accept the property and accept the release of paragraph 27. If the repairs are greater than deductible all the terms as stated above under Option 2 apply. If the seller accepts the proposal from the buyer, it is considered that he has satisfied these terms if any uncorrected or uncredited amounts equal the deductible.

PA Agreement of Sale Part 3

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A short post today to complete Page 3.

Page continues with Paragraph 7 revised in September 2005 which is a warning about meeting deadlines. If the agreement is contingent upon inspections and/or repairs, insurability, environmental conditions etc, if these are not carried out by the times stated in the agreement it is the same as if the contingency has been waived and the Buyer accepts the property and agrees to the RELEASE stated in Paragraph 27. This is one of the duties of the Buyers agent to make sure you are staying within your time lines and if extensions are needed as a result of discoveries negotiating those or terminating the contract so that the buyer is protected.

Paragraph 8 added in September 2005 deals with Property Insurance Availability. Option is to waive or elect. This paragraph allows the buyer to make sure the property is insurable with conditions that are reasonably acceptable to the buyer. As stated above this is a new paragraph and has not seen a courtroom as yet. It most likely will get tightened up as a result of a lawsuit as the language is too loose and allows a buyer room to get out of a contract if they wish. Sub paragraphs deal with steps as a result of the findings, A is acceptance; B Termination in writing with all monies returned to buyer according to the terms of paragraph 30; C enter into a mutually acceptable written agreement. If the buyer and seller do not reach a mutually written agreement during the contingency period and buyers does not terminate the agreement then as stated above in Paragraph 7 buyer accepts the property and agrees to the Release in paragraph 27.

Paragraph 9 revised in September 2005 deals with Inspections. There are five sub paragraphs. Paragraph A states that the seller will provide access to those who are making inspections. This also applies if the buyer is obtaining a mortgage. If the mortgage contingency is not elected make sure your agent specifies that access is given to appraisers if you are going to get a mortgage but the agreement is not contingent upon that. Buyers may also attend any inspections. Paragraph B allows the buyer to make a pre-settlement walk through inspection, even if all other contingencies are waived. Paragraph C states that seller will have heating and all utilities including fuel on for all inspections. Paragraph D allows any of those professionals making inspections to provide a copy of the inspection to the broker for the buyer. Paragraph E allows the seller to obtain without cost a copy of any inspection report from the party for whom it was prepared. Often if a deal falls apart it is important to now the reasons. Buyers usually resent handing over their inspection reports as they have paid for them, but this paragraph is clear in its wording that sellers can ask for it without charge.

PA Agreement of Sale Part 2

Continuing with our explanation of the PA Agreement of Sale (AOS) we will start at the top of page 2. If you want to read other parts of this explanation

Part 1

Part 3

Part 4

Part 5

Part 6

Part 7

Part 8

Part 9

Paragraph 4 A deals with Fixtures and personal property, this paragraph was revised in September 2005. It deals with items included in the sale of the home. Anything permanently installed which is free of liens, such as plumbing, heating lighting fixtures (including chandeliers and ceiling fans) etc. I will tell prospective sellers if they want to take something with them, take it down before listing your home so it does not become a deal breaker, even if you itemize it as something excluded from the sale buyers often fall in love with what you want to take with you. Remove the obstacle beforehand and put up a fixture that will stay with the house and avoid any arguments. Here items such as refrigerators, washers and dryers are added if they are being included in the sale. Items being leased and not owned by the seller are identified here in sub paragraph B. Sub-paragraph C identifies any fixtures and items not included in the sale.

Paragraph 5 explains that Dates and Time is of Essence revised in September 2005. There are four sub paragraphs that explain this concept, make sure you understand this and that your mortgage provider and any contractors such as home inspectors understand this. It is important. In Pennsylvania, if you say in the contract you will do something by or on a certain date at a certain time it is binding and you are in breach of contract if you do not comply. This is not the case in other states, and mortgage providers as an example sitting in another state may drag their feet unaware that time and dates are of essence as this is not the case where they live. So you need to make sure they are aware and that you stay on top of them to perform their duties by the time you have entered in the contract. This is not a time to understand the problems they are having, you need to bring pressure to bear upon them to meet the deadlines. Certain paragraphs are pre-printed with time periods for convenience, like everything else these are all negotiable and can be changed. Just remember to initial and date any changes that are made to the contract.

Paragraph 6 deals with the Mortgage Contingency revised in September 2005. If your offer is conditional upon you getting a mortgage you do not waive this contingency. Sometimes it is waived if a buyer will be getting a mortgage for tax reasons but does not need the mortgage to settle. Some buyers have sufficient funds that they can simply waive this contingency.  If you choose to use the contingency sub-paragraph A the details of your first and second mortgage are outlined. If the mortgage lender is identified you must make application and follow through with that lender. If you change lenders you need to notify the seller of this change. Whilst a mortgage rate is identified a maximum rate is also identified that the buyer will accept. Discount points, loan origination fees etc are also identified as a percentage of the mortgage loan. In the current market, who is financing the deal is just as important as how much is being paid. Sellers want to know that the funds will be at settlement, and buyers want to know that they will not be left at the settlement table with no friends in the room.

Sub-paragraph B details when the mortgage application will be made, 10 days is the default, and mentions that the broker for the buyer, or if there buyer is not represented the broker for the seller is authorized to communicate with the mortgage lender to assist in the loan process.

Sub-paragraph C explains that false statements or incomplete information furnished by the buyer to the seller or the brokers or mortgage lenders or failure to cooperate in good faith in the process  resulting in the mortgage not being approved puts the buyer in default.

Sub-paragraph D has 4 parts and begins with the mortgage commitment date. This is when your lender has reviewed the application, appraised the home and commits to the rate and fees offered and will fund the mortgage. This commitment needs to be provided to the seller by the date entered here. This is where time and date become important. If the seller does not receive this commitment the mortgage commitment date is extended until the Seller terminates the Agreement in writing to the buyer. So if your mortgage company drags their feet you can lose the home of your dreams, especially if the sellers have a back up offer.

It continues that as soon as the buyer has the commitment they will deliver a copy to the buyer. The seller can terminate the agreement in writing after the mortgage commitment date IF the mortgage commitment is not valid till the date of settlement, OR is conditional upon the sale and settlement of other property, OR does not satisfy all the terms outlined in paragraph 6 A, OR if it contains any other condition not specified in the AOS that is not satisfied or removed within 7 (pre-printed, remember this can be changed) days after the mortgage commitment date in paragraph 6 D 1 other than certain terms that are usually done closer to settlement such as insurance and confirming employment status.

If the agreement is terminated for any of these reasons the deposit monies are returned to the buyer according to the terms of paragraph 30 and the agreement is VOID. Buyer is responsible for their costs incurred for inspections, title insurance, appraisal fees etc as outlined here.

Sub-paragraph E discusses what happens if the mortgage lender or insurance company requires repairs to the property. Buyer is required to deliver a copy to the seller who will within 5 (pre-printed, remember this can be changed) days seller will notify the buyer if the seller will make these repairs. If the seller will make the repairs to the satisfaction of the mortgage lender or insurer the buyer accepts the property and agrees to the release in Paragraph 27.  If the seller will not make the repairs, the buyer can choose within 5 (pre-printed, remember this can be changed) days to make the repairs or terminate the agreement in writing with all monies returned to the buyer as outlined in Paragraph 30.

Sub-paragraph F deals with any seller assist given to the buyer. Remember mortgage lenders must be made aware of any funds being given to the buyer by the seller to complete the deal so that there is no fraud in the mortgage application in relation to loan to value ratios.

There is also a boxed paragraph here dealing with FHA/VA loans if this is applicable with sub-paragraphs G, H and I.  These deal with the property appraising, that an inspection can be carried out and a certification that the terms of the contract for purchase are true.

The PA Agreement of Sale (AOS) is 10 pages long, 11 if you include the Lead-based paint hazards disclosure and inspection contingency addendum and consists of 34 paragraphs and 622 lines excluding Notices on the back of the pre-printed pages, which can take it to 17 pages.  It is continually being updated due to revisions through use and often law suits which have arisen as a result.  Each paragraph states when it was last updated. This agreement is most commonly used in resales of existing homes. Builders will often have their own contracts. Whether you are a buyer or seller it is helpful to understand this form better before you buy or sell a home.

Page 1 lays out the general terms of the agreement of sale and is probably the meat and potatoes of the agreement. This is not to say that the other pages should be taken lightly as in any contract you need to pay attention to every clause. If you do not fully understand something consult an attorney.

Page 1 starts by listing the brokers and agents involved and who they represent. The AOS states that when a Broker is the same for Buyer and Seller the Broker is a Dual Agent. All of Brokers licensees are Dual Agents unless there are separate Designated Agents for Buyer and Seller. In the case where the agent represents both Buyer and Seller the agent is a Dual Agent. These terms should be familiar to you as they are outlined on the Consumer Notice which you should have had explained to you when you first had a substantive discussion about real estate with your agent, as well as the terms Buyer's Agent, Seller's Agent and Transaction Licensee. For an explanation of these terms see Who Represents You? 

Paragraph 1 of the AOS then states the date on which the agreement is being drawn up, this date is referred to in any addendae that are added when the AOS is written or later. Sellers are listed by name, all whose names are upon the deed need to be listed here. Whilst the MLS sheet often gives the names of the owners this should not be relied upon entirely without checking. Sometimes the MLS sheet may only say "Owner of Record".  This information should be cross checked with the Public Records and verified with the Selling Agent. In the case of a 1031 exchange words stating "or their Assignee" will be used, but this then requires the striking of a later paragraph in the AOS which states the AOS cannot be assigned. Any discrepancies here are a "Red Flag". Buyers are also listed by name. If you intend to purchase the home as an investment through a corporation or through a family trust this needs to be entered here. Sometimes wording is used as follows, the name of the buyer or their assignee as in the above case of a 1031 exchange or a possible straw purchase where a well kown purchaser is not revealing who is actually buying the property. However again if this is used a later paragraph needs to be struck from the AOS as it states that the AOS cannot be assigned.

Paragraph 2 identifies the property being purchased legally, 123 Main Street, in the Township of Anywhere, County is identified in the Commonwealth of PA. The legal identification is entered as per where the deed is recorded in the Public Records, for example the Tax id number or parcel number.

Paragraph 3 deals with the terms of the agreement, updated in September 2005. Sub paragraph A identifies the Purchase price, this is noted in script and below this it identifies how this purchase price will be paid numerically. How much will be paid at the signing of the agreement, if any additional payment will be made and when following the execution of the agreement. Another line is left blank should there be a desire to make a further deposit. Finally the amount due at settlement is noted. This is then totaled and should equal the amount identified as the purchase price above.

Sub paragraph B informs that any payments within 30 days of settlement will be by cash or cashier's check and will be paid in Dollars to the Broker for the Seller unless otherwise stated here, these amounts will be held in an escrow account until the completion of the agreement or its termination in line with the agreement and all laws and regulations applicable.  No check given with the agreement is cashed till the acceptance of the agreement of sale.

Sub paragraph C states the date and time by when the seller needs to respond to the AOS.

Sub paragraph D gives the Settlement date, which can be moved forward if buyer and seller are in agreement and even later.

Sub paragraph E is a legal notice notifying buyer and seller that settlement will take place in the county where the property is located or an adjacent county during normal business hours unless Buyer and Seller agree otherwise.

Sub paragraph F explains how the deed will be transferred, presuming Fee Simple deed of special warranty unless stated otherwise here.

Sub paragraph G details how transfer taxes will be paid by buyer and seller equally unless specified differently here.

Sub paragraph H details what charges will be adjusted and paid on a pro-rata basis at settlement. These can be payments from the buyer to the seller for taxes paid in advance or from the seller to the buyer for rents received in advance as an example. Seller pays up to and including the day of settlement and Buyer pays for days following settlement unless stated differently here.

That completes Page 1. I have found this page usually takes the longest to complete as buyers discuss the price they are going to offer.

Part 1

Part 2

Part 3

Part 4

Part 5

Part 6

Part 7

Part 8

Part 9