Purchase and sale agreement

Key Takeaways

• A purchase and sale agreement sets the price, the closing date, the contingencies, and who pays which costs, and it governs the transaction from mutual acceptance through closing.
• The deed transfers ownership, not the purchase and sale agreement. Washington requires every conveyance of real estate to be by deed (RCW 64.04.010), and the agreement is the enforceable promise to deliver that deed.
• Mutual acceptance happens when one party signs the other's exact terms without change. Any response that alters a term is a counteroffer, and it ends the offer it replaced.
• In Washington, an agreement employing an agent or broker to sell or purchase real estate for compensation or a commission is void unless it is in writing (RCW 19.36.010).

What It Means

A purchase and sale agreement is the written contract that turns an offer into a deal. It names the buyer and the seller, identifies the property, fixes the price, sets the closing date, lists the conditions each side must satisfy, and states what happens if someone fails to perform. Everything downstream is built from it, including the escrow instructions, the lender's file, and the settlement statement.

The document starts life as an offer. A buyer signs and delivers it, the seller either accepts it as written or changes something and sends back a Counteroffer, and the parties keep trading until one of them accepts the other's exact terms. That moment is Mutual Acceptance, and it is when the deadlines written into the contract start to run.

In practice, every residential purchase and sale agreement is written and signed, and the written record is what a court, an escrow agent, and a lender all work from. That is why brokers use standard forms and record every later change on a signed Addendum rather than agreeing to it by phone. A term the parties meant but never wrote down is very hard to enforce.

How It Works in Washington

In Washington, the agreement is a promise and the deed is the transfer. RCW 64.04.010 provides that every conveyance of real estate, or any interest in it, and every contract creating or evidencing an encumbrance upon real estate, shall be by deed. A signed purchase and sale agreement therefore obligates the seller to deliver a deed at closing; it does not move title on its own, which is why the parties still have to close.

Washington also puts a writing requirement on the broker's side of the transaction. RCW 19.36.010 makes void, unless in writing and signed, an agreement authorizing or employing an agent or broker to sell or purchase real estate for compensation or a commission. The Listing Agreement and the purchase and sale agreement are two separate signed contracts with different parties, and a commission promised only verbally is not enforceable.

Statutory deadlines attach once the parties sign. RCW 64.06.030 gives a residential buyer three business days after receiving the seller's disclosure statement to deliver written notice of rescission to the seller, and provides that the statement is deemed approved and accepted by the buyer if that notice is not delivered within the three business day period. Washington brokers work mostly from the Northwest Multiple Listing Service form set, and any change to a signed agreement goes on a written addendum signed by both parties.

Example

Elena lists a Vancouver, Washington rambler at $479,000. Tomas offers $470,000 with a 30 day closing, $10,000 in earnest money, a 10 day inspection contingency, and a 25 day financing contingency. Elena signs a counteroffer at $475,000 and leaves every other term alone. Tomas initials it on October 6.

October 6 is mutual acceptance, so both contingency clocks start October 7. Elena delivers her seller disclosure statement on October 8, which starts the three business day window in which Tomas could rescind in writing. He keeps the disclosure and the window closes.

The inspection turns up a failed water heater. On October 15, inside the 10 day window, the parties sign an addendum in which Elena credits Tomas $1,400 at closing. The price stays $475,000 because the credit is a settlement statement line, not a price change, and the closing date does not move because the addendum did not touch it. Every one of those adjustments exists only because somebody wrote it down and both parties signed.

Common Mistakes and Exam Traps

• An offer is not a contract. Until one party accepts the other's exact terms, there is only an offer or a counteroffer on the table.
• A counteroffer terminates the original offer. A seller who counters cannot later go back and accept the buyer's first offer if the buyer has already moved on.
• The listing agreement and the purchase and sale agreement are different contracts between different parties. The listing runs between the seller and the firm; the purchase and sale agreement runs between the buyer and the seller.
• Signing the agreement does not make the buyer an owner. The buyer holds contract rights until the deed is delivered and recorded at closing.