An agreement of sale is a contract between buyer and seller of a property stating the terms and conditions of the transaction.
Sometimes also referred to as the sales and purchase agreement or the sales agreement, this document should contain material information including:
- Legal names of parties involved in the transaction
- Legal address of the property in question
- Date of signed agreement
- Date by which the transaction must be completed or actions taken towards completion
It is a bilateral two-way agreement whereby the buyer is obligated to buy and the seller obligated to sell.
Failure to fulfill the obligation gives the other party the right to sue for damages in court.
However it seldom goes that far as the party at fault will usually compensate the victimized party one way or another.
In some states, an agreement of sale is a very specific definition that refers to a method of seller financing either called:
- Land sale contract
- Bond for title
- Contract for deed
In this scenario, a property buyer makes payments over the course of the financing period while the seller keeps hold of the legal title.
At the end of the repayment tenure, the seller issues a deed to the purchaser.
The buyer however, takes on the risks of losing everything should the property face foreclosure or seller files for bankruptcy during the payment period.
With all these said, it must be noted however, that in practice, an agreement of sale refers to the sales contract between buyer and seller.