What exactly is a Purchase Agreement?
A purchase agreement is a legal document created between two parties, one of whom (the seller) intends to sell and the other (the buyer) wishes to purchase personal property. A purchase agreement is not the same as a bill of sale or a sales receipt. It is a contract to enter into a future transaction that specifies the terms of the transaction.
Why is a purchase agreement required?
Purchase agreements ensure that the contract between the seller and the buyer is properly and legally executed. It contains critical information such as a detailed description of the property, payment terms, and the possession date, indicating that both parties are fully committed to the transaction. A properly prepared purchase agreement fully protects both parties' rights and interests, ensuring that each party has the legal right to take legal action if the other party does any damage.
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Purchase agreements also aid in the preservation of real estate records for tax purposes. Selling property may affect your tax return, which you must disclose to the Internal Revenue Service (IRS). Documenting your real estate transactions might save you time and money in the long run.
