If it’s your first time buying a new property, it’s important to understand that several negotiation stages deserve close attention. The property purchase and sale contract is one of those moments, after all, it’s the document that protects your rights as a buyer and helps to avoid many headaches in the future.
Not sure exactly how this document works, how important it is and what needs to be done before signing it? Continue reading this article and check out all this information. Good reading!
What is a property purchase and sale agreement?
A real estate purchase and sale contract is a legal document that establishes the rights and duties that buyer and seller must fulfill when acquiring a property.
As the sale of a property is only completed, in fact, after the public deed is drawn up at the registry office, the property purchase and sale agreement guarantee the security of the transaction for both parties, creating the real right of purchase after its signature.
In other words, this document is essential to give legal value to the commitment signed between the parties.
Why is the real estate purchase and sale agreement so important?
The real estate purchase and sale agreement is important because it defines the terms and conditions by which the purchase of the property will be carried out. Besides, it’s the document that describes all relevant information about the transaction, such as the property information itself, the sale price and payment terms.
This is important because it provides a clear and detailed reference for both parties in times of doubt or later disputes.
The real estate purchase and sale agreement is also important because it’s a legally binding agreement and safeguards the interest in the property. In other words, this means that the parties are obligated to abide by the terms of the contract and that any breach could result in legal consequences.
For example: if the new owner fails to pay the property as described in the contract, the seller can take legal action to recover the amount owed. In another case, the seller may not deliver the property as described in the document and the buyer may sue for the property to remain in the agreed conditions.
How does the real estate purchase and sale agreement work?
The real estate purchase and sale agreement is regulated by the Brazilian Civil Code, which provides for different aspects. What is most important is that this document outlines clear information about what is being sold, who is selling it, and who is buying it.
Seeking to guarantee maximum security for the parties, it is essential that the real estate purchase and sale contract be very detailed. If you are looking for how to make the purchase and sale contract of the property and want to understand the fundamental points of this bureaucratic step, we describe what should be included below.
Information of the parties
Describe the data of the seller and the buyer. Include information such as the full name, nationality, profession, marital status, address, ID and Social Security Number/Federal Tax Identification Number of each party.
Payment Conditions
You must inform the value of the property agreed between the parties and the payment methods. In case of financing, describe the conditions of this modality
Property Description
These are the specifications of the property, which must be described in accordance with those presented in the Property Registry. Among the information at this point, the address, dimensions, registration of the property, registry office where it’s registered, specific characteristics and other details must be included.
Documents Required
The purchase and sale contract must also attach all documents and certificates required by the Notary.
Information about the property in the plan
In case of acquisition of property under construction, in addition to the information generally included in a purchase and sale contract, the document must contain the following information: details of the construction company, deadline for delivery of the work, possibility of readjustments and characteristics of the work and other areas.
Penalties for the parties
If there is non-compliance with the rights and duties established throughout the purchase process, the document must provide for the applicable penalties. For example, if the builder doesn’t deliver the property within the agreed period, it may be penalized with a fine.
At this point, both the new owner and seller should be aware of potential penalties to avoid future problems or misunderstandings.
Signature
Finally, the signatures of the buyer, the seller and two witnesses must be included.
Is it necessary to register the contract of purchase and sale of real estate?
The written and registered form of the contract for the purchase and sale of a property is the safest way to protect your rights and duties.
Besides, the law determines that, when the value of the good exceeds 30 minimum wages, the contract must be registered in a notary.
It’s also worth remembering that, for the purchased property to be, in fact, your property, it’s necessary that your public deed has been drawn up and registered in the Property Registry Office of the property’s jurisdiction.
This also applies to cases of real estate financing, in which the financing agreement must also have been registered for the good to be in your hands.
In short, the registered contract is just the first step in the process of legalizing the process of buying and selling a property. All this ensures that the transaction is safe and legitimate.
What precautions should be taken when signing the real estate purchase and sale agreement?
When signing a real estate purchase and sale agreement, it’s important to take some precautions to ensure that the transaction takes place in a safe and predictable manner. Here are some of the main precautions to take:
- Read the contract carefully and understand all the conditions. If there is any clause or term that you do not understand, seek a legal representative to resolve your doubts.
- You must have a lawyer or legal representative! This ensures that your interests are protected, and is key to helping you understand the contract thoroughly.
- Check the property documentation, ensuring that it’s in order and included in the contract.
- Check all personal data and the company that will sign the contract.
- If possible, before signing the contract, visit the property and check that the characteristics are in accordance with what was described in the document.
- Negotiate the terms of the contract. If there are any points you don’t agree with or want to change, try to negotiate them with the seller. It’s important that all parties are satisfied with the final agreement.
- Keep all documents even after the completed transaction.
What is the validity of the real estate purchase and sale agreement?
The term of validity of the contract may or may not be described in the document itself, taking into account the time required to analyze all the steps involved.
If the definitive document is not signed – in this case, the public deed – within the agreed period, the purchase and sale agreement loses its validity.
Who pays for the expenses of the purchase and sale of real estate?
Expenses related to the purchase and sale of real estate can be divided in several ways. They depend on the specific conditions agreed between the parties and on what was described in the document itself.
However, if nothing is described or agreed, the buyer is responsible for the expenses involved in the purchase and sale of the property.
How much does a real estate purchase and sale contract cost?
The final cost of this document depends on several factors, such as the value of the property, related expenses and the legal services you can hire.
However, the fee for registering the purchase and sale is 1% and the property transfer tax (ITBI) is between 2% and 4% of the value of the property, depending on the city. It must be paid before the public deed is drawn up.
Did you see how important a property purchase and sale agreement are?
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