Key Takeaways
- Pennsylvania uses the Agreement of Sale as the standard real estate purchase contract
- The contract must be in writing to be enforceable under the Statute of Frauds
- Time is of the essence clauses make all deadlines strictly enforceable
- Contingencies commonly include financing, inspection, and sale of buyer's property
- Pennsylvania uses title companies or attorneys for closings (not escrow companies like western states)
Pennsylvania Purchase Contracts
Real estate contracts in Pennsylvania must meet all standard contract requirements plus Pennsylvania-specific provisions.
Standard Contract Requirements
For a valid Pennsylvania real estate contract:
| Requirement | Description |
|---|---|
| Competent Parties | Legal age (18+) and mental capacity |
| Offer and Acceptance | Meeting of the minds |
| Legal Purpose | Transaction must be lawful |
| Consideration | Something of value exchanged |
| Written Form | Statute of Frauds requires writing |
| Legal Description | Property must be identifiable |
The Agreement of Sale
Pennsylvania commonly uses the Agreement of Sale for residential transactions.
Key Contract Sections
| Section | Purpose |
|---|---|
| Property Description | Identifies the property |
| Purchase Price | Price and payment terms |
| Deposit/Hand Money | Deposit amount and holder |
| Settlement Date | Closing date |
| Possession | When buyer gets possession |
| Financing | Loan terms and contingency |
| Inspection | Due diligence provisions |
| Disclosures | Required seller disclosures |
| Title | Type of title and insurance |
Deposit (Hand Money)
In Pennsylvania, the deposit is often called hand money:
- Amount is negotiable
- Typically held by broker, title company, or attorney
- Becomes part of purchase price at closing
- Disposition governed by contract terms
Key Contract Provisions
Time is of the Essence
Pennsylvania contracts often include "time is of the essence" meaning:
- All deadlines are strictly enforceable
- Missing a deadline can constitute breach
- Extensions require written agreement
Common Contingencies
| Contingency | Purpose |
|---|---|
| Financing | Buyer must obtain loan approval |
| Inspection | Buyer can inspect and negotiate repairs |
| Appraisal | Property must appraise at contract price |
| Sale of Buyer's Property | Buyer must sell existing home |
| Attorney Review | Review by attorneys (if included) |
Inspection Contingency
The inspection contingency allows the buyer to:
- Conduct professional property inspections
- Review inspection reports
- Request repairs or credits
- Cancel if issues are unacceptable
Buyer's options after inspection:
- Accept property as-is
- Request repairs or credits
- Renegotiate price
- Cancel contract (within contingency period)
Settlement (Closing)
Pennsylvania closings are typically handled by:
- Title companies - Most common
- Attorneys - For either party or both
- Settlement agents - Licensed providers
Note: Pennsylvania does not commonly use escrow companies like western states. Instead, title companies and attorneys handle closings.
When Contract Becomes Binding
A contract becomes binding when:
- Offer is made
- Acceptance occurs
- Acceptance is communicated to the offeror
- Consideration is exchanged (deposit)
Counteroffers
Any change to the offer creates a counteroffer:
- Original offer is terminated
- Counteroffer becomes new offer
- Must be accepted to create contract
What is the deposit in a Pennsylvania real estate contract commonly called?
Who typically conducts real estate closings (settlements) in Pennsylvania?