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
Important: This content covers Pennsylvania-specific contract requirements. You should complete the National Real Estate Exam Prep first, as general contract concepts are tested on the national portion.
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?