3.1 Washington Purchase and Sale Agreements

How the Washington Contract System Works

Nearly every residential deal in Washington uses Northwest Multiple Listing Service (NWMLS) forms. The Form 21 Residential Purchase and Sale Agreement is the spine of the transaction. Around it cluster numbered addenda the exam expects you to recognize:

Mutual Acceptance Is the Starting Gun

A Form 21 deal does not become binding when an offer is written — it becomes binding at mutual acceptance. Mutual acceptance requires three things: the last party signs the most recent version of the terms, that signature is communicated to the other party, and no term has been changed in the process.

1. Buyer signs and delivers an offer.
2. Seller either signs unchanged (mutual acceptance) or returns a counteroffer (Form 35C or a marked-up Form 21).
3. Any change — even one dollar of price or one day of a deadline — converts the document into a counteroffer, which the original offeror must then accept.
4. When the final signature is communicated back, the clock starts.

Exam trap: A seller who signs but adds "subject to seller finding replacement housing" has NOT accepted — they have countered. Acceptance must be unconditional and unchanged.

Counting Days the Form 21 Way

Form 21 deadlines are stated as a number of days from mutual acceptance, and the counting rule is precise and frequently tested:

• Day 1 is the first calendar day after the date of mutual acceptance.
• All days are calendar days unless the form says "business days."
• If a deadline lands on a Saturday, Sunday, or legal holiday, it rolls forward to the next business day.
• The earnest-money deposit deadline is stated in the contract — commonly 2 days of mutual acceptance for delivery to the closing agent.

Worked example: Mutual acceptance is Wednesday. A 5-day inspection contingency means Day 1 = Thursday, and the deadline is the following Monday (Day 5). If Day 5 were a Sunday, the deadline would move to Monday.

Why This Matters for the State Exam

The Washington state portion contains 30 scored questions (plus 5 unscored pretest items), and contract mechanics are one of the densest topic clusters. Expect scenario questions that hand you a mutual-acceptance date and a contingency length and ask for the exact deadline date. The two most-missed points are: (1) the acceptance date itself is not Day 1, and (2) weekend/holiday rollover applies to the deadline, not to the intermediate days. Practice counting on a calendar until it is automatic.

Also remember that the buyer's signature alone does not bind the seller — and vice versa — until acceptance is communicated back to the offeror, which is why faxed-back or emailed-back delivery timestamps matter in a dispute.

Earnest Money, Contingencies, and Amendments

Earnest Money

Earnest money is the buyer's good-faith deposit, named on Form 21 with the amount, the holder (closing/escrow agent or an NWMLS firm), and the form (check, wire, promissory note). It is negotiable — there is no statutory minimum — but typical deposits run 1%–3% of price. By contract it must reach the named holder within the stated window (commonly 2 days of mutual acceptance).

The Big Three Contingencies

A contingency is a condition that must be satisfied or waived or the buyer may terminate and recover earnest money:

Washington's Form 22A financing contingency is a true "failure" contingency: if the buyer applies diligently and the loan still fails, the buyer is excused and earnest money returns. The buyer cannot simply walk for convenience — they must pursue financing in good faith.

Time Is of the Essence

Form 21 states time is of the essence. Consequences tested on the exam:

• A missed deadline can be a breach, exposing the breaching party to default remedies.
• Default remedies on Form 21 are typically forfeiture of earnest money (often the seller's exclusive remedy) or, if elected, specific performance.
• A waived or unsatisfied contingency that is not timely terminated is generally deemed satisfied — silence can bind the buyer.

Amendments and Addenda

Once a deal is mutually accepted, terms change only in writing signed by all parties:

Exam tip: A verbal agreement to extend an inspection deadline is unenforceable. The Statute of Frauds and the form both require a signed writing. If it is not in writing, on the exam it did not happen.