What is an Indiana Purchase Agreement for Real Estate?
An Indiana real estate purchase agreement is a legally binding, written contract that lays out the terms of a real property transaction in the state of Indiana. The agreement represents an offer made by the buyer (or an agent of the buyer) to purchase real property, which is then accepted (and signed) by a seller (or seller’s agent) to complete the contract. Both parties must sign the agreement for it to be valid. The Indiana real estate purchase agreement document dictates the price agreed upon as well as other specific terms of the sale .
The Indiana real estate purchase agreement is a legally binding contract. Once it is signed, you no longer have the flexibility to walk away from this deal without penalties. Because a signature on this agreement indicates your legal acceptance of the offers included in the document, you must agree to the terms of the purchase agreement before signing. If you don’t agree to the terms of the contract, you can walk away from the deal without the penalties for breaking the contract, but in doing so, you will be back at square one in negotiating your sale or purchase of the property in question.
Elements of an Indiana Purchase Agreement PDF
An Indiana purchase agreement contains the legal names of all the parties, their status (such as "married", "single"), along with addresses and often other personal identifiers such as phone numbers and Social Security numbers. But what is critical is that the contract also has a description of the property to be purchased, along with a statement of the value to be paid the sellers and the terms of the sale.
It is essential that the sale price be clearly specified, along with the method of payment. Is it cash? Is a mortgage to be secured? Will part of the cost be financed by the seller? Any or all of these may occur in a given transaction, but specifications are essential if there are not to be any misunderstandings or disputes that can lead to the need for litigation to settle the matter.
The sales price is not the only issue. Arrangements for the down payment and the mode of issue of the money must be stated clearly. Then there’s the list of the items that the sellers will be leaving with the purchasers. Anything that does not become the property of the buyer falls into the category of "mere personal property" of the sellers. The contract also identifies those things that will be removed from the premises by the sellers. In the event of a lien against the property by third parties, it is possible for them to place part of the mortgages on the certificate of title. While such liens are rare for real estate, they may be placed on automobiles and furniture.
How to Fill Out the Indiana Purchase Agreement
- Identify the Parties: The full legal names of the buyer(s) and seller(s) should be entered at the beginning of the document. In some cases, corporations or LLCs might be the buyers or sellers instead of individuals.
- Detailed Property Description: Once the property is identified as relevant to the agreement, it should be described in detail to avoid any misunderstandings about the parcel that is being purchased or sold. This can be accomplished through the use of a property description on file with the county assessor, so that the description can be easily located at a later date if needed.
- Enter the Purchase Price: The final price must then be entered. The amount may be financed through various means, such as an adjustable-rate loan, a fixed-rate loan, private loan or other means. The buyer should be certain about the amount to be tendered (and how to go about that) prior to signing the purchase contract.
- Inspections and Repairs: Per the Indiana Statute IC 32-21-4, a buyer and seller can agree to a set period of time allowed for repairs or even the ability to terminate the contract if an inspection shows problems with a home, for example. In most cases though, the seller will merely disclose problems that the buyer will need to deal with after purchase.
- Fixtures and Personal Property Included in the Sale: Indiana law protects certain fixtures included on the property, but terms regarding items included as "personal property" may be agreed upon by the buyer and seller before signing. This subject is listed as a separate item in the Indiana Residential Purchase Agreement to avoid confusion about what is included in the sale.
- Closing Costs and Earnest Money: The agreement must also address a range of closing costs and earnest money issues, including which party pays for any particular cost. This will often be a matter of negotiation between the buyer(s) and seller(s). Once agreed upon, the amount of earnest money should be recorded in the document.
- Other Agreements or Contingencies: Finally, the buyer(s) and seller(s) can list additional subjects to be added to or deleted from the purchase agreement, such as the $100 all cash scenario or acknowledging acceptance of the property "as is" in its current condition.
Requirements of an Indiana Real Estate Agreement
Indiana law mandates that the property being sold and any other agreed-upon contingencies must be in writing. Statute of frauds is the legal concept that requires certain types of contracts to be in writing to be enforceable. Although real estate agents often use generic forms for all of their transactions, custom contracts should be created to properly represent the terms and conditions under which a seller and a buyer have agreed to do business.
The Indiana Code Annotated sets out what these requirements are here:
Ind. Code ยง 32-20-1-2: (a) A real estate purchase contract must:
- (1) be in writing;
- (2) be signed by the parties to be charged; and
- (3) sufficiently describe the real estate to be transferred so that it may be identified.
(b) A real estate purchase contract described in subsection (a) may not be denied enforceability, because of lack of consideration, if:
- (1) the real estate is transferred or agreed to be transferred to a corporation;
- (2) at the time the real estate is transferred or is to be transferred, the vendor or transferor is acting as an agent in conducting the transfer; and
- (3) the contract between the vendor or transferor and the corporation commenced more than seven (7) years before the date on which the transfer is made or required to be made.
(c) This section does not impair title to real estate:
(1) held in trust; or
(2) transferred or agreed to be transferred under a deed or lease for a term of years;
that is made, taken, or given in pursuance of a written contract made by the vendor or transferor.
Tips for Evaluating an Indiana Purchase Agreement
When reviewing an Indiana real estate purchase agreement, both buyers and sellers should follow these essential tips to ensure that the document accurately reflects the agreed-upon terms and conditions for the purchase of the property. Here are some key areas to focus on:
- Purchase Price and Financing: Ensure that the purchase price, financing terms, and any contingencies related to financing are clearly stated. Look for specific language about how the purchase price may be affected by appraisals or inspections.
- Earnest Money: Review the amount of earnest money required as a deposit on the home, and check how it will be handled if the sale does not go through.
- Closing Date and Costs: Make sure the closing date is clear and accurate. Additionally, confirm who will be responsible for closing costs, or how they will be divided between the parties.
- Inclusion of Fixtures and Personal Property: Confirm that the listing of furniture, appliances, and fixtures is correct and that both parties have the same understanding of what is included in the sale.
- Applicable Laws and Regulations: Ensure that the agreement complies with all local, state, and federal laws , especially those that pertain to real estate transactions in Indiana.
- Signature Blocks: Verify that the signature blocks are present for all parties involved, including spouses, if necessary, and confirm that all parties have reviewed and signed the document.
- Right to an Attorney: Review the section that grants the right to an attorney to explain the terms of the agreement and prepare the warranty deed for closing. This is especially important in legal states like Indiana.
- Addenda: Check for any addenda or modifications to the original agreement, and ensure that all parties have initialed or signed next to each change.
- Flexibility and Negotiation: Keep in mind that every Indiana real estate purchase agreement is negotiable. If any terms do not seem fair or if you don’t understand something, don’t hesitate to ask your attorney or real estate professional for clarification.
- Seek Legal Guidance: Finally, it’s always a wise investment to involve a qualified real estate attorney to review the agreement thoroughly before signing. They can offer additional insights and help avoid potential pitfalls.
These tips should provide guidance for ensuring that the Indiana Real Estate Purchase Agreement PDF is accurate, fair, and in the best interest of the buyer and seller.
Where Can I Find an Indiana Purchase Agreement PDF?
For those looking to access an Indiana real estate purchase agreement PDF form, it is important to turn to a reliable source. By way of example, those looking for a standard Indiana Purchase Agreement Form can find a reliable and free copy of that document here. Importantly, when it comes to Indiana real estate purchase agreements, you do not have to pay for a copy from a private vendor or third party. These documents are standardized, intuitive, safe, and most importantly, free.
Avoidable Mistakes
Many buyers and sellers fail to pay adequate attention to the details of the Indiana Purchase Agreement. When this occurs, it may lead to significant legal or financial exposure for the parties. The following list contains some of the most common mistakes:
- Failure to properly identify parties. Failure to properly identify who the buyer is (the owner of the home) and to identify who the seller is (title holder to the property) can cause significant liability for the seller. For instance, it is not uncommon to see owners identify husband and wife as buyer and sellers in the purchase agreement. In Indiana title holders to real estate should be identified using their full legal names. It is not sufficient to a identify a person by their nickname. For example: "Barb Smith" is not sufficient to legally identify someone as the owner of real estate, even if everyone calls her that. You should use her full name on the purchase agreement and the full name on the deed. Additionally, you need to consider how title to the property is held. Joint Tenants with right of Survivorship or Tenants in Entirety are common ways in which spouses hold title to real estate. A failure to properly identify the buyer could result in the seizure and sale of the property to satisfy creditors of one of the spouses in a divorce action. To compound the problem , the other spouse would not be entitled to any proceeds from the sale.
- Failure to properly label property. When executing a purchase agreement, you must accurately describe the property. If you are obtaining financing, the lender will order an appraisal to value the property. The appraiser will perform an analysis of the property and prepare a report. When the lender reviews the appraisal, they will want to confirm that you are buying the property that is the subject of their appraisal. Using the legal description of the property is the best way to make sure that you are actually buying the property. Real estate is routinely transferred with the wrong legal description. To avoid making this mistake, make sure and confirm the legal description on a recent, certified copy of the property’s deed.
- Not specifying all items included in the sale or what can be removed. Buyers and sellers mistake the Indiana Purchase Agreement for a contract for deed. As a result, they attempt to convey items that should not be transferred. For instance, it is critical to clearly specify what items are being included in the sale and what items are not part of the sale. Sometimes, the buyer makes the mistake of attempting to purchase items that are effectively so integral to the property that it is impossible to sell the property without them. Items such as cabinets, carpet and window treatments can create liability for the seller, and headaches for the buyer.
