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Purchase Agreement basics

A Purchase Agreement, sometimes called a Sales Contract or Purchase Contract, defines the terms of a transaction of goods. The "goods" may be property, vehicles, business assets or other. This agreement provides legal protection for both the buyer and the seller.

Use the Purchase Agreement document if:

  • You're selling personal property and want a written agreement.
  • You're buying property and want written proof of the agreement.
  • You want assurance that the seller has the legal right to sell the property.
  • As the seller, you want to document payment agreements.

This Purchase Agreement document can be used to make a Purchase Contract between individuals, married couples, businesses or trusts. Rocket Lawyer's document builder can make a Purchase Agreement suitable for any state.

Other names for a Purchase Agreements

Purchase Agreement Form, Purchase and Sale Agreement, Purchase Contract

What is a Purchase Agreement?

A Purchase Agreement is a two-sided legal document that outlines a sales agreement for goods. It is more than a simple sales receipt or Bill of Sale. While it does include the basics such as what the item being sold is and the purchase price, it also includes protections for the buyer and seller. For example, it can require that the buyer acknowledge (in writing) that they have the right to sell the property and that it does not have a lien or other burdens that would interfere with the sale of the property. A Purchase Agreement can also document terms such as how much earnest money is required and when the final payment is due.

What are Purchase Agreements used for?

A Purchase Agreement can be used to document the sale and purchase of nearly any type of good. These contracts are not used when the sellable item is a service. It is most often used in larger transactions because it offers some protection for the buyer and seller. Purchase Contracts can be used in real estate transactions, to purchase business assets or vehicles. They can also be used when selling/purchasing jewelry, artwork or guns (where allowed).

This Purchase Agreement is for general purposes, but we also offer contracts for specific uses, such as:

If you are selling a service, see essential service contracts.

What information do I need to make a Purchase Agreement?

The Rocket Lawyer document builder is easy to use. You simply submit a bit of information and the legal language is automatically generated for you. Documents are created according to the state where the property is located.

You may need to submit the following information to make your Purchase Agreement:

  • Buyer and seller information such as name, address and whether they are an individual, business or trust
  • What is being sold or legal description of property
  • Purchase price, amount of earnest money, whether the buyer will be acquiring financing
  • Whether the property is asserted to be free of liens or other encumbrances
  • If the seller will be making any warranties of the property
  • Closing date, when the final payment is due, when property will be transferred
  • Number of days the closing date can be extended
  • Whether it needs a lead-paint disclosure (if home or building)

Please note: Documents vary depending on the state. If the generated document doesn't seem to fit your needs, you may want to try one of the more specific Purchase Agreements listed above.

Purchase Agreement vs. Bill of Sale

A Bill of Sale documents a transfer of property and often an exchange of money. Whereas a Purchase Agreement is usually made before money is exchanged and it includes specific requirements both the seller and the buyer must meet before the property ownership is transferred. For example, if you need to ensure that the seller has the right to sell the property that they are offering a Purchase Agreement includes those provisions. Whereas you might use a Bill of Sale if you paid for a used car, you have the signed-over title in-hand, and you will be requesting a title transfer from the DMV.

Do I need a lawyer to make a Purchase Agreement?

No, you do not. You can make a Purchase Document using Rocket Lawyer and have it signed by the appropriate parties to make it valid. If you feel it adds extra assurance, you can ask for a witness signature or an Affidavit that declares that the signer saw you and the other party sign the document. If the Purchase Agreement is for a large purchase such as for a real estate or business purchase, you may benefit from having a lawyer look over the document before it is signed as an added layer of protection. In the event of a dispute, a lawyer can help you file for damages.

Do I have to pay taxes on items sold person-to-person?

I most cases, yes. The IRS and your local tax agency expect you to report any gain on property sold, you can also deduct losses. You are expected to pay your tax obligation on personal property you sell such as real estate, land, vehicles or other assets. To learn more, see Do I need to pay taxes on private sales transactions.

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Sample Purchase Agreement

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