What’s Included in a California Real Estate Purchase Agreement?

Most home buyers in California realize that they have to sign a purchase agreement with the seller, before proceeding with the transaction. But many people don’t know what kind of information actually goes into a residential real estate purchase agreement.

By understanding the different components of a real estate contract, home buyers can better prepare for the offer and negotiating process. So today, we will explain all of the important sections found within a standard California purchase agreement.

Meet the California Residential Purchase Agreement

When you make an offer on a house in California, you will likely use a standardized document that includes the purchase price and other terms of the sale. Later, once the seller has accepted your offer, both parties will sign this document making it a legal agreement.

In California, real estate purchase offers and agreements are typically submitted through a standardized document. It’s known as the “California Residential Purchase Agreement.”

You can find some blank copies of this document online, with a Google search. And there are benefits for doing so. It will give you a better sense of what kind of information you need to provide when making an offer, and when finalizing the contract with the seller. So it’s worth a look.

Here are the main parts of the California purchase agreement and sales contract:

1. Information about the buyer and the property

The first part of the purchase agreement identifies the buyer by name. It also identifies the property that the buyer is attempting to purchase, with a complete address including city, county and ZIP Code.

2. Real estate agents

The state of California does not require you to use a real estate agent when buying a home. But there are many benefits for doing so. If you do use a real estate agent, his or her name and license number will be included within the real estate purchase agreement. The seller’s real estate agent or broker will be listed here as well.

3. Terms of the purchase and allocation of costs

Part three of the California real estate purchase agreement is the most important section, from a home buyer’s perspective. This is where you’ll list all of the terms relating to the sale, including the purchase price.

This section also includes information relating to the type of mortgage loan being used, the home buyer’s earnest money deposit, down payment, and any contingencies that the buyer wants to include.

A “contingency” is a certain condition that needs to be met in order for the sale to proceed. For example, a home buyer in California might choose to include an inspection contingency. This allows them to back out of the deal if the inspector uncovers issues they are uncomfortable with.

There are other types of contingencies as well, and you’ll find them in this related article.

4. Property addenda and advisories

The next section of the California residential purchase agreement contains checkboxes for any advisories or addenda that have been attached to the contract.

According to the California Department of Real Estate:

“…disclosures, addenda and advisories such as Buyer’s Inspection Advisory (C.A.R. form BIA), Purchase Agreement Addendum (C.A.R. form PAA), Probate Advisory (C.A.R. form PAK). If any of the disclosures, addenda are checked they become a part of the contract and should be signed and included at the time of presenting the offer.”

Important Boilerplate Information

The rest of the purchase agreement contains standard boilerplate information relating to the real estate transaction. It explains everything from how the earnest money deposit gets handled, to how the real estate agents will be compensated.

There’s not much for a home buyer to do in these sections, aside from reading and understanding the information prior to signing the document.

Once the buyer and seller sign the purchase agreement, it becomes a legally binding real estate contract. It also determines a number of important details, including the purchase price, contingencies, and how the deposit money will be handled.

The best way to understand this document is to review it prior to making an offer. As mentioned above, you can find a PDF copy of the California Residential Real Estate Purchase Agreement with a quick Google search.

Pull up a copy and spend some time reviewing each section of the agreement. Pay particular attention to part three, which outlines the specific terms of the purchase. This is a great way to educate yourself about how real estate transactions are handled in the state of California, and how it affects you as a home buyer.

Have Mortgage Questions?

Your real estate agent will be able to answer any questions you have about the purchase agreement. But we can answer any mortgage-related questions you might have, and also pre-approve you for a loan.

Getting pre-approved before house hunting can increase your chance for success. Among other things, it can make sellers more inclined to accept your purchase offer, since you’ve been screened by a lender in advance. Please contact our staff to get started!