A purchase agreement is the official written document that records the terms agreed upon between the buyer and seller when purchasing a home. This document contains all legally binding arrangements, from the purchase price and transfer date to any contingency clauses. In this article, we answer the most frequently asked questions about the purchase agreement, so you know exactly what to look out for.
What exactly is included in a purchase agreement?
A purchase agreement contains all the terms that the buyer and seller have agreed upon regarding the transfer of a property. Think of the purchase price, the transfer date, the condition of the property, any movable items included in the sale, and the contingency clauses. Together, these elements form the legal foundation of the home purchase.
In practice, a purchase agreement typically includes the following elements:
- Personal details of the buyer and seller
- Description of the property, including the address and cadastral data
- Purchase price and method of payment
- Transfer date (the date of the notarial transfer)
- Deposit or bank guarantee, typically 10% of the purchase price
- Contingency clauses, such as a financing contingency or structural survey condition
- Condition of the property and any defects disclosed by the seller
- Movable items included in the purchase, such as curtains or a dishwasher
The purchase agreement is drawn up based on a standard model from the NVM (Dutch Cooperative Association of Real Estate Agents), but can be supplemented with custom arrangements. It is important to read through every section carefully before signing, as once signed, you are legally bound by its contents.
What is the difference between a purchase agreement and a sales contract?
In practice, a purchase agreement and a sales contract are the same document. The term sales contract refers to the legal agreement that is established, while purchase agreement describes the physical, signed document. In everyday usage, both terms are used interchangeably and refer to the same thing.
It is important, however, to distinguish the purchase agreement from the deed of transfer. The deed of transfer is the notarial document drawn up at a later stage, through which the property officially changes ownership. The purchase agreement is therefore the promise to buy and sell, while the deed of transfer is the actual transfer. Without a valid purchase agreement, the notary cannot draw up a deed of transfer.
When does a purchase agreement become legally valid?
A purchase agreement for a property becomes legally valid at the moment both parties have signed the document. For private buyers, a statutory cooling-off period of three days applies after signing, during which the buyer may cancel the purchase without giving any reason.
A few points to keep in mind regarding legal validity:
- The three-day cooling-off period applies only to the buying party, not to the seller.
- The cooling-off period begins the day after the buyer has received a signed copy.
- If the cooling-off period falls partially on a weekend or public holiday, it is extended accordingly.
- Once the cooling-off period has expired, the purchase agreement is fully binding on both parties.
Always make sure you receive a signed copy of the purchase agreement. Without this proof, it can be difficult to demonstrate later that the agreement was reached.
What are the consequences of not fulfilling the purchase agreement?
If one of the parties fails to meet their obligations under the purchase agreement, the other party is entitled to compensation or enforcement. Most purchase agreements also include a penalty clause: the party in default pays a penalty of 10% of the purchase price. This applies to both the buyer and the seller.
In practice, this can mean:
- Buyer withdraws outside the contingency clauses: the seller may claim the 10% deposit as a penalty.
- Seller withdraws: the buyer can seek enforcement through the courts or claim the 10% penalty.
- Defects discovered after transfer: if the seller concealed known defects, the buyer can claim damages.
If you have any doubts about your financing or the condition of the property, it is always wise to make use of the available contingency clauses. This helps you avoid being faced with a substantial penalty.
What contingency clauses can you include in a purchase agreement?
Contingency clauses are provisions in the purchase agreement that allow you to cancel the purchase if a specific condition is not met, without incurring a penalty. The most common contingency clauses when buying a home are the financing contingency and the structural survey condition.
An overview of commonly used contingency clauses:
- Financing contingency: you can cancel the purchase if you are unable to secure the required mortgage. A period of four to six weeks typically applies.
- Structural survey condition: if a survey reveals that repair costs exceed a specified amount, you may cancel the purchase.
- National Mortgage Guarantee (NHG): you can make the purchase conditional on obtaining NHG.
- Sale of your current home: less common in a tight market, but sometimes possible if you still need to sell your own property.
Always negotiate carefully about which contingency clauses to include and for what time period. A financing contingency with too short a deadline can put you in a difficult position if the mortgage application is delayed.
Who draws up the purchase agreement and who reviews it?
In most cases, the selling party’s real estate agent draws up the purchase agreement based on a standard model. The notary then reviews the purchase agreement and incorporates its contents into the deed of transfer. As a buyer, you have the right to have the purchase agreement reviewed before you sign.
It is advisable to have the purchase agreement checked by:
- Your own buyer’s agent, who represents the buyer’s interests and can assess whether all arrangements have been correctly recorded.
- The notary, who evaluates the legal accuracy and can point out any risks or ambiguities.
- A legal advisor, particularly if the agreement contains special clauses or custom arrangements.
Do not let yourself be pressured into signing quickly. As a buyer, you always have the right to sufficient time to review the purchase agreement thoroughly. A carefully reviewed purchase agreement prevents surprises after the transfer.
How we help with buying and selling a home
At Urban Homies, we guide you from start to finish through the process of selling your home. We develop a detailed marketing strategy, carry out a property valuation, and ensure professional presentation with photography and a tailored listing. Throughout the sales process, we negotiate on your behalf and review all documents, including the purchase agreement, to make sure everything is recorded correctly and in your best interest.
What we do for you:
- Property valuation and market analysis to determine the right asking price
- Professional presentation of your home for maximum visibility
- Negotiation support to help you secure the best deal
- Review of the purchase agreement and guidance all the way to the notary
- After-sales support following the transfer
Want to find out what we can do for you? Contact us for a no-obligation conversation.
