Purchase and Sales Agreement
The standard Purchase and Sales Agreement as prepared by the NH Association of REALTORS includes a section where the real estate, which is subject to the sale and purchase, is described. In that section, the Agreement defines the term “Property”. It is the only place where the Buyer and the Seller agree on what is being sold, and it is perhaps the most important part of the Agreement. Certainly, if a Buyer and Seller cannot agree on what is being sold/purchased, there is no deal.
In New Hampshire, the practice is that the section of the Agreement will include the city, the street address and the book and page of the recorded deed by which the Seller acquired title. The practice may be acceptable to the Seller if the Seller intends to sell what they purchased, as is. However, there are many occasions where more detail is essential.
You can imagine that if a Buyer walks through a house and sees four bedrooms, three baths, an in-law apartment, a detached two car garage and office space above the garage, then he/she expects to purchase exactly that: four bedrooms, three baths, an in-law apartment, a detached two car garage and office space above the garage. From the Buyer’s standpoint, the details of the house are very important and they are probably assumed. However, sometimes there is no discussion about the description provided in the Purchase and Sales Agreement. The description provided is simply the street address and a deed reference.
For a property description to accurately describe the parties’ Agreement, the Buyer needs to ask what is essential to his or her purchase. Are four bedrooms necessary; is the office space above the garage necessary? Once the Buyer has confirmed in his or her mind the essence of the Agreement, the description should contain those essentials characteristics.
Some of the things that a description might include are as follows:
- Size of the building
- Size of the lot
- Number of lots acquired
- Frontage on a body of water, road, etc.
- Number of living units
- Finished basement
- Particular easements, rights of way or appurtenant rights
While the property description may be simple, more detail is usually beneficial to a Buyer
While the property description provides detail to the subject of the Agreement, it is often important to go a step further and confirm the legal existence of the improvements. It is one thing to walk through a house with four bedrooms, three baths and an in-law apartment but it is quite another to determine that those four bedrooms, three baths and the in-law apartment were all legally permitted and properly occupied. It is often important to the Buyer to be sure that building permits were obtained and that the building process was followed properly. Often, Buyers need to know that inspections occurred and that the final inspections resulted in a certificate of occupancy. The description describes what you expect but there needs to be confirmation that it exists lawfully.
The standard Purchase and Sales Agreement form does not really address the Buyer’s concern in detail. Perhaps a Buyer could modify Section 14 Inspections to require an inspection of the municipal laws, rules and regulations. Or, perhaps a Buyer could add to Section 19 Additional Provisions a condition regarding proof of building permits and/or certificate of occupancy. The Buyer could also require a survey to determine lot size or other issues associated with the land. In all cases, the Buyer needs to decide what is essential to the deal and be sure that the description and the balance of the Agreement enable the Buyer to purchase what the Buyer expects.
The lawyers at Welts, White and Fontaine have experience in residential and commercial real estate transactions in Nashua and the surrounding towns in Hillsborough County, and in Salem and the other towns of Rockingham County. Please call us for more information at (603) 883-0797 or contact us through the form at the very bottom of the page.
Author: Thomas J. Leonard
This blog is intended for informational use only. The information contained herein should not be construed as offering legal advice or a legal opinion.