Key Takeaways

  • An agreement between buyer and seller of property outlines essential transaction terms and protects both parties legally.
  • It includes key elements such as buyer/seller identities, property details, purchase price, payment method, and contingencies.
  • Purchase agreements differ from bills of sale by timing and function: the former sets terms prior to the transaction, while the latter finalizes it.
  • Real estate agreements often involve additional clauses for inspections, financing, disclosures, and closing terms.
  • Agreements can apply to various types of property, including personal property, vehicles, and real estate.
  • Legal review is highly recommended to avoid future disputes or enforceability issues.

A purchase agreement letter between seller and buyer is created when two parties come together, where one party desires to purchase a piece of property and the other party is looking to sell a piece of personal property. The agreement is a legal document that outlines the conditions and terms of the sale. Also, another goal of the agreement is to eliminate any disputes related to the purchase of the property in the future.

What's the Essence of a Purchase Agreement?

A purchase agreement is used to serve as confirmation of the business transaction in regard to the sale of the personal property. All assets being sold between the two parties must be accompanied by a purchase agreement. The significance of the agreement is that it provides formal documentation to the business transaction in its true merit and form.

Why Agreements Between Buyer and Seller of Property Are Essential

The agreement between buyer and seller of property ensures both parties understand and accept the terms of a transaction before ownership transfers. For high-value or complex transactions, such as real estate, this agreement serves multiple purposes:

  • Legal Protection: Establishes enforceable obligations for both parties.
  • Clarification of Terms: Eliminates ambiguity around price, property condition, and responsibilities.
  • Contingency Handling: Includes provisions for inspections, financing approval, or required repairs before closing.
  • Dispute Prevention: Reduces misunderstandings that might lead to litigation.

Agreements are particularly vital in real estate transactions due to the monetary value and regulatory requirements involved. They also help parties adhere to local laws concerning disclosures, zoning compliance, and title transfer.

What Should Be Identified in a Purchase Agreement?

A purchase agreement should describe the basic elements of the transaction, including:

  • Buyer: The party purchasing the property.
  • Seller: The party selling the property.
  • Purchase price: The amount that the buyer will be paying the seller for the property.
  • Personal property: A description of the personal property that is being sold.
  • Payment: When and how the buyer will pay the seller for the property.

Common Clauses in Property Purchase Agreements

A comprehensive agreement between buyer and seller of property often includes several additional clauses beyond the basics:

  1. Earnest Money Deposit: A good-faith amount the buyer pays upfront, which may be forfeited if the buyer backs out unjustifiably.
  2. Contingencies: Conditions that must be satisfied before closing, such as:
    • Home inspection approval
    • Buyer securing financing
    • Property appraisal meeting value expectations
  3. Disclosure Requirements: Sellers may be legally obligated to disclose issues like pest infestations, mold, or structural damage.
  4. Closing Date and Possession: Specifies when the deal is finalized and when the buyer gains possession.
  5. Prorations and Adjustments: Clarifies how taxes, utilities, or homeowner association fees are handled during ownership transfer.
  6. Default and Remedies: Details consequences if either party breaches the agreement.

These clauses provide structure, fairness, and legal enforceability, especially in real estate agreements where state laws may impose additional requirements.

What's the Difference Between a Purchase Agreement and Bill of Sale?

A purchase agreement is typically signed prior to exchanging the money and property. It's an agreement made between the parties to enter into the future transaction and will document the details behind what property is being transferred. Before or after the exchange of the property (or money) has been completed, a bill of sale is signed. The purpose of the bill of sale is to document the transfer of the property from the seller to the buyer. Additionally, it serves as a receipt to the transaction.

A bill of sale may also be referred to as one of the following:

  • Contract for sale of personal property.
  • Sale and purchase agreement.
  • Agreement to sell personal property.

Key Legal Differences: Agreement vs. Deed vs. Bill of Sale

While a purchase agreement sets the terms and expectations leading up to a sale, other legal documents finalize the deal:

  • Bill of Sale: Confirms that the sale has occurred. Often used for personal property like vehicles, electronics, or equipment.
  • Deed: Used in real estate to legally transfer ownership of land or buildings. A deed must typically be notarized and recorded with a government entity.
  • Sales Contract (SPA): In commercial contexts, the Sales and Purchase Agreement (SPA) is the formal contract binding both parties to the transaction.

Understanding which document applies—and when—ensures that the property transfer is valid and enforceable in court if needed.

When Is a Purchase Agreement Needed?

A purchase agreement is needed in cases where you're purchasing or selling any personal property; it's a good idea to consider recording the transaction in a personal property sales contract. A written contract allows both parties to scrutinize and describe the particulars regarding the sale. Additionally, it acknowledges each party's perception of the how the transaction will ensue.

Situations That Require a Property Purchase Agreement

You should strongly consider a written agreement between buyer and seller of property in the following situations:

  • High-value transactions: Particularly real estate or vehicles.
  • Longer timelines: Where time is needed to arrange financing, inspections, or approvals.
  • State-mandated disclosure laws: For example, real estate deals that require lead-paint disclosures or flood risk assessments.
  • Sale involving contingencies: Like needing to sell another property before closing.
  • Business asset sales: To transfer equipment, trademarks, or inventory.

Even seemingly straightforward deals can turn contentious. A signed agreement protects both parties’ interests and serves as an enforceable legal record.

Sample of an Agreement Letter for Selling a Car

January 1, 2019

This letter authorizes the sale regarding the automobile with VIN Number XXX, between Mrs. Eileen Smith (Seller) and Mrs. Janet Evans (Buyer). The agreement, along with the details below, are acknowledged by both individuals and the witnesses.

  • Car Model: Chevrolet Corvette.
  • Make Year: 2017.
  • Owner: Current Owner.
  • Color: Red.
  • Other Specifications, including: MP3 player, leather interior, air bags, automatic transmission, climate control, etc.

The seller, Mrs. Eileen Smith additionally states that the mileage on the automobile reading stands at XX,XXX miles to the best of her knowledge, with the odometer being in its original state.

The buyer, Mrs. Janet Evans agrees that seller will not be held responsible for any mechanical problems which may arise following the purchase of the automobile. The MP3 player is currently not working and any repairs will need to be completed by the buyer, herself. However, the seller has kept the original factory radio and this should provide the buyer with the ability to get the automobile properly serviced, if need be.

  • Buyer name and date.
  • Seller name and date.

Automobile selling agreement letter:

  • Witness name and date.

Automobile seller details:

  • Name.
  • Address.
  • VIN number.

Automobile buyer details:

  • Name.
  • Address.
  • VIN number.

Automobile details:

  • Make.
  • Model.
  • Year.
  • Mileage.
  • Registration number.
  • Chassis number.
  • Engine number.

I hereby acknowledge the delivery and sale of the above-mentioned automobile to Mrs. Eileen Smith, which is sold at (agreed upon price). The original paperwork for the automobile is now in the possession of Mrs. Janet Evans, while I've kept a copy of the vehicle title for my own personal records.

The vehicle is sold in “as-is” condition, where the seller, Mrs. Eileen Smith, is not responsible for any damages or repairs after the agreement has been signed by all parties.

  • Seller's signature.
  • Buyer's signature.
  • Current date.

Tips for Drafting a Strong Agreement Between Buyer and Seller of Property

To create a legally sound and practical agreement, consider the following best practices:

  • Be Specific: Clearly identify the property being sold and all transaction terms.
  • Use Legal Descriptions: For real estate, include the legal property description—not just a street address.
  • State the “As-Is” Clause (if applicable): If the buyer accepts the property in current condition, it should be stated clearly.
  • Include Witnesses or Notary Signatures: Adds legal weight and is sometimes required.
  • List Representations and Warranties: The seller may state that they have the right to sell and that the property is free of liens.
  • Consult an Attorney: Especially in real estate or commercial transactions, legal review ensures enforceability and compliance with state laws.

You can find qualified attorneys on UpCounsel to assist with preparing or reviewing your agreement to ensure it's properly drafted and legally binding.

Frequently Asked Questions

  1. What is an agreement between buyer and seller of property?
    It is a legal contract outlining the terms of a property sale, including price, property description, contingencies, and the responsibilities of both parties.
  2. Is a purchase agreement legally binding?
    Yes, once signed by both parties, it becomes a legally enforceable document. Breach of contract may result in legal consequences.
  3. Can a buyer back out after signing a purchase agreement?
    Only if a contingency in the agreement allows it—such as a failed inspection or inability to secure financing.
  4. Do I need a lawyer for a property purchase agreement?
    While not always legally required, consulting a lawyer is strongly recommended for complex transactions, particularly involving real estate.
  5. What happens if a seller refuses to honor the purchase agreement?
    The buyer may pursue legal remedies, such as specific performance (forcing the sale) or monetary damages, depending on the contract terms and local laws.

If you need help with an agreement letter between seller and buyer, you can post your legal need on UpCounsel's marketplace. UpCounsel accepts only the top 5 percent of lawyers to its site. Lawyers on UpCounsel come from law schools such as Harvard Law and Yale Law and average 14 years of legal experience, including work with or on behalf of companies like Google, Menlo Ventures, and Airbnb.