Four Important FAQs About Real Estate Sales Contracts

What Is A Sales Contract?

A real estate sales contract (also known as a purchase agreement) is a legal contract between the buyer and the seller of a piece of real estate that details the terms of purchase and transfer.

Generally, there are three types of real estate contracts: commercial improved, commercial unimproved, and residential. Contracts will differ depending on the type of realty, financing, and goals of the parties.

Why Is The Form of Contract Important?

The sale or purchase of any real property is a transaction that requires a significant amount of money, time, and other parties (mortgage companies, real estate agents, lawyers, appraisers, inspectors, etc.). A well-drafted contract ensures that the buyer and seller are aware of and have agreed to, all rights and obligations in the transaction.

What Is Included In A Sales Contract?

A real estate sales contract will include many provisions. The basic, mandatory requirements include:

  • Competent parties and their names
  • The purchase price
  • The address of the property
  • A description of the property
  • Signatures of both parties

It’s important to note that Alabama law employs the rule of caveat emptor, meaning, “let the buyer beware.” This means that the seller is under no legal obligation to disclose any issues about the physical condition of the home during the sale. It is the buyer’s responsibility to uncover any potential defects.

However, there are three exceptions to this rule in which the seller would be legally obligated to disclose any defects of the home. They are:

  • A fiduciary relationship between the buyer and seller.
  • If the seller is aware that the home poses a health or safety risk to the buyer.
  • If the buyer inquires directly about any specific defects.

Additionally, there are many negotiable conditions you will include in the contract, such as:

  • If the buyer wants the seller to pay any closing costs
  • The specific closing costs each party will pay
  • Closing date
  • Home inspection contingency
  • Whether or not any fixtures or appliances are included in the purchase
  • Sale of existing home contingency

Do I Need A Lawyer?


Sales contracts are a very important part of the transaction. In order to ensure all your interests are protected, the contract should be drafted with a qualified attorney.

At Stanko, Senter & Mitchell, we specialize in real estate transactions and contract law. If you’re looking to buy or sell a piece of real estate, contact us today.