What happens to the earnest money deposit if the deal falls through?

If the deal falls through due to a contingency (financing, inspection, or appraisal) that the buyer exercised in good faith, the earnest money is typically refunded to the buyer. If the buyer defaults without a valid contingency, the seller usually retains the earnest money as liquidated damages. If the seller defaults, the buyer is entitled to a full refund of the earnest money and may also pursue additional remedies such as specific performance.

Is a purchase agreement legally binding?

Yes. A signed purchase agreement is a legally binding contract. Both parties are obligated to perform their respective duties under the contract unless a contingency is properly triggered or both parties agree in writing to cancel. Failure to perform without a valid legal excuse may result in liability for breach of contract, including loss of the earnest money deposit or a lawsuit for specific performance or damages.

Do I need a real estate agent or attorney to use a purchase agreement?

You are not legally required to use a real estate agent or attorney for a private purchase agreement, but it is strongly recommended — especially for real estate transactions. Many states require licensed agents to use state-approved forms. Real estate attorneys can ensure the agreement complies with local disclosure laws, identify title issues, and protect your interests at closing.

How long does the inspection period typically last?

Most residential purchase agreements provide for a 7–14 day inspection period. The buyer should schedule a professional home inspection as soon as possible after the agreement is signed. During the inspection period, the buyer may request repairs, negotiate a price reduction, or terminate the contract if material defects are discovered. The inspection period clock typically starts from the date the purchase agreement is fully executed.

What is an appraisal contingency and why does it matter?

An appraisal contingency protects the buyer if the property is appraised by the lender's appraiser at a value lower than the purchase price. Without this contingency, the buyer would be required to pay the agreed price even if the lender will only finance a loan up to the appraised value — leaving the buyer to cover the gap in cash. With the contingency, the buyer can renegotiate the price, make up the difference, or walk away and recover the earnest money deposit.

Who pays closing costs in a purchase agreement?

Closing cost responsibility is negotiable between buyer and seller. In many markets, buyers pay the majority of closing costs (loan origination, title insurance, prepaid taxes/insurance), while sellers pay the real estate commission and transfer taxes. The total closing costs typically range from 2–5% of the purchase price. The allocation of closing costs should be clearly specified in the purchase agreement to avoid misunderstanding at closing.

Free Purchase Agreement Template — Fill Out & Download Instantly

Free — No Sign-Up RequiredPDF & WordUpdated April 6, 2026

⚠️ Legal Disclaimer: This template is attorney-reviewed and built to US legal standards. It does not substitute for professional legal advice. For complex situations, we recommend consulting a licensed attorney.

What Is a Purchase Agreement?

A Purchase Agreement is a legally binding contract between a seller and a buyer that documents the sale of property, real estate, a vehicle, or any other significant asset. It sets out the purchase price, deposit amount, closing or transfer date, contingencies, and the responsibilities of each party before and at closing. Our free template supports both real estate and personal property sales, and includes optional contingency clauses for financing, inspection, and appraisal — the three most critical buyer protections in any purchase transaction.

When Do You Need It?

You need a Purchase Agreement whenever you are buying or selling real estate, a business, a vehicle, or high-value personal property. Common situations include selling or buying a house, condo, or land; completing a for-sale-by-owner (FSBO) real estate transaction without a real estate agent; selling a business or significant business assets; selling a vehicle privately; or documenting any large purchase where both parties want written proof of agreed terms before money and title change hands..

What's Included in This Template

Seller and buyer identification and addresses
Full property or item description
Purchase price and deposit amount
Closing or transfer date
Financing contingency with lender details
Inspection period and contingency
Appraisal contingency (optional)
Included and excluded items
Title insurance provisions
Closing cost allocation
Default and remedies clause
Governing law
Signature blocks for both parties

How to Fill It Out

Select the Governing State — Choose the state where the property is located or where the sale will take place. State law governs contract enforceability, disclosure requirements, and closing procedures.

Enter Seller and Buyer Information — Provide the full legal names and addresses of all sellers and buyers. For real estate, use the names exactly as they should appear on the deed.

Describe the Property or Item — For real estate, include the complete street address and legal description. For personal property, describe the item in detail including make, model, year, serial number, or any other identifying features.

Set the Price, Deposit, and Closing Date — Enter the total purchase price, the earnest money or deposit amount, and the target closing or transfer date. Clearly specify when and how the deposit is to be paid.

Select Contingencies — Choose which contingencies apply — financing (buyer secures a loan), inspection (property passes inspection), and appraisal (property appraises at or above purchase price). Each contingency protects the buyer and may allow them to exit the contract without penalty.

Specify Included and Excluded Items — List all items that are included in the sale (e.g., appliances, fixtures, furniture) and any items that are explicitly excluded. Clear lists prevent post-closing disputes.

Allocate Closing Costs — Specify who pays closing costs — buyer, seller, or a negotiated split. Include title insurance provisions if applicable.

Legal Requirements & Notes

Purchase agreements for real estate are subject to state-specific statutory requirements, including mandatory disclosure laws (e.g., California Civil Code § 1102, New York Property Condition Disclosure Act), Statute of Frauds (requiring written contracts for real estate), and transfer tax obligations. Key legal considerations: (1) Real estate purchase agreements must describe the property with sufficient certainty — a full legal description from the deed is strongly recommended; (2) Earnest money forfeiture provisions may be subject to liquidated damages rules that vary by state; (3) RESPA (12 U.S.C. § 2601) regulates settlement services for residential real estate transactions; (4) Lead-based paint disclosure is federally required for pre-1978 homes under 42 U.S.C. § 4852d; (5) For FSBO transactions, a real estate attorney should review the agreement before signing; (6) Many states require licensed real estate agents to use state-approved purchase agreement forms. This template is provided for informational purposes only and does not substitute for advice from a licensed real estate attorney or agent in your state.

Frequently Asked Questions

A purchase agreement is a contract that sets out the terms and conditions of a sale before it is completed — it creates a binding obligation to sell and buy on agreed terms, subject to contingencies. A bill of sale documents the transfer of ownership after a sale has already been completed. For real estate, a purchase agreement is signed first; the deed and bill of sale transfer title at closing. For personal property, a purchase agreement may be combined with a bill of sale.

Free Purchase Agreement Template — Fill Out & Download Instantly

PURCHASE AGREEMENT

1. PROPERTY DESCRIPTION

2. PURCHASE PRICE AND DEPOSIT

3. CLOSING DATE

4. CONTINGENCIES

5. INCLUDED AND EXCLUDED ITEMS

6. TITLE AND CLOSING COSTS

7. DEFAULT AND REMEDIES

8. CONDITION OF PROPERTY

9. GOVERNING LAW

10. ENTIRE AGREEMENT

SELLER:

BUYER: