12 ‘indispensable’ topics to make the Property Purchase and Sale Agreement

Asad Ijaz
Property Purchase

You probably worked hard to sell your property.

You did all the work of advertising your property for months until you found the right buyer.

You advertised your property on real estate sales websites like Tajarat Properties, put up posters and even shared photos of your property among your friends on social media, all so that your property has as much exposure as possible.

But all this work to sell your property doesn’t mean much if you end the entire process with the signing of a property purchase and sale contract, all wrong and full of legal defects.

All your hard work can be thrown away if the contract is legally invalid

That’s why you need to have a document that legally guarantees the validity of the purchase and sale process that you are carrying out with the buyer of the property.

See how you can have the contract fully updated and made by the renowned lawyers of our Registry.

But before we start, let’s see what this legal document is.

1. What is the Property Purchase Agreement?
2. How to make a Property Purchase and Sale Agreement?
3. What documents are required to buy and sell a property?
4. Payment method: cash or in installments?
5. How to register the Real Estate Purchase and Sale Agreement at the Notary Public Office?
6. Does the Property Purchase and Sale Agreement have the value of a Deed?
7. Can I sell my Property with a Drawer Contract?
8. Is the Property Purchase and Sale Agreement valid?
9. Is it possible to buy a property that is in Divorce Sharing?
10. How to carry out the Purchase and Sale Agreement for the Property of Heir?
11. How does the Contractual Termination of Purchase and Sale of Property occur?
12. How much does a Property Purchase and Sale Agreement cost?

1. What is the Property Purchase Agreement?

Buying a property, be it commercial or residential, is the dream of many families and an important step in anyone’s life. That’s why it’s normal to feel butterflies in your stomach when you sign this purchase and sale agreement.

This document sets out in detail the commitments made by the seller and the buyer regarding the good being negotiated. It also contains all the details of the property such as location, size and information about its condition, as well as the name and details of the owners.

The simple document in itself does not guarantee the transfer of ownership to the buyer, but allows him to demand the transfer of ownership in the property registry described, as we will see below.

Something that will differentiate which annotation will be made in the registry is whether the contract is in fact a purchase and sale contract or just a promise. Let’s now identify what the difference is.

Promissory Purchase and Sale Agreement

The buy and sell promise seems to be a contract, as it creates an obligation to buy or sell something based on pre-established conditions.

Therefore, it does not change the status of the business, which remains the property of the seller, awaiting payment from the buyer to conclude the purchase and sale agreement.

This document has a repentance clause, which allows the parties to withdraw from the deal without penalties.

For this reason, the purchase and sale promise is a method widely used in the acquisition of property through real estate financing.

Thus, one must be very careful when preparing the document. For example, on the internet there are several models of contracts for the purchase and sale of property, but they are actually models of promises. Be cautious!

Property Purchase and Sale Agreement

How to know if the Property is Rural or Urban?

What differentiates a rural property from an urban property is its agricultural, livestock, extractive, vegetable, forest, or agro-industrial destination.

Brazilian legislation defines rural property as an “area formed by one or more continuous land registrations, owned by the same owner (owner or squatter), located both in the rural and urban areas of the municipality”.

Urban properties are used for the construction of improvements. In other words, in the case of land, what defines it as urban is the type of structure that will be built on it, regardless of whether the land is productive or not.

It is important to understand the differences between rural and urban property, mainly because of tax issues.

The owner of the urban property pays the tax called IPTU – Urban Property and Land Tax, while the owner of the Rural Property pays the Rural Land Tax – ITR.

If comparing two properties by their size, the amount of IPTU charged would be greater than the value of the ITR for the same property.

The rural tax is paid by the size of the property, which can be classified as:

But regardless of which one you have chosen, making this type of purchase is not part of most people’s routine and the process of choosing until transferring ownership is usually quite bureaucratic.

This is because several items need to be checked in order for everything to come out correct and valid. But before team of Taj residencia analyze what is essential in this contract, let’s talk about its validity.

2. How to make a Property Purchase and Sale Agreement?

There are some requirements and information that cannot be missing from this type of contract. Below is a brief report on each.

Qualification of Parties

If they are a natural person, they must have proof of residence, in addition to personal identification documents: RG (or driver’s license) and CPF.

In addition, it is necessary to present a birth or marriage certificate and, if married, the spouse’s identification documents.

It is also good to be presented with a negative certificate of civil actions and certificates obtained from the Federal and Labor Courts.

If one party is a legal entity must include the CNPJ of the company, documents people’s representative, negative certificates of civil claims and state debts and social contract or social status of the company.

All this information must be observed, so that if there is any problem during the payment of the property, the aggrieved party has a way to contact the other.

Property Purchase and Sale Agreement

Description of the property that will be sold

The term of the agreement must contain the location, size of the property, if it is furnished, among other conditions that must be carefully analyzed. This is so that there are no surprises when you enter the property, whether it is new or used. 

The description needs to be honest, that is, problems such as leaks, cracks, mold, among others, need to be described in the document.

For this, an Inspection Report must be made, which must be clear about the structure of the property at the time of the transaction, and attached to the contract.

This opinion must be very detailed and include photos, which facilitates the verification of the need for possible repairs, which must be described in the document.

If the property is being purchased at the plant, the project description needs to be checked carefully before being delivered.

Finally, the registration number that is registered at the notary’s office is also included in the property description.

Value and Payment Method

The document must contain in detail the form of payment and especially the price at which the property is being sold.

This amount will be agreed between the parties, but if the amount exceeds 30 minimum wages, the legal transaction is only valid by public deed.

Now, if the value is less than this amount, the business can be carried out under a private purchase and sale contract, such as the one discussed in this article.

Obligations and rights of the parties

First, the seller’s obligation is to deliver the rural property to the buyer whose main obligation is to pay for the property.

Both parties are responsible for setting the price and agreeing on how the payment will be made. 

Thus, it is the buyer’s obligation to pay the total amount or installments on time, as well as pay the fines in case of delay.

The seller must present proof of payment of taxes, as well as a property inspection report with photos showing details about the conservation. He must also hand over the property to the new owner on the stipulated date.

By now I believe you have already realized that this document is extremely important and full of requirements, which makes it difficult for a person without a lot of legal knowledge to do it without making it invalid.

Property Purchase and Sale Agreement

When there are realtors behind the sales, it’s up to the person who hired him to bear his expense. The payment of the Transmission Tax (ITBI) is up to the buyer of the property. 

Notary fees for changing the transfer of ownership are, as a rule, paid by the buyer, but the parties can agree differently provided this information is in the contract.

There are a few more obligations for each of the parties, as we’ll see later.

Time of possession of the Property

The parties must define in the document the moment of possession by the buyer, that is, when he will have the right to occupy the property after all negotiation and pay the taxes arising from the property.

This moment of possession can happen after the signing of the contract, on a specific date stipulated by the parties or after the property has been paid off.

The important thing is that the parties are in agreement and that information is written in the term that testifies to it.

3. What documents are required to buy and sell a property?

When buying or selling a property, some documents are required. Regarding the contractors, the following documents are required:

As for the property, the following are necessary:

After the contract is made, there are some obligations and rights that must be fulfilled by the signatories. However, an essential topic in the document is how the payment will be made. 

That is why it is so necessary to present a contract that complies with the legal requirements, to guarantee its validity in case of default.

Property Purchase and Sale Agreement

4. Payment method: cash or in installments?

It is important to define whether the payment amount will be deposited in cash, bank transfer, checks and the place where the payment will be made.

If payment is in cash, it is important to decide until which day this amount will be paid. If it is in installments, you must inform in how many installments will be paid and the value of each one, in addition to indicating where this payment will be made.

If payment is made by checks, it is interesting that the document contains the serial number of the checks, the issuer and the value of each money order.

As there may be other goods in the negotiation, such as the offer of a vehicle, it is relevant that the contract contains a description of them.

In addition, it is essential to forecast what happens in the event of late payment: will there be termination of the business and payment of a fine with monetary correction?

Team of Park view city Lahore will talk about this later.

5. How to register the Real Estate Purchase and Sale Agreement at the Notary Public Office?

In order to regularize the property by registering the purchase and sale contract at a notary’s office and transferring the property, other documents are required in addition to the contract: registration, deed and property registration

The license is the property of the birth certificate, that is, everything that happens in it has to be included in this registration. This includes the fraction to the original part, the first owner, the next sale, any construction made, and so on.

Therefore, for the transfer of property to have legal value, the deed must be registered in the property’s registration.

The Deed is prepared at the Notary Public ‘s Office after taking the signed Purchase and Sale Agreement. This is an act that certifies that one party sold a good to another and validates the deal between them. 

When the purchase is made in cash, the deed is made at the notary’s office. In the case of financing, the bank is able to issue the document.

The Real Estate Registry is the document that definitively transfers ownership of the property. It is nothing more than a book where the property’s registration number will be registered.

It is extremely important that this registration number appear in the document, as it is the identification of the property before the Notary Public.

After signing the contract, the first step is to take it with the buyer’s and seller’s documents to the notary’s office to draw up the deed.

At the notary’s office, the Notary will prepare the draft of the deed to be validated by the parties to the business, that is, the parties will read the deed and sign the document.

The next step is payment of a boleto: the buyer will have to pay some fees/taxes: ITBI (Tax on Transmission of Real Estate) and the costs of the Notary Office. 

After payment, the buyer must take the proof of payment along with the deed to the Real Estate Registry Office (CRI) and register the property in the Property Registry.

Thus, it is clear that this contract has several details, which means that not everyone can do it in a way that meets all the necessary requirements. And without them unfortunately your contract will not be valid.

6. Does the Property Purchase and Sale Agreement have the value of a Deed?

Although many people believe that the answer to this question is yes, the Deed is a unique document of the property that the Purchase and Sale Agreement cannot replace.

In fact, this contract is important to be able to change the name of the property owner, as it contains the former owner’s will, through his signature, to transfer the property to another person, who will be the buyer.

It should always be remembered that the purchase and sale contract does not transfer ownership of the property, it only transfers ownership. Only the deed will transfer ownership.

This is important because there are cases in which the property does not have a deed and ownership of the property can only be acquired through usucapio action.

As the document is proof that there was a negotiation, it is an important proof in the adverse possession action.

Is it possible to sell land without deed?

Many people purchase a property using only the deed, taking it for registration at the Property Registry Office.

This practice can even work, but if the buyer does not pay one of the installments, for example, it is much more difficult to go to court without a document proving the business done.

Therefore, the purchase and sale contract must have as much information as possible about the good and about the negotiation, such as the identification of the seller, the buyer, the value, the form of payment.

What is the declaration by sentence of Usucapião?

The adverse possession is a procedure that formalizes the ownership of a land through continuous possession, for an extended period. 

Claiming adverse possession requires a different process, as it is necessary to appear at a Notary Public’s Office. You must bring the land plan, the public deed of the property, tax clearance certificates and a document attesting to the land purchase. Advice from a lawyer is advisable.

However, there are owners who do not have access to the property deed because they are not the ones who actually appear in the property’s registration. It can also occur because the transfer of the property was registered only in a particular document (drawer contract).

In this case, it is possible to make a new deed. The creation of a new deed costs around 4% of the property’s value, in addition to an approximate fee of R$ 1,000.00 (one thousand reais).

Another alternative to regularize the property’s situation is to find the former owners and request the issuance of the deed. 

Subsequently, the interested party must go to the Real Estate Registry Office and present the Land Purchase and Sale Agreement to certify that they have negotiated the land with the land’s official owners.

In this way, no one should be allowed to write this document. A legally qualified professional, such as a lawyer or notary’s office, is required.

Property Purchase and Sale Agreement

7. Can I sell my Property with a Drawer Contract?

There are people who have some impediment to take ownership of the property at the time of purchase. An example of this is when someone is going to buy a mortgaged property, but without transferring the mortgage to their name.

In this case, a Purchase and Sale Agreement is carried out where it is specified that although the property is being sold before the end of its financing, possession will only be transferred to the new owner after he pays off the financing installments.

Another detail is that in these cases, if the contract is a drawer, the financing will remain in the name of the borrower (seller of the property), but who will pay the installments is the drawer (new buyer).

This occurs both because the name of the Gaveteiro would not be approved by the bank, as well as to avoid the increase in the value of the installments if the property is refinanced.

In summary, the Drawer Agreement is the instrument used in a sale that is currently unavailable to carry out the transfer of ownership.

8. Is the Property Purchase and Sale Agreement valid?

When carrying out a property purchase and sale business, it is very important to enter into a contract, as it serves to prove that the legal transaction has been carried out and how it was carried out.

Therefore, this document will contain all the details of the legal transaction, such as the sale price, how it was paid, when the buyer will be able to enjoy the property. Furthermore, it is a document that proves the seller’s willingness to transfer the property to a new owner.

Therefore, even if he alone does not transfer ownership, it is through his demonstration that the seller’s willingness to transfer the property to another will be proven.

9. Is it possible to buy a property that is in Divorce Sharing?

Real estate in divorce sharing can be both a good deal and a bad one.

Many properties in this situation need to be sold as soon as possible, which causes their value to drop a little. With this, the buyer can get a property with a much more affordable value.

However, one must be careful that there are situations where one of the spouses, usually in a contentious divorce, tries to sell the property before the property is shared.

This is so that you don’t have to share the money with the other spouse.

In these cases, whoever buys the property will be getting into a big mess because, unless they have an authorization from the judge allowing the sale of the property, it will not be carried out legally.

That’s why we emphasize the information that every contract needs to follow basic rules and requirements that sometimes on the internet are out of date, as the models offered are generic and may not fit the specific need you need.

Property Purchase and Sale Agreement

10. How to carry out a Purchase and Sale Agreement for Heir Property?

Inventory is the procedure by which the assets of a deceased person is identified to allow the transfer of assets to heirs, through sharing.

Under normal conditions, the heirs sell the inherited assets after completion of the inventory.

But if the probate is through the courts, it can take one to three years to be completed and many families may need to sell some assets to pay for the process.

For this, it is necessary to ask the judge for an authorization that justifies the reason for the sale.

The buyer will not be able to transfer the property to their name before the inventory is completed, but properties sold during the inventory tend to be cheaper.

11. How does the Contractual Termination of Purchase and Sale of Property occur?

Imagine that the buyer made the legal deal with you, but a few months later, he lost his job and finds it difficult to pay the installment of the property.

It is then that one of the most boring moments of the contractual relationship arises, the breach of the contract, where one of the parties must return all the values ​​of the negotiation.

When the undoing of the business is caused by the seller/builder, the Consumer Code states that the installments paid must be immediately refunded.

In any case, the property purchase and sale contract usually includes in its termination clause a fine of 10% on the amount paid as a penalty.

This means that the buyer who does not pay on time must pay a 10% fine calculated on the total value of the deal, when the delay is for more than 3 months and the buyer, even after an extrajudicial notification, does not regularize the payment.

12. How much does a Property Purchase and Sale Agreement cost?

A document like this, so full of details, needs a lot of attention to be done, as well as a good knowledge in the legal area so that it fits all the requirements provided by law.

Thus, as mentioned above, it must be done by a qualified professional because there are many free templates in word or pdf on the internet that do not comply with current legislation .

A private lawyer is a professional with full capacity to do it, but they usually charge a very high amount, around R$ 150.00.

Therefore, it is much cheaper to perform your contract on an online notary site that, in addition to having legal knowledge, charge a much more affordable price for the performance.

ALL ABOUT THE TOPIC

Legislation: Brazilian Civil Code (Law No. 10.406/02)

Concept: it is the document that proves the purchase of a property, whether rural or urban, and the terms agreed upon by the parties.

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