Deed vs. Agreement of Sale: What`s the Difference and Why Does it Matter?
When it comes to buying or selling real estate, there are many legal documents involved. Two of the most important ones are the deed and the agreement of sale. While these documents may seem interchangeable, they have distinct differences that are important to understand.
What is a Deed?
A deed is a legal document that transfers ownership of real estate from one person to another. It includes the names of the buyer and seller, a description of the property being transferred, and any relevant legal language required by the state. A deed must be signed, witnessed, and notarized to be considered valid.
Once a deed is signed and recorded with the county or city, it becomes a permanent record of the transfer of ownership. There are different types of deeds, including warranty deeds, quitclaim deeds, and special warranty deeds. The type of deed used depends on the circumstances of the transfer and the state or local laws governing the transfer.
What is an Agreement of Sale?
An agreement of sale, also known as a sales contract, is a legal document that outlines the terms and conditions of the sale of real estate. It includes the purchase price, payment terms, and any contingencies that must be satisfied before the sale can be completed. An agreement of sale must be signed by both the buyer and seller to be considered valid.
Unlike a deed, an agreement of sale is not a transfer of ownership. It is a document that outlines the terms and conditions of the sale that both parties agree to. Once all the conditions in the agreement of sale are satisfied, a deed can be prepared and signed to transfer ownership.
Why Does it Matter?
Understanding the differences between a deed and an agreement of sale is important for both buyers and sellers. As a buyer, it`s important to review the agreement of sale carefully to ensure that the terms and conditions are acceptable before signing it. As a seller, it`s important to understand the terms of the agreement of sale to ensure that the transfer of ownership goes smoothly.
It`s also important to work with a qualified real estate attorney throughout the transaction process. An attorney can help review the legal documents, ensure that the terms and conditions are fair and legal, and provide guidance throughout the transaction.
In conclusion, while the deed and agreement of sale are both important legal documents in real estate transactions, they serve different purposes. Understanding these differences can help ensure a smooth and successful transaction for both buyers and sellers.