Understanding Sales Contracts involved in Land Sale 

When you buy or sale land, there are two legal documents involved in the transaction – the sales contract and the deed. The sales contract is the initial contract between the buyer and seller. The deed is the legal document that symbolized the transfer of legal ownership of the property. This article covers the information you should know about sales contracts.  

What’s Covered in a Sales Contract 

For residential properties, the most commonly used sales contract in Texas is the One to Four Family Residential Contract made available by the Texas Real Estate Commission (TREC Form 20-12). This contract does the following:  

• Describes the property 
• Identifies the buyer and seller 
• Lists the sale price 
• Details the agreement terms and conditions 

The sales contract also contains detailed information about earnest money deposits, title policies, and surveys.  In the event of a breach of contract, the sales contract describes the buyer and seller’s remedies as well as the procedures for terminating the contract if the deal falls through.  

Sales Contract Addendums 

The sales contract may be accompanied by a variety of addendums such as: 

• A third-party financing addendum 
• Addendum for sale of other property by buyer 
• Seller’s disclosure of property condition.  

A third-party financing addendum makes the purchase contingent upon the buyer securing financing from a third-party to secure funding or mortgage to buy the property. T 

The addendum for sale of other property by buyer, TREC Form 10-6, makes the buyer’s purchase of the seller’s property contingent on buyer selling its other home or property.  

Form OP-H, the seller’s disclosure of property condition, contains a checklist in which the seller provides information about the home such as smoke detectors, structural defects or malfunctions, maintenance fees or assessments, and much more. This disclosure form, however, is not a substitute for an inspection or warranty.  

Sales Contracts and Closing on the Property 

Sales contracts generally include a closing date on the property. Once all the due diligence is completed, the buyer and seller proceed to closing. The closing is a ceremonial event in which legal title to the property is transferred from the seller to the buyer and the seller is paid.  

At this time, the parties to the transaction sign all the necessary documents to transfer the property title to the new owner. It is important to note the type of deed you are obtaining on the property. There are several different types of deeds which come with varying warranties. Your legal remedies after closing will largely depend upon the type of deed.   

To ensure that your legal rights are protected, consult with a real estate attorney about your sales contract and deed. Tony Malley at Texas Land Brokers is both a real estate attorney and broker. Texas Land Broker’s legal expertise and turnkey brokerage services can help you close the deal on your property quickly and efficiently.