Virginia PL, Level 7 - Purchase Contracts

binder

a preliminary agreement for the sale of a property secured by a valuable deposit from the potential buyer, which binds the seller to a good faith agreement to sell the subject property, provided that a sale contract meeting the conditions determined is executed within the prescribed period; also known as a letter of intent (loi)

counteroffer

a contract proposal submitted in response to a previous offer, modifying the terms of the original offer; considered a rejection of the original offer

offer

a proposition made by an offeror to an offeree to agree to the terms of a binding contract; becomes a contract upon acceptance

offer and acceptance

the mutual understanding and agreement of the parties of a contract to that contract's terms; process that changes an offer into a contract when the offeree communicates acceptance to the offeror

revocation

the termination of an agreement by the person who granted it, such as when as when a principal terminates an agency relationship or withdraws an offer

contingency

a provision within a contract that makes performance conditional upon the occurrence of a stated event

earnest money

funds paid to confirm or commit to a contract

option

gives one party the right to perform a non-obligatory action within a time period (ex: terminating a contract or the right of first refusal)

sales contract

a contract used in the sale of real property that outlines the responsibilities of the parties and terms of the sale; also known as a purchase agreement, purchase contract, or purchase and sale agreement.

subject to

this provision in a sales contract refers to the purchase of a property that is subject to the existing mortgage; in such a sale, the title changes hands, so the buyer owns the house legally, but the seller's old mortgage stays in place

time is of the essence

a phrase that communicates to parties of a contract that they must perform their contractual duties by a specific date and time in order to avoid a breach of contract

contract for deed

a sales contract in which the buyer pays the seller for the property in multiple installments for a predetermined length of time, and the seller holds the title until the property has been fully paid for; also known as an installment sales contract or land contract