A land purchase agreement, also known as a land sale agreement or real estate purchase agreement, is a legal document that outlines the terms and conditions under which a parcel of land will be bought or sold.
This agreement serves as a contract between the buyer and the seller, specifying the rights, obligations, and commitments of both parties involved in the transaction.
The document is essential for providing a clear framework for the land sale and purchase, ensuring that both parties understand their responsibilities and minimizing the potential for disputes or misunderstandings later on.
What Is a Land Purchase Agreement?
A land purchase contract is a legal agreement between a seller and purchaser to buy land. It includes details about the property, price, and much more.
Other common names for a land purchase agreement include:
- Land agreement
- Installment land contract
- Land sale contract
But keep in mind that a land installment contract differs slightly from a standard land purchase agreement.
What Is an Installment Land Contract?
An installment land contract is a purchase agreement where the seller finances the sale.
The buyer pays for the land in installments (to the buyer) until the total price is paid, avoiding financing through a bank or a third-party lender.
When Do You Use a Land Purchase Contract?
You use a land purchase contract for situations such as, but not limited to:
- Instances where the buyer has trouble financing through a bank
- When selling vacant land
- While creating flexibility in purchasing options
Land Pricing Factors
When determining the purchase price, the seller should consider several factors:
- Location and size of the real estate
- Availability of utilities
- Mineral rights and soil quality
- The amount of usable land and how the property is zoned
Why Use a Land Purchase Agreement?
A land purchase agreement template helps you document a deal between a seller and a buyer.
It is a legal contract to sell or purchase land, and this agreement helps both parties protect their interests and rights in what can be a complex real estate deal.
Most jurisdictions require that land contracts be in writing, as they lay out critical details that each party must follow and can legally enforce.
Otherwise, the land purchase agreement can be unenforceable or voided.
What to Include in a Simple Land Purchase Agreement
To write a land purchase agreement, you should include important provisions, such as:
- Identify all parties to the contract
- Include a detailed description of the land, including the property address and the legal description
- Provide the purchase price, earnest money deposit, payment details, and installment options
- Add financing contingencies, if any
- Include the representations and warranties section
- Detail any rights of inspection, title insurance, closing, and costs
- Signature lines for the parties to the agreement
A land purchase agreement contains many legal sections.
You can use our step-by-step builder to create a customized land contract quickly.
How to Write a Land Purchase Agreement
Follow the steps below to write a land purchase agreement.
Step 1 – Write the Date of the Agreement
Write the date of the land purchase agreement.
Step 2 – Enter Seller and Buyer Information
Provide the full name and address of the seller and buyer, the parties signing the agreement.
Then, indicate if the seller and buyer are individuals or entities, including the entity type.
Step 3 – Note Property Description
Describe the purchased property and include as much detail as possible to identify the property accurately.
Include the property size, property address, and legal description. Refer to the title or deed for an explanation.
Step 4 – Fill In Purchase Price
Write the amount of the purchase price the buyer is paying the seller for the property.
Include details regarding earnest money deposit and method of payment.
Step 5 – Enter Financing Details
Provide whether the buyer will assume the seller’s existing loan and whether the purchase is contingent on the buyer obtaining a mortgage.
Step 6 – State Any Seller Representations and Warranties
Select the representations and warranties the seller will make under this agreement.
Write in any other representations and warranties not already provided.
Step 7 – Enter Closing Details
Provide the closing date and location. Indicate the seller and buyer closing deliverables and the seller and buyer closing costs.
Step 8 – Fill in the Delivery Date of the Property
Provide the date the seller will deliver possession of the property to the buyer.
Step 9 – Write Miscellaneous Provisions
Provide for miscellaneous provisions such as seller disclosures, property inspection, title insurance, and dispute resolution methods.
Step 10 – Obtain Signatures
Both the seller and buyer will sign the land purchase agreement.
Frequently Asked Questions
Below are some frequently asked questions about land purchase agreements.
What Is a Land Purchase Option?
A land purchase option is when a buyer pays for the right to purchase a property at a certain price and within a specific time frame. The seller cannot sell the property to anyone else during that time. The buyer is under no obligation to buy the property, however.
What Happens When a Land Contract is Paid in Full?
Once the buyer pays off a land contract, the seller transfers the property’s legal title to the buyer through a deed. The buyer now owns the real estate.
Can You Sell a Land Contract?
Yes, you can sell a land contract if permitted by the contract and state or local law.
Both agreements are usually identical unless something must differ under state or local law.Is There a Difference Between a Residential and Commercial Land Purchase Agreement?
Land Purchase Agreement Sample
Below is an example of what the document typically looks like. You can download our free land purchase agreement in PDF or Word format and complete it on your own.
