This form is used by a buyer’s agent when the buyer will use conventional or seller financing for the purchase of a one-to-four unit residential property, to prepare an offer with a cash down payment, an existing mortgage or new conventional mortgage and seller carryback financing.
For real estate transactions conveying fee ownership of a property, the primary document a buyer’s agent uses to negotiate their buyer’s acquisition of a property is a purchase agreement form. [See RPI Form 150-159]
The use of different varieties of purchase agreements is required for different types of properties and financing arrangements. The various purchase agreements comprise provisions necessary for the buyer’s agent to successfully negotiate the purchase of a particular type of property.
Three basic categories of purchase agreements exist to formalize real estate transactions. The categories are influenced primarily by legislation and court decisions addressing the handling by the seller’s agent of the disclosures and due diligence investigations required to market properties.
The three categories of purchase agreements are for:
Within each category of purchase agreements, several variations exist. The variations cater to the specialized use of a property, the diverse arrangements for payment of the price, property conditions which affect value, and to loan discount approvals through a short sale with greater emphasis within the one-to-four unit residential property category.
Analyzing the purchase agreement
Purchase agreements are a document used by buyers. Sellers and seller’s agents rarely use purchase agreements other than to accept a buyer’s offer. Seldom do they fill them out themselves, unless in the instance of a counteroffer. Thus, a buyer’s agent uses the RPI’s Purchase Agreement (One-to-Four Residential Units – Conventional and Carryback Financing) to prepare and submit the buyer’s written offer to purchase a one-to-four unit residential property to a seller and seller’s agent.
The pricing and terms for performance are limited to conventional financing, a takeover of existing mortgages and a carryback note or a combination of some of these arrangements. This purchase agreement is also properly used by sellers and their agents when confronted with a counteroffer situation. Used as a counteroffer, the seller’s agent prepares an entirely new purchase agreement, then submits it as their fresh offer to sell on terms different from those of an unacceptable purchase offer submitted by the buyer.
On acceptance, the purchase agreement becomes a binding written contract between the buyer and seller. To be enforceable, the price and terms for performance need to be clearly worded, concise and complete to prevent misunderstandings. To this end, RPI’s purchase agreement is a comprehensive “boilerplate” purchase agreement. It is designed as a checklist to avoid malpractice claims, containing all the provisions the buyer and their agent are to consider when preparing an offer. The various conventional financing arrangements and conditions a prudent buyer considers when making an offer to purchase are tightly worded for easy selection. [See RPI Form 150]
Components of the purchase agreement
Each Section of Form 150 has a separate purpose and need for enforcement. The segments include:
Observations
Providing forms with maximum risk reduction and fee protection for brokers and their agents is RPI’s policy for drafting real estate forms. Thus, RPI’s purchase agreements exclude provisions which tend to increase the risk of litigation. As a matter of good policy, provisions felt to work against the ultimate best interests of the buyer, seller and brokers are excluded.
Also, since the buyer and their agent are the ones who make and submit an offer to purchase, RPI’s purchase agreement is designed with the buyer in mind. Thus, the form does not favor the seller in the structuring of provisions.
Excluded provisions seen in some purchase agreements include:
RPI’s purchase agreement includes a mandatory mediation provision which mitigates the risk of a legal battle. Mediation of any dispute must be undertaken as a precursor to filing an action, be it arbitration or litigation. Mediation is a quick process and is the most cost effective method of dispute resolution society has developed.
Editor’s note — RPI publishes a wide selection of purchase agreements which cater to different types of transactions, such as short sales and commercial property acquisitions. [See RPI Form 150-159]
The following instructions are for the preparation and use of the Purchase Agreement – One-to-Four Residential Units, RPI Form 150. Form 150 is designed as a checklist of practical provisions so a broker or their agent can prepare an offer for a prospective buyer who seeks to purchase conventionally financed, one-to-four unit residential property located in California.
Each instruction corresponds to the provision in the form bearing the same number.
Editor’s note — Check and enter items throughout the agreement in each provision with boxes and blanks, unless the provision is not intended to be included as part of the final agreement, in which case it is left unchecked or blank.
Document identification:
Enter the date and name of the city where the offer is prepared. This date is used when referring to this purchase agreement.
Facts:
1. Buyer, deposit, and property: Enter the name of each buyer who will sign the offer. Do not enter the word nominee or assignee
1.1. Enter the dollar amount of any good-faith, earnest money deposit. Check the appropriate box to indicate the form of the good-faith deposit. Enter the name of the payee (escrow, title company or broker).
1.2. – 1.3. Enter the name of the city and county in which the property is located.
1.4. Enter the legal description or common address of the property, or the assessor’s parcel number (APN).
1.5. Check the box to indicate personal property will be included in the sale. The seller’s trade fixtures to be purchased by the buyer must be listed as inventory if they are to be acquired by the buyer. [See RPI Form 256]
2. Entire agreement: Enter the number of pages comprising all of the addenda, disclosures, etc., which are attached to the purchase agreement.
Terms for payment of the purchase price:
3. Cash down payment: Enter the dollar amount of the buyer’s cash down payment toward the purchase price.
3.1. Additional down payment: Enter the description of any other consideration to be paid as part of the price, such as trust deed notes, personal property or real estate equities (an exchange). Enter the dollar amount of its net value.
4. New trust deed loan: Check the appropriate box to indicate whether any new financing will be a first or second trust deed loan. Enter the amount of the loan, the monthly principal and interest (PI) payment, the term of the loan, and the rate of interest. Check the box to indicate whether the interest will be adjustable (ARM), and if so, enter the index name. Enter any limitations on loan points.
4.1 Buyer’s loan qualification: Check the box to indicate the seller is authorized to cancel the agreement if the buyer is to obtain a new loan and fails to deliver documentation from a lender indicating they have been pre-approved for a loan. Enter the number of days the buyer has after acceptance to deliver written confirmation of their qualification for the loan.
5. First trust deed note: Check the appropriate box to indicate whether the transfer of title is to be “subject to” an existing loan or by an “assumption” of the loan if the buyer is to take over an existing first trust deed loan. Enter the lender’s name. Enter the remaining balance, the monthly PI payment and the interest rate on the loan. Check the box to indicate whether the interest is adjustable (ARM), and if so, enter the index name. Enter any monthly impound payment made in addition to the PI payment.
5.1. Loan balance adjustments: Check the appropriate box to indicate the financial adjustment desired for loan balance differences at the close of escrow.
5.2. Impound balances: Check the appropriate box to indicate whether the impound account transferred to the buyer will be with or without a charge to the buyer.
6. Second trust deed note: Check the appropriate box to indicate whether the transfer of title is to be “subject to” an existing loan or by an “assumption” of the loan if the buyer is to take over an existing second trust deed loan. Enter the lender’s name. Enter the remaining balance, the monthly PI payment and the interest rate on the loan. Check the box to indicate whether the interest is adjustable (ARM), and if so, enter the index name. Enter the due date for payment of a final/balloon payment.
7. Bond or assessment assumed: Enter the amount of the principal balance remaining unpaid on bonds and special assessment liens (such as Mello-Roos or 1915 improvement bonds) which will remain unpaid and become the responsibility of the buyer on closing.
8. Solar bond assessment assumed: Enter the amount of the principal balance remaining unpaid on solar bonds and liens which will remain unpaid and become the responsibility of the buyer on closing.
Editor’s note — Improvement bonds are obligations of the seller which may be assumed by the buyer in lieu of their payoff by the seller. If assumed, the bonded indebtedness becomes part of the consideration paid for the property. Some purchase agreements erroneously place these bonds under “property tax” as though they were ad valorem taxes, and then fail to prorate and charge the unpaid amount to the seller.
9. Seller carryback note: Enter the amount of the carryback note to be executed by the buyer as partial payment of the price. Enter the amount of the note’s monthly PI payment, the interest rate and the due date for the final/balloon payment.
9.1 Special carryback provisions: Check the appropriate box to indicate any special provisions to be included in the carryback note or trust deed. Enter the name of any other special provision to be included in the carryback note or trust deed, such as impounds, discount options, extension provisions, guarantee arrangements or right of first refusal on the sale or hypothecation of the note.
9.2 Loan Purpose Statement: Fill out and attach the Loan Purpose Statement. [See RPI Form 202-2]
9.3 Financial disclosure: Fill out and attach a Financial Disclosure Statement as an addendum. [See RPI Form 300]
Editor’s note — Further approval of the disclosure statement in escrow creates by statute a buyer’s contingency allowing for cancellation until time of closing on any purchase of one-to-four unit residential property.
9.4 Notice of Delinquency: Requires the buyer to execute a Request for Notice of Default and Notice of Delinquency and pay the costs of recording and serving it on senior lenders since they will have priority on title to the trust deed securing the carryback note. [See RPI Form 412]
9.5 Buyer creditworthiness: Requires the buyer to provide the seller with a completed credit application. [See RPI Form 302]
9.6 Approval of creditworthiness: Enter the number of days within which the seller may cancel the transaction for reasonable disapproval of the buyer’s credit application and report.
9.7 Subordination: Provides for the seller to terminate this transaction if the parameters agreed to for financing by an assumption or origination of a trust deed loan with priority on title to the carryback note are exceeded. [See RPI Form 183]
9.8 Personal property as security: Requires the buyer on the transfer of any personal property in this transaction to execute a security agreement and UCC-1 financing statement to provide additional security for any carryback note. [See RPI Form 436]
10. Purchase price: Enter the total amount of the purchase price as the sum of lines 3, 3.1, 4, 5, 6, 7 and 8.
11. Acceptance and performance periods:
11.1 Delivery of acceptance: Check the appropriate box to indicate the time period for acceptance of the offer. If applicable, enter the number of days in which the seller may accept this offer and form a binding contract.
Editor’s note — Acceptance occurs on the return delivery to the person making the offer (or counteroffer) or to their broker of a copy of the unaltered purchase agreement offer containing the signed acceptance.
11.2 Extension of performance dates: Authorizes the brokers to extend the performance dates up to one month to meet the objectives of the agreement — time being of a reasonable duration and not the essence of this agreement as a matter of policy. This extension authority does not extend to the acceptance period.
11.3 Mortgage contingency: Authorizes the buyer to cancel the transaction at the time scheduled for closing if the financing for payment of the price is not obtainable or assumable.
11.4 Sale of other property: If the closing of this transaction is to be contingent on the buyer’s receipt of net proceeds from a sale of other property, enter the address of the property to be sold by the buyer.
11.5 Cancellation procedures: Provides the method of cancellation required to terminate the agreement when the right to cancel is triggered by other provisions in the agreement, such as contingency or performance provisions. [See RPI Form 183]
11.6 Exchange cooperation: Requires the parties to cooperate in an IRS §1031 transaction on further written notice by either party. Provides for the parties to assign their interests in this agreement. [See RPI Forms 171 and 172]
11.7 Mediation provision: Provides for the parties to enter into non-binding mediations to resolve a dispute remaining unsolved after 30 days of informal settlement negotiations.
11.8 Liability limitations: Provides for a dollar limit on the buyer’s liability for the buyer’s breach of the agreement. Check the first box and enter the maximum dollar amount of money losses the seller may recover from the buyer or check the second box to indicate the buyer’s monetary liability is limited to the good-faith deposit tendered with the offer to buy.
Editor’s note — Liability limitation provisions avoid the misleading and unenforceable forfeiture called for under liquidated damage clauses included in most purchase agreement forms provided by other publishers of forms.
12. Property Conditions:
12.1 Seller to furnish: Check the appropriate box(es) within the following subsections to indicate the items the seller is to furnish prior to closing.
a. Pest control: Check the box to indicate the seller is to furnish a structural pest control report and clearance.
b. Home inspection report: Check the box to indicate the seller is to employ a home inspection company and furnish the buyer with the company’s home inspection report.
c. Home warranty: Check the box to indicate the seller is to furnish an insurance policy for home repairs. Enter the name of the insurer and the type of coverage, such as for the air conditioning unit, etc.
d. Local ordinance compliance: Check the box to indicate the seller is to furnish a certificate of occupancy or other clearance required by local ordinance.
e. Sewer or septic certificate: Check the box to indicate the seller is to furnish a certificate of the condition of the sewage disposal system stating it is functioning properly.
f. Potable well water: Check the box to indicate the seller is to furnish a certificate stating the well supply meets water standards.
g. Well water capacities: Check the box to indicate the seller is to furnish a certificate stating the amount of water the well supplies. Enter the number of gallons per minute the well is expected to produce.
h. Energy Audit Report: Check the box and enter the rating of the property’s improvements.
i. Other terms: Check the box and enter any other report, certification or clearance the seller is to furnish.
12.2 Property condition(s): Check the appropriate box within the following subsections to indicate the status of the seller’s Condition of Property Disclosure – Transfer Disclosure Statement (TDS).
a. Attached TDS: Check the box to indicate the seller’s TDS has been prepared and handed to the buyer, and if so, attach it to this agreement. Thus, the property’s condition “as disclosed” is accepted by the buyer upon entering into the purchase agreement offer as mandated.
Editor’s note — Use of the TDS form is mandated on one-to-four unit residential property. [See RPI Form 304]
b. Later delivered TDS: Check the box to indicate the TDS is to be delivered later to the buyer to confirm the condition of the property is “as disclosed” prior to entry into the purchase agreement. On receipt of the TDS, the buyer may either cancel the transaction for failure of the seller or the seller’s agent to disclose known property defects prior to acceptance of the purchase agreement (or counteroffer), or give notice to the seller of the defects known and not disclosed prior to acceptance and make a demand on the seller to correct them prior to closing.
c. Repair of defects: Authorizes the buyer to either cancel the transaction or adjust the price should the seller fail to correct the defects noticed under sections 11.2b or 11.4a. [See RPI Form 183]
12.3 Transfer Fee Disclosure Statement: Check the appropriate box within the following subsections to indicate the status of the seller’s Transfer Fee Disclosure Statement (TFDS). [See RPI Form 304-2]
a. Attached TFDS: Check the box to indicate the seller’s Transfer Fee Disclosure Statement has been prepared and handed to the buyer, and if so, attach it to this agreement.
b. Later delivered TFDS: Check the box to indicate the TFDS is to be delivered later to the buyer to confirm the existence of a transfer fee as disclosed prior to entry into the purchase agreement. On receipt of the TFDS, the buyer may terminate this agreement based on a reasonable disapproval of the TFDS.
c. Transfer fee: Requires the seller to pay any transfer fees arising out of this transaction.
12.4 Buyer’s inspection: Authorizes the buyer to inspect the property twice during the escrow period to verify its condition is as disclosed by the seller prior to the time of acceptance.
a. Initial property inspection: Requires the buyer to inspect the property immediately after acceptance to put the seller on notice of material defects to be corrected by the seller prior to closing. [See RPI Form 269]
b. Final walk-through inspection: Requires the buyer to inspect the property again within five days before closing to confirm repairs and maintenance of the property have occurred. [See RPI Form 270]
12.5 Seller’s Natural Hazard Disclosure Statement (NHD): Check the appropriate box to indicate whether the NHD statement disclosing the seller’s knowledge about the hazards listed on the form has been prepared and handed to the buyer. If it has been received by the buyer, attach a copy to the purchase agreement. If the NHD will be handed to the buyer after acceptance, the buyer has ten days after the buyer’s receipt of the NHD statement in which to approve it or cancel.
Editor’s note — Disclosure by the seller is mandated on one-to-four unit residential property.
12.6 Hazard disclosure booklets: Check the appropriate box(es) to indicate which hazard booklets have been received by the buyer, together with the seller’s prepared and signed disclosures accompanying each booklet. [See RPI Form 316-1]
12.7 Other property disclosures: Check the appropriate box(es) to indicate other disclosures made by the seller regarding the location of the property. Enter a reference to any local (option) ordinance disclosure statement attached as an addendum to the purchase agreement and attach it. [See RPI Forms 307 and 308]
12.8 Operating costs and rents: Check the appropriate box(es) to indicate the information the seller is to disclose regarding the operating expenses of ownership and tenancies affecting title.
a. Operating cost sheet: Check the box to indicate the seller will prepare and hand the buyer an Operating Cost Sheet on acceptance of this offer. The buyer may cancel the purchase agreement and escrow if the operating expenses disclosed are unacceptable. [See RPI Form 306]
b. Leasing and Operating Addendum: Check the box to indicate the Leasing and Operating Addendum is attached to confirm the buyer is taking title subject to the tenancies disclosed. [See RPI Form 275]
12.9 Homeowners’ association (HOA): Check the box to indicate the property is located in a Homeowners’ Association (HOA) community.
a. Attached addendum: Check the box to indicate the seller’s Homeowners’ Association (HOA) Addendum has been prepared and handed to the buyer, and if so, attach it to this agreement. [See RPI Form 309]
b. Later delivered addendum: Check the box to indicate the HOA addendum is to be delivered to buyer on acceptance for buyer’s review. [See RPI Form 309]
c. Disapproval of HOA documents: Authorizes the buyer to terminate this purchase agreement within ten days after their receipt of HOA documents when the disclosures are made after entering into the purchase agreement. Disclosure of HOA conditions in escrow triggers a statutory contingency allowing the buyer to cancel the purchase agreement. [See RPI Form 183]
12.10 Solar lease assumption: Check the box to indicate the property is burdened by a solar equipment lease. Enter the monthly payment amount and expiration date.
12.11 Criminal Activity and Security Disclosure: Check the appropriate box within the following subsections to indicate the status of the seller’s Criminal Activity and Security Disclosure Statement. [See RPI Form 321]
a. Attached disclosure: Check the box to indicate the seller’s Criminal Activity and Security Disclosure Statement has been prepared and handed to the buyer, and if so, attach it to this agreement.
b. Later delivered disclosure: Check the box to indicate the Criminal Activity and Security Disclosure Statement is to be delivered later to the buyer. On receipt of the disclosure, the buyer may terminate this agreement based on a reasonable disapproval.
12.12 Safety compliance: Requires smoke detectors and water heater bracing to exist or be installed by the seller.
12.13 Solar Collector Notice: States the seller will hand a copy of the notice received from any neighbor to the buyer. If the seller sent neighbors a notice, a list of everyone who was sent a notice is to be handed to the buyer. The buyer is authorized to terminate this purchase agreement for cause within ten days after receipt.
12.14 Buyer’s possession: Check the appropriate box to indicate when possession of the property will be delivered to the buyer, whether at closing or under an attached buyer’s interim occupancy or seller’s holdover agreement. [See RPI Forms 271 and 272]
12.15 Property maintenance: Requires the seller to maintain the present condition of the property until the close of escrow.
Editor’s note — See section 11.4b for the buyer’s final inspection to confirm maintenance at closing.
12.16 Fixtures and fittings: Confirms this agreement includes real estate fixtures and fittings as part of the property purchased.
Editor’s note — Trade fixtures are personal property to be listed as items on the Personal Property Inventory at section 3. [See RPI Form 256]
12.17 Sex offender disclosure: Complies with requirements that the seller disclose the existence of a sex offender database on the sale (or lease) of one-to-four residential units.
Editor’s note — By the existence of the disclosure in the form, the seller and brokers are relieved of any duty to voluntarily make further disclosures regarding registered sex offenders.
13. Closing conditions:
13.1 Escrow closing agent: Enter the name of the escrow company handling the closing.
a. Escrow instructions: Check the box to indicate the purchase agreement is to also serve as the mutual instructions to escrow from the parties. The escrow company will typically prepare supplemental instructions they will need to handle and close the transaction. [See RPI Form 401]
b. Escrow instructions: Check the box to indicate escrow instructions have been prepared and are attached to this purchase agreement. Prepare and attach the prepared escrow instructions to the purchase agreement and obtain the signatures of the parties. [See RPI Form 401]
13.2 Closing date: Enter the specific date for closing or the number of days anticipated as necessary for the parties to perform and close escrow. Also, prior to seven days before closing, the parties are to deliver all documents needed by third parties to perform their services by the date scheduled for closing.
a. Escrow charges: Requires each party to pay their customary escrow closing charges, amounts any competent escrow officer can provide on inquiry.
13.3 Title conditions: Enter wording for any further-approval contingency provision the buyer may need to confirm that title conditions set forth in the preliminary title report will not interfere with the buyer’s intended use of the property, such as “closing contingent on buyer’s approval of preliminary title report.”
13.4 Title insurance: Provides for title to be vested in the name of the buyer or their assignee. Enter the name of the title insurance company which is to provide a preliminary title report in anticipation of issuing title insurance. Check the appropriate box to indicate the type of title insurance policy to be issued on closing.
a. Policy endorsements: Enter any endorsements to be issued with the policy.
b. Payment of premium: Check the appropriate box to indicate whether the buyer or seller is to pay the title insurance premium.
13.5 Fire insurance: Requires the buyer to provide a new policy of hazard insurance.
13.6 Prorates and adjustments: Authorizes pro rations and adjustments on the close of escrow for taxes, insurance premiums, rents, interest, loan balances, service contracts and other property operating expenses, prepaid or accrued.
13.7 Personal property: Requires the seller to execute a bill of sale for any personal property being transferred in this transaction as called for in section 1.
13.8 Property destruction: Provides for the seller to bear the risk of loss for any casualty losses suffered by the property prior to the close of escrow. Thus, the buyer may terminate the agreement if the seller is unable to provide a marketable title or should the property improvements suffer major damage. [See RPI Form 183]
14. Supplemental property tax bill: Notifies the buyer they will receive one or two supplemental property tax bills they are to pay when the county assessor revalues the property after a change in ownership.
15. Gas and hazardous liquid pipelines: Notifies the buyer of the public availability of information regarding general location of gas and hazardous liquid transmission pipelines via the National Pipeline Mapping System (NPMS) web site.
16. Brokerage fee:
16.1 Fee amount: Enter the total amount of the fee due all brokers to be paid by the seller. The amount of the fee may be stated as a fixed dollar amount or as a percentage of the price.
a. Seller paid: Provides that the seller will pay the brokerage fee on the change of ownership.
b. Wrongful prevention: Provides that the party wrongfully preventing the change of ownership will pay the brokerage fee.
Editor’s note — The defaulting party pays all brokerage fees and the brokerage fee can only be altered or cancelled by mutual instructions from the buyer and seller.
16.2 Fee sharing: Enter the percentage share of the fee each broker is to receive.
Editor’s note — The percentage share may be set based on an oral agreement between the brokers, by acceptance of the seller’s broker’s MLS offer to a selling office to share a fee, or unilaterally by an agent when preparing the buyer’s offer.
16.3 Agency law disclosures: Attach a copy of the Agency Law Disclosure addendum for all parties to sign. [See RPI Form 305]
Editor’s note — The disclosure is mandated to be acknowledged by the buyer with the offer and acknowledged by the seller on acceptance as a prerequisite to the buyer’s broker enforcing collection of their fee when the property involved contains one-to-four residential units. [See RPI Form 305]
16.4 Disclosure of sales data: Authorizes the brokers to report the transaction to trade associations or listing services.
17. Other terms: Enter any special provision to be included in the purchase agreement.
Agency confirmation:
Buyer’s broker identification: Enter the name of the buyer’s broker and their Department of Real Estate (DRE) license number. Enter the name of any buyer’s agent and their DRE license number. Obtain the signature of the buyer’s broker or the buyer’s agent acting on behalf of the buyer’s broker. Check the appropriate box to indicate the agency which was created by the broker’s (and their agents’) conduct with the parties. Enter the buyer’s broker’s address, telephone and fax numbers, and email address.
Seller’s broker identification: Enter the name of the seller’s broker and their DRE license number. Enter the name of any seller’s agent and their DRE license. Obtain the signature of the seller’s broker or the seller’s agent acting on behalf of the seller’s broker. Check the appropriate box to indicate the agency which was created by the broker’s (and their agents’) conduct with the parties. Enter the seller’s broker’s address, telephone and fax numbers, and email address.
Signatures:
Buyer’s signature: If additional buyers are involved, check the box, prepare a Signature Page Addendum form referencing this purchase agreement, and enter their names and obtain their signatures until all buyers are individually named and have signed. Enter the date the buyer signs the purchase agreement and the buyer’s name. Obtain the buyer’s signature. [See RPI Form 251]
Seller’s signature: If additional sellers are involved, check the box, prepare a Signature Page Addendum form referencing this purchase agreement, and enter their names and obtain their signatures until all sellers are individually named and have signed. Enter the date the seller signs the purchase agreement and the seller’s name. Obtain the seller’s signature. [See RPI Form 251]
Rejection of offer:
If the offer contained in the purchase agreement is rejected instead of accepted and the rejection won’t result in a counteroffer, enter the date of the rejection and the names of the party rejecting the offer. Obtain the signatures of the party rejecting the offer.
Form navigation page published 06-2015.
Form last revised 04-2024 to include the mandatory appraisal notice.
