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Real Estate Purchase Agreement: Essential Guide for Landlords, Investors, and Tenants

Comprehensive guide to understanding real estate purchase agreements for tenants living in properties being sold, real estate investors with multiple rentals, and individual landlords selling rental properties.

Introduction

A Real Estate Purchase Agreement is a legally binding contract that outlines the terms and conditions of a property sale between a buyer and seller. Whether you're a tenant concerned about your living situation when your landlord decides to sell, a real estate investor expanding your portfolio, or a landlord looking to sell your rental property, understanding this document is crucial to protecting your interests and ensuring a smooth transaction. This guide breaks down the key components of a Real Estate Purchase Agreement and provides specific insights for tenants, investors, and landlords navigating property sales.

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Key Things to Know

  1. 1

    A Real Estate Purchase Agreement is legally binding once signed by all parties, so review it carefully or have an attorney review it before signing.

  2. 2

    Tenants generally maintain their rights under existing leases when a property is sold, as the new owner must honor the terms until the lease expires.

  3. 3

    Contingencies protect buyers by allowing them to back out of the deal under specific circumstances without losing their earnest money.

  4. 4

    Landlords selling rental properties must disclose existing leases, security deposits, and any known property defects to potential buyers.

  5. 5

    Real estate investors should include contingencies for reviewing tenant payment histories, lease agreements, and property financial records.

  6. 6

    The purchase agreement should clearly state whether the property will be delivered vacant or with tenants in place at closing.

  7. 7

    Security deposits must be transferred from the seller to the buyer at closing, with proper accounting and notification to tenants.

  8. 8

    Financing for investment properties typically requires larger down payments and carries higher interest rates than primary residence loans.

  9. 9

    Local landlord-tenant laws may impact how a property sale can proceed, including requirements for tenant notification and rights of first refusal.

  10. 10

    Tax implications of selling rental property differ significantly from selling a primary residence, including potential capital gains tax and depreciation recapture.

Key decisions before you file

Before you file a Real Estate Purchase Agreement in Nebraska, a few decisions shape the document: which option to choose and what each one means. The Real Estate Purchase Agreement guide walks through them.

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Nebraska Requirements for Real Estate Purchase Agreement

  • Statute of Frauds (Nebraska Revised Statute § 36-103)

    Real estate contracts must be in writing to be enforceable under the Statute of Frauds. In Nebraska, contracts for the sale of real property must be written and signed by the party to be charged.

  • Property Disclosure Statement (Nebraska Revised Statute § 76-2,120)

    Sellers must provide a written disclosure statement to buyers regarding the condition of the property, including known defects. This disclosure must be delivered before the buyer is obligated under the purchase agreement.

  • Lead-Based Paint Disclosure (42 U.S.C. § 4852d; 24 CFR Part 35)

    For properties built before 1978, sellers must disclose known lead-based paint hazards and provide buyers with a 10-day period to conduct a risk assessment or inspection for lead-based paint hazards.

  • Fair Housing Compliance (42 U.S.C. § 3601-3619; Nebraska Fair Housing Act, Neb. Rev. Stat. § 20-301 to 20-344)

    Real estate transactions must comply with federal and state fair housing laws, prohibiting discrimination based on race, color, religion, sex, disability, familial status, or national origin.

  • Real Estate Commission Licensure (Nebraska Real Estate License Act, Neb. Rev. Stat. § 81-885.01 to 81-885.55)

    Real estate agents involved in the transaction must be properly licensed under Nebraska law, and the agreement should reflect their involvement and compensation structure.

  • Title Insurance Requirements (Nebraska Title Insurance Act, Neb. Rev. Stat. § 44-1978 to 44-19,108)

    The agreement should address title insurance requirements, which protect the buyer against defects in the title that may not be discovered during the title search.

  • Closing and Settlement Procedures (Real Estate Settlement Procedures Act (RESPA), 12 U.S.C. § 2601 et seq.)

    The agreement must comply with RESPA requirements for closing procedures, including the provision of a Closing Disclosure at least three business days before closing.

  • Earnest Money Provisions (Nebraska Real Estate Commission Rules, Title 299, Chapter 3)

    The agreement must specify how earnest money will be handled, including who will hold it in trust and under what conditions it may be released or forfeited.

  • Property Tax Proration (Nebraska Revised Statute § 77-1701 to 77-1759)

    The agreement must address how property taxes will be prorated between buyer and seller at closing, in accordance with Nebraska law.

  • Homestead Exemption Transfer (Nebraska Revised Statute § 77-3501 to 77-3529)

    The agreement should address the transfer of homestead exemption status if applicable, as this affects property tax liability.

  • Deed Requirements (Nebraska Revised Statute § 76-201 to 76-281)

    The agreement must specify the type of deed to be used (warranty, special warranty, etc.) and ensure it meets Nebraska's requirements for valid conveyance of real property.

  • Recording Requirements (Nebraska Revised Statute § 76-237 to 76-257)

    The agreement should acknowledge that deeds and certain other documents must be recorded with the Register of Deeds in the county where the property is located.

  • Environmental Disclosures (Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA), 42 U.S.C. § 9601 et seq.)

    The agreement should address environmental concerns and disclosures, including potential contamination or hazardous substances on the property.

  • Flood Zone Disclosure (National Flood Insurance Act, 42 U.S.C. § 4001 et seq.)

    If the property is in a special flood hazard area, this must be disclosed, and the agreement should address flood insurance requirements.

  • Inspection Period (Nebraska common law; no specific statute)

    The agreement must specify the time period during which the buyer may conduct inspections and the procedure for requesting repairs or terminating the contract based on inspection findings.

  • Financing Contingency (Nebraska common law; Truth in Lending Act, 15 U.S.C. § 1601 et seq.)

    If the purchase is contingent on the buyer obtaining financing, the agreement must clearly state the terms, including the time period for securing financing and consequences if financing cannot be obtained.

  • Foreign Investment in Real Property Tax Act (26 U.S.C. § 1445)

    The agreement must comply with FIRPTA, which may require withholding of tax if the seller is a foreign person.

  • Landlord-Tenant Provisions (Nebraska Uniform Residential Landlord and Tenant Act, Neb. Rev. Stat. § 76-1401 to 76-1449)

    If the property is tenant-occupied, the agreement must address existing leases and tenant rights under Nebraska's Landlord and Tenant Act.

  • Condominium or HOA Disclosures (Nebraska Condominium Act, Neb. Rev. Stat. § 76-825 to 76-894)

    For condominiums or properties subject to homeowners' associations, the agreement must address disclosure of governing documents, financial information, and assessments.

  • Default and Remedies (Nebraska common law; Nebraska Revised Statute § 25-2144)

    The agreement must specify what constitutes default by either party and the remedies available, including potential liquidated damages or specific performance.

Frequently Asked Questions

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