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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 Nevada, 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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Nevada Requirements for Real Estate Purchase Agreement

  • Statute of Frauds (NRS 111.210)

    Real estate purchase agreements must be in writing to be enforceable under the Statute of Frauds, which requires certain contracts to be written and signed by the parties to be bound.

  • Property Disclosure Requirements (NRS 113.130)

    Sellers must provide a written disclosure form to buyers detailing known material defects that could affect the value or desirability of the property.

  • Lead-Based Paint Disclosure (42 U.S.C. § 4852d; 40 CFR Part 745)

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

  • Escrow Requirements (NRS 645A)

    Regulations governing the handling of earnest money deposits and the use of escrow accounts in real estate transactions.

  • Real Estate Transfer Tax (NRS 375.020)

    Documentation of the Nevada Real Property Transfer Tax that must be paid upon transfer of property ownership.

  • Homeowners' Association Disclosures (NRS 116.4109)

    Sellers must provide buyers with HOA documents, including CC&Rs, bylaws, financial statements, and pending assessments if the property is part of an HOA.

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

    Requirements for withholding tax on dispositions of U.S. real property interests by foreign persons.

  • Equal Housing Opportunity (42 U.S.C. § 3601-3619 (Fair Housing Act))

    Prohibition against discrimination in the sale of housing based on race, color, religion, sex, handicap, familial status, or national origin.

  • Water Rights Disclosure (NRS 113.065)

    Disclosure of water rights associated with the property, particularly important in Nevada's arid climate.

  • Environmental Hazards Disclosure (NRS 113.140)

    Disclosure of known environmental hazards affecting the property, including underground storage tanks, hazardous waste, or contamination.

  • Residential Landlord and Tenant Rights (NRS 118A.330)

    Requirements for notification to tenants when a rental property is being sold and provisions for showing the property to prospective buyers.

  • Real Estate Broker Representation (NRS 645.252-645.254)

    Disclosure of real estate broker relationships and agency representation in the transaction.

  • Closing and Settlement Procedures (12 U.S.C. § 2601 et seq.)

    Requirements for closing procedures, including the Real Estate Settlement Procedures Act (RESPA) provisions for federally related mortgage loans.

  • Title Insurance Requirements (NRS 692A)

    Provisions regarding title insurance to protect buyers against defects in title that may affect ownership rights.

  • Recording Requirements (NRS 111.310-111.365)

    Requirements for recording deeds and other documents related to real property transfers with the county recorder.

  • Contract Rescission Rights (NRS 113.150)

    Provisions allowing buyers to rescind the purchase agreement under certain circumstances, such as material misrepresentations.

  • Mechanic's Lien Disclosures (NRS 108.221-108.246)

    Disclosure of potential or existing mechanic's liens on the property that could affect title transfer.

  • Truth in Lending Act Compliance (15 U.S.C. § 1601 et seq.)

    For transactions involving seller financing, compliance with federal disclosure requirements regarding loan terms and costs.

  • Impact Fee Disclosure (NRS 278B)

    Disclosure of any impact fees or special assessments that may affect the property.

  • Electronic Signatures (15 U.S.C. § 7001 et seq.; NRS 719)

    Provisions allowing for the use of electronic signatures in real estate transactions under the Electronic Signatures in Global and National Commerce Act and Nevada's Uniform Electronic Transactions Act.

Frequently Asked Questions

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