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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 South Carolina, 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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South Carolina Requirements for Real Estate Purchase Agreement

  • Statute of Frauds (S.C. Code Ann. § 32-3-10)

    Real estate contracts must be in writing to be enforceable under the Statute of Frauds, which requires certain contracts to be written and signed by the party against whom enforcement is sought.

  • Property Disclosure Requirements (S.C. Code Ann. § 27-50-10 et seq.)

    Sellers must provide a written residential property condition disclosure statement to purchasers, disclosing known material defects that could affect the property's value.

  • 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 a risk assessment or inspection for lead-based paint hazards.

  • Fair Housing Act Compliance (42 U.S.C. § 3601 et seq.)

    The agreement must comply with federal Fair Housing Act prohibitions against discrimination based on race, color, religion, sex, handicap, familial status, or national origin.

  • South Carolina Fair Housing Law (S.C. Code Ann. § 31-21-10 et seq.)

    State-level prohibitions against housing discrimination that mirror and sometimes expand upon federal protections.

  • Earnest Money Requirements (S.C. Code Ann. § 40-57-135(B))

    Regulations governing the handling of earnest money deposits, including requirements for brokers to maintain trust or escrow accounts for holding such funds.

  • Real Estate Broker Licensing (S.C. Code Ann. § 40-57-10 et seq.)

    Requirements for real estate professionals involved in the transaction to be properly licensed, with specific provisions for broker duties and responsibilities.

  • Recording Requirements (S.C. Code Ann. § 30-7-10)

    Deeds and other instruments of conveyance must be recorded in the county where the property is located to provide constructive notice to third parties.

  • Transfer Tax Provisions (S.C. Code Ann. § 12-24-10 et seq.)

    Documentary stamp tax requirements for real estate transfers, including calculation methods and payment responsibilities.

  • 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.

  • Homeowners Association Disclosure (S.C. Code Ann. § 27-30-110 to 27-30-170)

    Sellers must disclose information about homeowners associations, including fees, restrictions, and governing documents.

  • Coastal Zone Management Act Compliance (S.C. Code Ann. § 48-39-10 et seq.)

    Special requirements for properties in coastal areas, including disclosure of coastal hazards and compliance with coastal zone management regulations.

  • Wetlands Protection (33 U.S.C. § 1344; S.C. Code Ann. § 48-39-10 et seq.)

    Disclosure and compliance requirements for properties containing wetlands protected under federal and state law.

  • Attorney Review Provision (S.C. Supreme Court Rule 04-707)

    South Carolina is an attorney state for real estate closings, requiring attorney involvement in the preparation of documents and conducting of closings.

  • Flood Hazard Disclosure (42 U.S.C. § 4104a; National Flood Insurance Act)

    Requirements to disclose if property is located in a designated flood hazard area and information about flood insurance requirements.

  • Methamphetamine Contamination Disclosure (S.C. Code Ann. § 44-53-1650)

    Disclosure requirements for properties known to have been used for methamphetamine production.

  • Title Insurance Requirements (S.C. Code Ann. § 38-75-10 et seq.)

    Regulations governing title insurance policies, which protect buyers against defects in title that may not be discovered in a title search.

  • Electronic Signatures (15 U.S.C. § 7001 et seq. (ESIGN Act); S.C. Code Ann. § 26-6-10 et seq. (UETA))

    Recognition of electronic signatures for real estate transactions under both federal and state law.

  • Closing Disclosure Requirements (12 CFR § 1026.19(f) (TILA-RESPA Integrated Disclosure Rule))

    Federal requirements for providing buyers with a Closing Disclosure at least three business days before closing, detailing all costs associated with the mortgage loan.

  • Property Tax Proration (S.C. Code Ann. § 12-37-10 et seq.)

    Requirements for the fair allocation of property tax liability between buyer and seller based on the date of closing.

Frequently Asked Questions

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