You accepted an offer on your North Shore home, or your offer was accepted. The next major milestone is signing the Purchase and Sale Agreement, often called the P&S. This is the document that turns a handshake agreement into a legally binding contract. Understanding what it contains and what to watch for can save you thousands of dollars and weeks of stress.
What Is the Purchase and Sale Agreement?
The Purchase and Sale Agreement is the definitive contract between buyer and seller. It replaces the initial offer to purchase and adds detailed terms that govern the transaction from signing through closing. In Massachusetts, the P&S is typically drafted by an attorney and signed 7 to 14 days after the offer is accepted.
While the offer establishes the basics (price, deposit, closing date), the P&S fills in the legal framework: what happens if the financing falls through, what inspections reveal, what items convey with the property, and what remedies exist if either party defaults.
The Timeline: Offer to P&S to Closing
Offer Accepted
Buyer submits offer with good faith deposit ($500–$5,000). Seller accepts.
Inspection Period (7–14 days)
Home inspection, pest inspection, and any specialized inspections (radon, lead, mold) are completed.
Attorney Review & P&S Signing
Both attorneys review and negotiate the P&S. Buyer pays the balance of the deposit (typically 5% total).
Appraisal & Underwriting
Lender orders appraisal, processes loan, and issues clear to close.
Closing
Documents signed, funds transferred, keys handed over.
Key Terms in the P&S You Need to Understand
Purchase Price and Deposits
The P&S confirms the final purchase price and details the deposit structure. In Massachusetts, there are typically two deposits: the initial good faith deposit paid with the offer, and a second deposit paid at P&S signing. The combined total is usually 5% of the purchase price.
For an $800,000 home in Beverly, the deposit structure might look like: $5,000 with the offer, then $35,000 at P&S signing, for a total of $40,000 (5%). This money is held in an escrow account and applied to the purchase at closing.
Closing Date
The P&S specifies the date by which the transaction must close. This is typically 30 to 45 days after P&S signing for financed buyers, or 7 to 14 days for cash buyers. Extensions are possible but may include per diem fees charged to the party causing the delay.
Contingencies
Contingencies are conditions that must be met for the sale to proceed. If a contingency is not met, the party who benefits from it can terminate the contract and recover their deposit. Common contingencies include:
- Financing contingency: Buyer can terminate if they cannot secure a mortgage
- Inspection contingency: Buyer can terminate or renegotiate based on inspection findings
- Appraisal contingency: Buyer can terminate if the appraisal comes in below the purchase price
- Home sale contingency: Buyer can terminate if their current home does not sell
- Condo document contingency: Buyer can review and reject condo association documents
What Conveys with the Property
The P&S specifies which items stay with the property and which are excluded. In Massachusetts, fixtures (anything permanently attached) typically convey automatically, but it is important to list specific items to avoid disputes. Common items to address: appliances, lighting fixtures, window treatments, sheds, above-ground pools, and outdoor equipment.
Default Provisions
The P&S outlines what happens if either party fails to perform. If the buyer defaults, the seller may retain the deposit as liquidated damages. If the seller defaults, the buyer may seek specific performance (forcing the sale) or recover damages. These provisions vary by contract and should be reviewed by your attorney.
What to Watch For Before Signing
- • Make sure all agreed-upon contingencies are actually included in the P&S language
- • Verify the deposit amounts and escrow instructions match what you negotiated
- • Check that the closing date gives you enough time for financing and appraisal
- • Confirm that all items you expect to convey are explicitly listed
- • Review any addenda for special conditions (septic, lead paint, wetlands, etc.)
- • Ensure the property description and address are accurate
Special Considerations for North Shore Properties
North Shore homes often involve issues that require specific P&S language:
- Coastal properties: Flood zone disclosures, seawall maintenance responsibilities, and FEMA flood insurance requirements
- Historic homes: Lead paint disclosures for pre-1978 properties, historic district commission restrictions
- Septic systems: Title 5 inspection results and repair cost allocations
- Private roads: Road maintenance agreements and access rights
- Condominiums: Condo document review period, reserve fund disclosures, special assessment history
Kathleen's Take
The P&S is where the real negotiation happens. The offer gets the deal started, but the P&S is where every detail gets locked in. I have seen deals fall apart because a contingency was missing or a conveyance item was unclear. Before you sign, make sure every term you negotiated is in writing, and have an attorney review it. This is not the place to cut corners.
Who Drafts the P&S in Massachusetts?
Massachusetts is an attorney state. Unlike some states where the title company or agent handles the entire transaction, Massachusetts real estate transactions typically involve attorneys who draft and review the P&S. The buyer's attorney usually drafts the initial P&S, and the seller's attorney reviews and negotiates any changes.
Some agents use standard form P&S documents, but these should still be reviewed by an attorney, especially for complex transactions involving contingencies, coastal properties, or unique conditions.
Frequently Asked Questions
Related Reading
Questions About Your P&S?
Whether you are buying or selling, understanding your Purchase and Sale Agreement is critical. Let's walk through it together.
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