Washington Real Estate Contract: Purchase & Sale Agreement In WA

Understanding Washington contracts real estate is crucial for anyone looking to buy or sell property in the Evergreen State. Each contract must include legally mandated terms and clauses, while others are optional. Knowing these terms will help you navigate in contract real estate smoothly and protect your interests. As a result, we’ve developed this guide to teach you about the specifics of Washington real estate contracts forms, covering everything from mandatory and optional terms to key clauses and necessary disclosures. With this knowledge, you'll be well-equipped to master the ins and outs of any Washington real estate contract:

• What Is A Washington Real Estate Contract?
• Types Of Washington Real Estate Contracts
• The 5 Essential Parts Of Washington Real Estate Contracts
• Download Washington Real Estate Contract PDFs
• What Disclosures Are Required In A Washington Real Estate Contract?
• Washington Real Estate Contracts: FAQs
• How to Customize Washington Real Estate Contracts
• Final Thoughts On Washington Real Estate Contracts

Understanding the different types of Washington real estate contracts is an excellent start to your investing career. But to truly maximize your potential and capitalize on the wealth of opportunities Washington offers, enroll in Real Estate Skills' free training program. This valuable resource will help you sharpen your skills and confidently navigate the market. Join us today and take the next step toward your real estate success.

What Is A Washington Real Estate Contract?

A real estate contract washington is, at its core, a legally binding agreement made between two or more parties in a Washington real estate deal. Although these contracts cover a wide spectrum of scenarios, they are most commonly associated with what’s known as a purchase and sale agreement (PSA). As its name suggests, a purchase and sale agreement is a contract between a buyer and seller that maps out the impending real estate transaction. Whether you already know how to flip houses in Washington or want to buy your first rental property, purchase and sale agreements play a pivotal role.

However, note that the PSA, sometimes referred to in reverse, sale and purchase agreement (SPA), is only one type of contract that dictates REI deals in the Evergreen State. It usually comes into play during a property purchase and sale transaction.

It establishes the buyer and seller's rights, obligations, and duties. A real estate contract in Washington is made up of the following sections:

• Party Identification: A Washington PSA usually begins by identifying the individuals involved in the deal. It features the full legal names and contact information of the buyer and seller, as well as details of the agents or representatives involved. Including these details ensures each party is legally recognized and tied to the contract terms and, as such, can be held liable if they breach or fail to meet their obligations.
• Description Of Property: Immediately after party identification, the PSA usually features a detailed property description. This description usually features the address and legal description of the home, plus details regarding property lines, fixtures, and any other additional features.
• Purchase Price (Including Financing Contingency): The Washington purchase contract must also outline the buyer's and seller-accepted offer prices. Parties involved in a Washington real estate contract should include a financing contingency clause in this section. It assures the seller that the buyer is actively seeking financing and plans to pay for the property. Simultaneously, a financing contingency clause protects the buyer by allowing them to walk away from the deal if they cannot secure financing within a stated period.
• Payment Terms: A Washington purchase contract must also outline the mode of payment the buyer intends to use. It should also discuss earnest terms, such as whether the seller will forfeit the earnest money deposit or refund it when the buyer fails to secure financing within the agreed timeframe.
• Closing Date: For a WA sales contract to be legally enforceable, the closing date and associated costs must be specified. The contract should also lay out conditions upon which closing may be extended and how extensions will be managed.
• Conditions Of Sale: A home sale contract typically establishes the conditions of sale (formally known as contingencies) by both parties. The seller's conditions of sale could be that the buyer provide proof of funding by a certain date for the sale to continue, while the buyer might require a clear property title. Other contingencies include selling the buyer's current home or a replacement property for the seller, property appraisal, and HOA review.
• Title And Title Insurance: A legally binding Washington real estate purchase contract must also state whether the seller has a clear and marketable property title. If there are any issues, such as easements and restrictions, the PSA must detail how the seller intends to resolve them. Additionally, it should include a provision for the purchase of title insurance.
• Prorations And Adjustments: Home buying and selling a home comes with inescapable costs. However, it wouldn't be fair for one party to bear all these expenses. To ensure fairness, a PSA includes details of these costs as prorations, or in simpler words, credits divided between the buyer and seller so that each party only pays for them during their duration of ownership. Examples of prorations include HOA fees and property taxes. In contrast, adjustments refer to closing costs such as escrow fees. Like prorations, adjustments are divided between both parties for a fair transaction.
• Representations & Warranties: These are the seller's assurances and promises regarding the home's condition, status, and characteristics.
• Disclosures: A Washington residential real estate purchase agreement usually includes information about the property that only the seller knows (Disclosures are discussed in detail below).
• Signatures: Lastly, a contract of sale real estate must include the signatures of both parties to be considered a legally binding contract in Washington.

The 5 Essential Parts Of Washington Real Estate Contracts

For a real estate contract in Washington to be legally enforceable, it must include the following components:

• Mutual Assent: For a Washington real estate contract to be legally binding, the parties involved must demonstrate mutual consent, meaning they have a shared understanding of and have mutually agreed to the contract's terms and conditions. Mutual assent, also known as the meeting of minds, is usually achieved when one party makes an offer and the other one accepts the terms (acceptance).
• A Valid Offer And Acceptance: A real estate contract in Washington must feature specific actions that demonstrate offer and acceptance. These actions include the offeror (usually the buyer) presenting a clear and definite proposal to the offeree (typically the seller) outlining the terms and conditions of the contract. Their offer must also prove their intent to be bound by the terms if it's accepted. On the other hand, the offeree must unconditionally agree to the terms and communicate their acceptance verbally or through a written notice. Together, these actions demonstrate offer and acceptance and also prove mutual assent. Note that the offer and acceptance terms and conditions are usually documented within the contract rather than as a separate legal document.
• Adequate Consideration: For a real estate contract to be legally enforceable in Washington, it must prove adequate consideration; that is, there's something of reasonable value exchanged between the parties involved. For example, for sellers engaged in a Washington real estate purchase agreement, adequate consideration is the money they earn from the sale, while for the buyer, it's the property itself.
• Legal Contract Purpose: For a REI contract to be considered legal in Washington, its overall structure must prove that its purpose doesn't violate public policies or legal principles. In other words, everything about it, from party identification to disclosures, must demonstrate the parties are agreeing on a legally allowable purpose.
• Legal Capacity: In Washington, a real estate contract, whether a PSA or a JV contract, must prove that the parties involved have the legal capacity to enter into contracts. This requires all parties to be at least 18 and of sound mind. If they are below 18, they must prove emancipation. Additionally, individuals granted a power of attorney, those authorized to represent corporations, and fiduciaries with contractual authority have the legal capacity to participate in Washington real estate contracts.

Read Also: How To JV Wholesale Deals: Start Closing Deals With Our 6-Step Process

Types Of Washington Real Estate Contracts

Although the phrase real estate contract usually denotes the purchase and sale agreement in Washington, various other contracts can be used to govern transactions. Here are additional agreements you may encounter during real estate deals in Washington State:

• Real Estate Assignment Contract: Wholesaling has become a popular exit strategy, which begs the question: Is wholesaling real estate legal in Washington? The answer is yes, thanks to the ability to assign contracts. That said, assignment contracts make it possible for investors to assign their contracts to another buyer, which is instrumental for anyone who knows how to wholesale real estate in Washington.
• Lease Agreement: This contract usually occurs between property owners/landlords and tenants (leasee). It dictates the terms and conditions of a leasing arrangement, such as the lease duration, amount, and responsibilities of each party.
• Power Of Attorney: A POA contract usually grants one individual the right and authority to act on behalf of another. For instance, a wholesaler with a large portfolio may assign their assistant the rights to wholesale properties on their behalf using a POA.
• Joint Venture Agreement: Known as a JV, this type of contract usually outlines the rights and responsibilities of individuals involved in collaborative real estate investments. For example, two house flippers collaborating on a project will use a JV contract to establish each one's responsibilities, contributions, and profit-sharing terms, ensuring they're both aware of their obligations and gains.
• Listing Agreement: A listing agreement often occurs between a realtor and a property owner. It grants realtors/real estate agents the right to list the latter's property and features the terms and conditions of the arrangement.

Read Also: How To Become A Real Estate Agent In Washington

These contracts form the cornerstone of all real estate transitions in Washington. Therefore, if you want to master all of them, attending a Washington real estate school online may be worthwhile. Until then, we will cover the basics of a Washington purchase and sale agreement.

*For in-depth training on Washington real estate contracts, Real Estate Skills offers extensive courses to get you ready to make your first investment! Attend our FREE training and gain insider knowledge, expert strategies, and essential skills to make the most of every real estate opportunity that comes your way!

Download Washington Real Estate Contract PDFs

As mentioned, real estate contracts in Washington run quite a gamut. The ones listed above are just the primary contracts. Depending on the transaction, you'll encounter numerous others.

A clear grasp of all the contracts allows you to navigate each real estate deal effortlessly. For instance, by learning the ins and outs of the Washington purchase and sale agreement, you'll draft it with ease and in a way that safeguards your interests as an investor.

Curious about the other contract types? You're in great company. We offer specialized real estate education programs that comprehensively cover Washington's primary and secondary contracts. These programs are designed to give investors like you the knowledge you need to handle these essential documents. We're offering you these two free real estate contract PDFs. Download and customize each real estate agreement washington template to align with your needs today:

• Purchase & Sale Agreement
• Wholesale Real Estate Assignment Contract

What Disclosures Are Required In A Washington Real Estate Contract?

Prior to 1994, Washington's real estate deals operated under the principle of "caveat emptor" or, in simpler words, "buyer beware" or "non-disclosure." That meant that sellers weren't mandated to reveal details regarding the property's condition or the title. Instead, it was up to the buyer to do due diligence, such as arranging a property inspection and appraisal, to uncover these details. However, in 1994, Washington State enacted laws requiring property sellers to fill out and furnish buyers with a property disclosure statement form (also known as Form 17). The form should always disclose the following:

• Title To The Property: This section of the disclosure statement form requires property sellers to confirm they have the legal right to sell the property and that no one else can claim it. They should also disclose liens and encumbrances, easements, or any existing or pending legal actions.
• Water: Property sellers in Washington must also reveal details regarding the property's water source, such as whether it's connected to a public or private water system. They must also disclose information on any water-related features, such as the presence and condition of an outdoor sprinkler system on the property.
• Sewer/On-Site Sewage System: Whether you are interested in learning how to buy foreclosed homes in Washington or for sale by owner contract washington, as long as you're part of a PSA contract, you must divulge information regarding the type and condition of the sewage disposal system on the property. You're also expected to disclose whether the property's sewage system is subject to fees or permits.
• Structural: Sellers in the state of Washington must also inform buyers about the property's structural condition; this includes details such as the property's age, the roof's condition, its foundational integrity, and whether it has ever been subject to problems that might interfere with its structure, like pest infestations.
• Systems And Fixtures: As a property seller in Washington, you must also tell the buyer about the status of the various systems & fixtures available on the property. These include systems like the home's electrical and plumbing systems, smoke alarms, HVAC, and hot water tank.
• Homeowners Association/Common Interests: If the property is part of an HOA, the seller must disclose this fact. They must also reveal whether the property enjoys any shared features and, if so, provide details regarding joint maintenance requirements. Additionally, they must offer the buyer the contact information of an HOA member who can issue relevant documents such as HOA rules and conditions.
• Environmental: The seller must also disclose if the property has been subject to environmental issues like flooding, drainage problems, or damage from natural events like earthquakes.
• Manufactured And Mobile Homes: If the sold property features a manufactured or mobile home, the Washington seller must provide extra information specifically related to that unit. They must disclose details about any structural alterations, upgrades, repairs, and conditions of the manufactured or mobile unit; this ensures the buyer is well-informed about the condition and history of that unit, allowing them to make an informed purchasing decision.
• Full Disclosure By Sellers: Finally, if there's anything that could affect the property's condition but isn't specifically featured in the categories on a property disclosure statement, the seller should ensure they reveal it in this section.
• Proximity to farm or working forest: Sellers whose property or land is adjacent to a farm or working forest should inform the buyer of this fact; this is essential as customary agricultural activities typical to a farm or working forest might impact the buyer's comfort in the long run. Disclosing this information enables the buyer to determine whether the property suits their needs or not.
• Lead-based paint disclosure: This disclosure applies to properties built before 1978. Therefore, whether you know how to find off-market properties in Washington or are attempting to buy off the MLS, any home built before 1978 will fall under this disclosure.

Washington Real Estate Contracts: FAQs

As with most contracts, Washington real estate contracts are intricate and subject to many questions. Knowing the answers to these questions will allow you to answer your clients like a pro, thus establishing you as an authority in your niche. Check them out and their answers below:

How Much Detail Must You Provide In Your Disclosures?

You must disclose all you know about the property's physical condition, title status, and regulatory terms. Even when the disclosure doesn't fit any Seller Disclosure Statement Form categories, you must include it in the "full disclosure by seller" section.

What Is The Washington Residential Purchase Agreement?

The Washington Residential Purchase Agreement 2024 pdf is a real estate contract that establishes the rights, responsibilities, and conditions of a residential property sale in Washington.

Can A Seller Back Out Of A Contract In Washington?

Yes, a seller can back out of a contract in Washington if the buyer fails to meet their contingencies. For example, if the buyer fails to provide the down payment or secure financing by the agreed deadline, the seller can back out without any implications. Sellers can also withdraw if the contract features a clause allowing them to do so.

Can A Buyer Back Out Of A Washington Real Estate Contract?

Yes, buyers can back out of a contract if the seller's contingencies aren't met by the agreed date. They may also back out if they fail to meet their contingencies. For instance, if financing is a contingency, and they fail to secure a mortgage within the agreed timeline, a buyer may withdraw from the contract without any penalties.

Are Washington Real Estate Contracts Assignable?

Yes, Washington real estate contracts are assignable. According to RCW 79.02.280, all contracts, permits, or leases are assignable (unless otherwise stated). However, the new contract holder (assignee) is usually subject to the laws, regulations, and rights applicable to the original contract holder. However, the assignment must first be approved and entered into the Department of Natural Resources (DNR) records.

How to Customize Washington Real Estate Contracts

Customizing Washington real estate contracts involves adjusting key terms to suit individual needs. Start by clearly defining the purchase price, closing date, and contingencies related to inspections or financing. Incorporate specific provisions that address repairs, inclusions, or leaseback agreements if applicable. Ensure compliance with Washington state laws and regulations. It’s also beneficial to consult a real estate attorney to review modifications, ensuring all terms are enforceable and protect your interests throughout the transaction. Tailoring contracts helps create a smoother buying or selling experience.

Final Thoughts On Washington Real Estate Contracts

Understanding Washington real estate contracts is essential for successful property transactions. While there are several types of contracts, the purchase and sale agreement is the most common. Familiarizing yourself with all real estate contracts in Washington will increase your odds of executing deals successfully. By mastering the intricacies of a Washington real estate contract, you can navigate the market with greater confidence and protect your investment interests.

Now that you know the ins and outs of Washington real estate contracts, it's time to put that knowledge to use and seize the many opportunities in Washington’s real estate market. Enroll in Real Estate Skills' free training program today and take the next step towards becoming a successful real estate investor.

*Disclosure: Real Estate Skills is not a law firm, and the information contained here does not constitute legal advice. You should consult with an attorney before making any legal conclusions. The information presented here is educational in nature. All investments involve risks, and the past performance of an investment, industry, sector, and/or market does not guarantee future returns or results. Investors are responsible for any investment decision they make. Such decisions should be based on an evaluation of their financial situation, investment objectives, risk tolerance, and liquidity needs.