California Real Estate Purchase Agreement

Legal Aspects 

The California Statute of Frauds states that any agreement to sell land must be in writing, and oral contracts aren’t acceptable. It includes not only the terms of the sale but also multiple required disclosures, as we show below.

Writing Requirement

• California law requires a purchase agreement to contain four elements.
  • First, both parties must be legally capable of entering into a deal with each other.
  • Second, mutual consent must be the basis of this agreement.
  • Third, the objective of the contract must be a lawful action.
  • Fourth, the contract must include consideration, which means exchanging things of value.

• You must also include other terms to create a comprehensive and legally recognized agreement.
  • Add the purchase price and agent commissions. Also, state the Earnest Money Deposit amount, which is generally, in California, 1%-3% of the overall price.
  • State the contract’s closing date, which refers to when the parties complete the property transfer. Usually, it’s 30 to 60 days from when the parties signed the document.
  • Include any contingencies to the agreement, like that it hinges on the buyer getting a home loan. Further, state the contingencies removal date.

• The general critical information you must include are:
  • Legal property description
  • Names and details of parties
  • Grievance measures

• Both parties must sign this agreement for a court of law to accept it as legally valid.
• California law doesn’t require the agreement to be witnessed or notarized to be legal.

Required Disclosures

If some of these disclosures aren’t present in the agreement, then the buyer has three (3) days to terminate the deal in person or five (5) days if mailing the termination notice.

• Death on Premises Disclosure: The seller must disclose if a death occurred on the property within the last three (3) years.
• Homeowner’s Guide to Earthquake Safety: The buyer must receive this Earthquake Safety Manual.
• Local Option Real Estate Transfer Statement: This disclosure is only necessary if local laws require it in California counties.
• Megan’s Law: The buyer is entitled to the required information to check the surrounding areas for known sex offenders.
• Lead-Based Paint Disclosure: The seller must say whether lead-based paint is present in the building. This disclosure is only necessary for buildings built before 1978.
• Natural Hazard Disclosure: In this clause, the seller must inform the buyer about nearby hazardous areas. It includes flood areas, wildfire risks, and earthquake zones.
• Real-Estate Tax Disclosure: It’s a specific clause regarding the Supplemental Property Tax Bill.
• Water-Conserving Fixtures and Detector Notice: Status of water-conserving fixtures and carbon monoxide detectors the buyer must replace if they renovate the property.

• Some disclosures are what they sound like and simply require a governmental form or report:
  • Inspection Report on Wood Destroying Pests and Organisms
  • Environmental Hazards Pamphlet
  • Transfer Disclosure Status
  • Water Heater and Smoke Detector Compliance