The Anatomy of a Purchase Agreement

Executive Summary

A Real Estate Purchase Agreement is a legally binding contract between a buyer and seller that outlines the terms, price, and conditions of a property transfer. In creative real estate transactions, standard boilerplate agreements are often modified with specific addendums to accommodate assignment rights, seller concessions, or Subject-To acquisitions.

Core Components of a Binding Agreement

To be legally enforceable under Michigan Statute of Frauds (MCL 566.106), a real estate contract must be in writing, signed by all title holders, and contain mutual consideration. Essential sections include:

• Legal Property Description: Section, Township, Range, or recorded subdivision lot number.
• Purchase Price & Terms: Cash, new conventional mortgage, seller financing, or debt assumption.
• Earnest Money Deposit (EMD): Held in escrow by a licensed title company or broker to signal buyer intent.
• Contingency Clauses: Inspection periods, appraisal minimums, and title commitment verification.
• Closing Date & Tax Prorations: Clear allocation of transfer taxes, property taxes, and utility final readings.

Wholesale & Creative Addendums

Investors utilizing wholesale strategies must include an explicit "And/Or Assigns" clause allowing assignment of contractual rights to an end buyer prior to closing. Additionally, non-circumvention clauses and default forfeiture limits protect the primary assignor.