What is a purchase agreement
A purchase agreement (or purchase and sale agreement) is the contract that sets the terms of a sale: who's buying and selling, what's being sold, the price, and the conditions that have to be met before closing.
It's most common in real estate but also covers businesses, land, and even websites and domains. For real property, this contract does the legal work that the Statute of Frauds requires: A written, signed agreement is what makes the sale enforceable in the first place, a verbal promise to sell land generally isn't.
For real estate, the agreement is heavily shaped by state law: required seller disclosures (property condition, lead-based paint for older homes), how earnest money is handled, and standard contingencies (financing, inspection, appraisal). That's why a state-specific residential form matters, while business and website sales are more standardized.
When do you need one?
Buying or selling a home (residential real estate)
A commercial property or building sale
Purchasing vacant land or a lot
Buying or selling a business (its assets or stock)
Acquiring a website, domain, or online business
Documenting earnest money with an addendum
What it should include
Parties: buyer and seller, full legal names
What's sold: the property address and legal description, or the assets
Price & earnest money: the purchase price and the deposit held in escrow
Financing: cash or financed, and a financing contingency
Contingencies: inspection, appraisal, title, and their deadlines
Disclosures: state-required seller disclosures for real estate
Closing: the closing date and who pays which costs
Signatures: buyer's and seller's, dated
Contingencies protect the buyer
Contingencies let a buyer back out (and usually keep the earnest money) if a condition isn't met, financing falls through, the inspection turns up problems, or the appraisal comes in low. Each has a deadline. Waiving them makes an offer stronger but riskier.
State disclosures are the state-specific part
Most states require sellers of residential property to disclose known defects on a standard form, and federal law requires a lead-based-paint disclosure for homes built before 1978.
That federal requirement comes from the Residential Lead-Based Paint Hazard Reduction Act, 42 U.S.C. § 4852d, implemented at 24 C.F.R. Part 35, Subpart A. The seller must disclose any known lead-based paint or hazards, hand over any inspection records, give buyers an EPA pamphlet, and give them a 10-day window to test before they're bound.
Skip it, and the seller can face civil penalties per violation, plus liability for triple the buyer's actual damages. Your state page builds in the right disclosures; skipping any of them can void the sale or create liability.
Business and website purchases: when the UCC applies
Real estate purchase agreements are governed by state property and contract law and the statute of frauds noted above. A business or website sale is different depending on what's changing hands.
If the deal is an asset purchase that includes tangible goods, inventory, equipment, and the like, UCC § 2-201 requires a signed writing for any sale of goods worth $500 or more. A stock purchase (buying the company's shares rather than its individual assets) falls under corporate and securities law instead.
A website or domain sale is mostly intangible property and intellectual property, so it isn't goods under the UCC at all, but a written agreement is still the only reliable way to document what's transferring: the domain, the code, the content, customer data, and any accounts that go with it.
Purchase agreement vs. letter of intent
A letter of intent (LOI) is a preliminary document, usually used in business and commercial real estate deals, that outlines the broad terms both sides expect to agree on before either commits.
Most LOIs are intentionally non-binding on price and deal terms, though provisions like confidentiality or exclusivity within the LOI can still be enforceable.
A purchase agreement is the opposite: once both sides sign it, they're bound to the terms unless a contingency lets them exit. Confusing the two, or treating an LOI as if it locks in the deal, is a common and costly mistake in business sales.
Common mistakes to avoid
Using the street address instead of the full legal description for real estate
Leaving out or missing the deadline on a contingency
Skipping state-required seller disclosures
Not specifying who holds the earnest money and when it's refundable
Vague terms on what's included (fixtures, furniture, inventory)
Forgetting the lead-based-paint disclosure for pre-1978 homes
Treating a letter of intent as a binding purchase agreement when it isn't meant to be
Not specifying whether a business sale is an asset purchase or a stock purchase, which changes what liabilities transfer