Q: How should I advise my clients to address the addition of “the purchase is contingent upon the execution of a mutually agreeable Purchase and Sales Agreement” in additional provisions of an offer?
A: There is no one size fits all or standard office policy/procedure to address this addition as any additional provisions will need to be analyzed on a transactional basis. The Contract to Purchase already provides that “time is of the essence as to each provision” and paragraph 4 addresses the subsequent signing of the Purchase and Sale Agreement:
4. Purchase and Sale Agreement. The SELLER and the BUYER shall, on or before _____□a.m./□p.m. on ________________ execute the Standard Purchase and Sale Agreement of the MASSACHUSETTS ASSOCIATION OF REALTORS® or substantial equivalent which, when executed, shall become the entire agreement between the parties and this Offer shall have no further force and effect.
Ultimately, the Contract to Purchase is outlined in such a way to include all the material terms for the parties to agree upon and in most instances, the material terms carry over to the Purchase and Sale Agreement and the parties move forward.
In those off-chance instances where the buyer and seller do not sign that second contract, Massachusetts courts have provided for specific performance on those agreed to terms found in the underlying Contract to Purchase absent a subsequently signed Purchase and Sale Agreement. See: McCarthy v. Tobin, 429 Mass. 84, 706 N.E.2d 629 (Mass. 1999); Ritter v. Johnson, 616 F. Supp. 3d 158 (D. Mass. 2022.
As a practitioner it would be prudent to try and ascertain why the language is added and evaluate the particular transaction. For example, there may be a contingency that involves many more details to be negotiated between legal counsel and the parties have not come to a full meeting of the minds on the Contract to Purchase.
In general, for any added contingency, ensure that an end date is identified and be sure…