The RVAR Purchase Agreement
Jan 29, 2025
In Virginia, the process of making an offer on a residential property differs from many other states. Instead of submitting a separate written offer, buyers use a comprehensive document known as a Purchase Agreement. This agreement outlines the detailed terms of the offer and is presented directly to the sellers. If the sellers accept these terms, the agreement is ratified, and preparations for closing begin. However, if the sellers do not agree, both parties engage in negotiations to modify the terms until a mutually acceptable agreement is reached. This final, signed version of the Purchase Agreement is then forwarded to the closing attorneys to finalize the sale.
Let’s look through a purchase agreement together!
The very top of the purchase agreement defines who is involved in the purchase. It defines both the Seller and the Buyer by their legal names and what’s listed on public records.
Paragraph 1
Paragraph 1 defines the property very specifically, using what’s called a legal description. Your agent will get these off of public records to make it very clear what property you are purchasing.
This section clearly defines the relationships between the agents involved and the Buyer and Seller. The agents are listed above and who they are representing is checked beneath their name. The Seller and Buyer will then sign their names at the bottom.
Paragraph 2
This section lists the additional documents (addenda) and required disclosures that are part of the real estate contract, ensuring all relevant terms and property information are acknowledged. It helps both parties confirm any special conditions (like lake-related rules or dual agency) and required disclosures (such as lead paint risks or property defects) are included and signed off.
Paragraph 3 & 4
Paragraph 3 simply states whether or not this property is intended as your primary (principal) residence once you purchase.
Paragraph 4, simply put, says that if the property requires a disclosure, the seller must give it to the buyer before the contract is accepted. The Residential Property Disclosure is almost always presented to the buyer before they put in an offer.
Paragraph 5
This section explains that if the property is part of a Common Interest Community (CIC), such as an HOA or condominium, the seller must provide a resale certificate or notify the buyer if it’s unavailable. If the certificate isn’t provided within 14 days or as required, the buyer has the right to cancel the contract within 3 days or another specified period without penalty and receive a refund of their deposit. However, if the buyer doesn't exercise this right before settlement, it is waived.
Paragraph 6
Paragraph 6 states clarifies that any property built before Jan 1,1978 will need a Lead-Based Paint Disclosure to be signed by the Buyer and Seller.
Paragraph 7
Section 7 explains that under Virginia law, contractors or suppliers who provide labor or materials worth $50 or more can place a mechanic's lien on the property if they are not paid, even after settlement. The seller must provide an affidavit at closing, confirming that no unpaid labor or materials exist that could result in such a lien. If any work was done, the seller must also provide proof that all related costs have been paid to avoid potential liens against the property. Your title company will help make sure this is taken care of before closing.
Paragraph 8 & 9
The Fair Housing Disclosure ensures that all offers are treated equally, without discrimination based on factors like race, religion, gender, disability, sexual orientation, veteran status, or any other protected category under U.S., Virginia, and local laws, as well as the REALTOR® Code of Ethics.
The Megan’s Law Disclosure advises buyers to conduct their own research on registered sex offenders in the area by contacting local police or the Virginia State Police, as the seller and agents are not responsible for providing this information.
Paragraph 10
Section 10 states that fixtures like built-in appliances, window coverings, carpeting, light fixtures, alarms, garage door openers, smart home devices, and landscaping are included in the sale unless noted otherwise. Any listed personal property is included for convenience but holds no added value.
Paragraph 11
This section outlines the financial details, starting with the earnest money deposit, which shows the buyer’s commitment. The deposit is held by an escrow agent and applied toward the purchase at closing. If the buyer doesn’t pay it on time, the seller can cancel the contract. The deposit stays in escrow unless used at closing, both parties agree on its release, or a court orders it. If foreclosure happens before closing, the buyer gets the deposit back unless they’re at fault.
Next, the first mortgage loan details how the buyer will finance the home, whether through a conventional, FHA, VA, or another type of loan. The buyer must specify if the interest rate will be fixed, adjustable, or based on market rates at closing. If a second mortgage loan is needed, this section outlines its terms, including repayment and interest rate details.
The contract also allows for other financing terms, covering any additional agreements between the buyer and lender. Finally, the balance of the purchase price must be paid at closing, after deducting deposits and loans. This final payment must be made via cash, cashier’s check, certified check, or wire transfer—personal checks aren’t accepted.
Paragraph 12 & 13
If the buyer is paying in cash, they must provide written proof from their bank that they have the funds to complete the purchase within the agreed timeframe. If they fail to provide this verification, the seller has the right to cancel the contract and refund the buyer’s deposit. However, if the buyer provides verification but fails to close for any other reason not caused by the seller, they will be in default.
For buyers using a loan, they must submit a loan application within the agreed timeframe and make every effort to secure financing. If they fail to apply on time, the seller can terminate the contract. If they apply on time but cannot secure the loan by the deadline, they won’t be in default, but the seller still has the right to cancel the contract and refund the deposit. The seller and the lender are allowed to share general updates on the loan process with the seller’s agent.
If the lender requires repairs before approving the loan, the seller must notify the buyer within five business days of receiving the list of required repairs. The buyer then has five business days to decide whether to accept the repairs or cancel the contract and get their deposit refunded. If the buyer does not respond in time, the seller can cancel the contract.
The buyer will be in default if they fail to apply for financing as agreed, lose their loan qualification due to inaction, fail to meet lender requirements, lack the necessary funds at closing, fail to notify the seller of major financial changes, act in a way that prevents loan approval, or provide false information that results in loan denial.
Paragraph 14
This section explains the buyer's right to inspect the property and how inspection issues will be handled. The contract may or may not be contingent on inspections, meaning the buyer can choose whether they want inspections to impact their ability to proceed with the purchase. Inspections can cover various aspects, including the foundation, roof, flooring, HVAC, electrical systems, plumbing, appliances, drainage, and more. All inspections must be completed by licensed professionals at the buyer’s expense and within the agreed Inspection Deadline. If issues are found that require additional inspections, the buyer must notify the seller in writing before the deadline, and an extension of up to seven business days may be granted. If the buyer fails to complete inspections or provide necessary reports in time, their right to further inspections is waived.
The buyer is responsible for any damage caused by their inspectors, engineers, or contractors, and this responsibility continues even if the contract is terminated.
For septic inspections, a licensed professional must conduct the inspection at the buyer’s expense before the deadline. The seller must allow access to the septic system and remove any obstacles that could delay the inspection. If the seller fails to provide access in time, the deadline will be extended by the amount of time lost due to the delay.
The seller must keep all utilities, systems, and appliances in working order for the inspections. If the seller delays in meeting any inspection requirements, the deadline will be extended accordingly to allow the buyer to complete necessary inspections.
After the Inspection Deadline, the buyer must provide the seller with copies of all inspection reports related to requested repairs, along with a Repair Addendum listing the repairs they want the seller to address. This request cannot include cosmetic changes or outdated but functional systems. Once the repair request is submitted, both parties have a set number of business days (default is 3) to negotiate an agreement. Either party can make, modify, or reject offers, but a rejection does not end negotiations. If an agreement is reached, both parties sign the Repair Addendum, and the contract moves forward.
If no agreement is reached by the end of the Negotiation Period, the buyer has two additional business days to decide whether to accept the property as-is or terminate the contract. If the buyer does not cancel within this timeframe, the contract continues, and the inspection contingency is considered waived. If the contract is terminated, the deposit is refunded.
The Purchaser Option allows the buyer to either proceed with negotiations or terminate the contract instead of requesting repairs. If the buyer submits a repair request, they waive their right to cancel based on inspection issues. If the buyer fails to submit a repair request or cancellation notice before the deadline, the inspection contingency is automatically waived, and the contract remains in effect.
Paragraph 15
This section covers the Inflow and Infiltration Inspection, which determines whether storm or groundwater is entering the public sewer system from the property. The contract may or may not be contingent on this inspection.
The seller must request the inspection within the agreed number of business days, and once the report is received, they must provide a copy to the buyer within three business days. If the report finds that water infiltration is occurring, the seller is responsible for fixing the issue at their own expense. If the seller refuses to make the repairs, the buyer has two business days to either cancel the contract or proceed with the purchase as-is. If the buyer does not terminate within that time, they are considered to have accepted the property in its current condition regarding this issue.
Paragraph 16
This section outlines the Preoccupancy or Presettlement Verification, which allows the buyer to inspect the property before moving in or finalizing the purchase.
If the contract is contingent on inspections, the buyer can conduct a final walkthrough before closing or occupancy to confirm that the property is in the agreed condition and that any required repairs have been completed. However, the buyer cannot request additional repairs for defects that existed in a prior inspection but were not previously reported.
If the contract is not contingent on inspections, the seller must still deliver the property in the condition it was in when the contract was signed, except for normal wear and tear. The buyer and their agent can still conduct a final verification to ensure the property meets contract terms.
If the final walkthrough reveals new material damage or necessary repairs that were not present during previous inspections, the seller’s obligations will follow the limits outlined in the contract. The seller must allow reasonable access for the buyer, their inspectors, and their lender’s representatives to conduct this verification.
The seller is responsible for keeping all utilities, systems, and appliances in working order for these inspections. They must also deliver the property in a broom-clean condition and maintain it until closing or move-in. If the seller delays in meeting these requirements, it could delay the closing process.
Any required repairs must be done by licensed professionals, and written proof of completion must be provided to the buyer. If the seller fails to meet these conditions, or if new significant damage is found and the seller refuses to fix it, the buyer has the right to either terminate the contract and receive a refund of their deposit or accept the property as-is without a price adjustment.
Paragraph 17
This section outlines the Seller Obligation Limit, which is the maximum amount the seller is required to spend on necessary repairs discovered during the Preoccupancy or Presettlement Verification or related to the title. If the cost of fulfilling these obligations exceeds this limit, the seller has two options:
- Cover the full cost of the required repairs at their own expense.
- Pay or credit the Seller Obligation Limit amount to the buyer (if allowed by the lender or if the buyer chooses their own contractor) but refuse to pay anything beyond that limit.
If the seller chooses option 2, the buyer can either:
- Accept the property as-is and proceed with the purchase.
- Cancel the contract and receive a full refund of their deposit (if allowed by the lender or agreed upon with the contractor).
If no dollar amount is specified in this section, the default Seller Obligation Limit is $1,000.
Paragraph 18
This section explains what happens if either the buyer or seller defaults on the contract. The party that fails to meet their obligations will be responsible for any unpaid brokerage fees that would have been earned if the contract had been completed, as well as any damages and legal costs incurred by the non-defaulting party, the Listing Firm, and the Selling Firm.
If the defaulting party causes the contract to fall through, they cannot avoid liability by later completing a transaction related to the property. The intent of this provision is to protect both the Listing and Selling Firms and ensure they have a right to recover damages for a breach.
If the buyer defaults, they are responsible for covering any reasonable costs the seller incurs while trying to preserve and resell the property. This includes loan interest, equity loss, and any difference between the original contract price and the final resale price. Essentially, the buyer could owe the seller for any financial loss caused by their failure to close.
Paragraph 19, 20 & 21
Under Virginia law, the buyer has the right to choose the settlement agent who will handle the closing process. The settlement agent’s role is to collect and disburse funds, record legal documents, and coordinate the administrative steps required to finalize the sale. However, they cannot provide legal advice unless they are an attorney engaged by one of the parties for that purpose.
The seller cannot require the buyer to use a specific settlement agent. The Virginia State Bar provides guidelines to ensure settlement agents follow legal procedures, and buyers can request a copy of these guidelines from their settlement agent.
The buyer has the option to purchase owner’s title insurance to protect their ownership rights to the property. Virginia law requires the settlement agent to inform the buyer about this insurance, including coverage for mechanic’s liens and future property improvements. The buyer can choose between standard or enhanced title insurance. If the buyer’s lender provides a quote for enhanced coverage, it does not mean the buyer is required to purchase it, and approval depends on the title insurer.
The final closing, or settlement, will take place at the agreed location on the specified date. Possession of the property will transfer to the buyer at settlement, unless both parties agree otherwise in writing. Settlement occurs when all documents are signed, funds are disbursed, and all contract conditions are met. The settlement agent may send closing disclosures and documents electronically, and the buyer authorizes their lender and settlement agent to do so.