The PA Agreement of Sale (AOS) is 10 pages long, 11 if you include the Lead-based paint hazards disclosure and inspection contingency addendum and consists of 34 paragraphs and 622 lines excluding Notices on the back of the pre-printed pages, which can take it to 17 pages. It is continually being updated due to revisions through use and often law suits which have arisen as a result. Each paragraph states when it was last updated. This agreement is most commonly used in resales of existing homes. Builders will often have their own contracts. Whether you are a buyer or seller it is helpful to understand this form better before you buy or sell a home.
Page 1 lays out the general terms of the agreement of sale and is probably the meat and potatoes of the agreement. This is not to say that the other pages should be taken lightly as in any contract you need to pay attention to every clause. If you do not fully understand something consult an attorney.
Page 1 starts by listing the brokers and agents involved and who they represent. The AOS states that when a Broker is the same for Buyer and Seller the Broker is a Dual Agent. All of Brokers licensees are Dual Agents unless there are separate Designated Agents for Buyer and Seller. In the case where the agent represents both Buyer and Seller the agent is a Dual Agent. These terms should be familiar to you as they are outlined on the Consumer Notice which you should have had explained to you when you first had a substantive discussion about real estate with your agent, as well as the terms Buyer's Agent, Seller's Agent and Transaction Licensee. For an explanation of these terms see Who Represents You?
Paragraph 1 of the AOS then states the date on which the agreement is being drawn up, this date is referred to in any addendae that are added when the AOS is written or later. Sellers are listed by name, all whose names are upon the deed need to be listed here. Whilst the MLS sheet often gives the names of the owners this should not be relied upon entirely without checking. Sometimes the MLS sheet may only say "Owner of Record". This information should be cross checked with the Public Records and verified with the Selling Agent. In the case of a 1031 exchange words stating "or their Assignee" will be used, but this then requires the striking of a later paragraph in the AOS which states the AOS cannot be assigned. Any discrepancies here are a "Red Flag". Buyers are also listed by name. If you intend to purchase the home as an investment through a corporation or through a family trust this needs to be entered here. Sometimes wording is used as follows, the name of the buyer or their assignee as in the above case of a 1031 exchange or a possible straw purchase where a well kown purchaser is not revealing who is actually buying the property. However again if this is used a later paragraph needs to be struck from the AOS as it states that the AOS cannot be assigned.
Paragraph 2 identifies the property being purchased legally, 123 Main Street, in the Township of Anywhere, County is identified in the Commonwealth of PA. The legal identification is entered as per where the deed is recorded in the Public Records, for example the Tax id number or parcel number.
Paragraph 3 deals with the terms of the agreement, updated in September 2005. Sub paragraph A identifies the Purchase price, this is noted in script and below this it identifies how this purchase price will be paid numerically. How much will be paid at the signing of the agreement, if any additional payment will be made and when following the execution of the agreement. Another line is left blank should there be a desire to make a further deposit. Finally the amount due at settlement is noted. This is then totaled and should equal the amount identified as the purchase price above.
Sub paragraph B informs that any payments within 30 days of settlement will be by cash or cashier's check and will be paid in Dollars to the Broker for the Seller unless otherwise stated here, these amounts will be held in an escrow account until the completion of the agreement or its termination in line with the agreement and all laws and regulations applicable. No check given with the agreement is cashed till the acceptance of the agreement of sale.
Sub paragraph C states the date and time by when the seller needs to respond to the AOS.
Sub paragraph D gives the Settlement date, which can be moved forward if buyer and seller are in agreement and even later.
Sub paragraph E is a legal notice notifying buyer and seller that settlement will take place in the county where the property is located or an adjacent county during normal business hours unless Buyer and Seller agree otherwise.
Sub paragraph F explains how the deed will be transferred, presuming Fee Simple deed of special warranty unless stated otherwise here.
Sub paragraph G details how transfer taxes will be paid by buyer and seller equally unless specified differently here.
Sub paragraph H details what charges will be adjusted and paid on a pro-rata basis at settlement. These can be payments from the buyer to the seller for taxes paid in advance or from the seller to the buyer for rents received in advance as an example. Seller pays up to and including the day of settlement and Buyer pays for days following settlement unless stated differently here.
That completes Page 1. I have found this page usually takes the longest to complete as buyers discuss the price they are going to offer.