Purchase and Sale Agreement Overview: Understanding Your Contract in Washington

Complete guide to Washington's Purchase and Sale Agreement: key sections, critical deadlines, notice requirements, and your rights as a buyer.

Tags:purchase-sale-agreement, psa, washington, contract, legal
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You're about to sign a 20-page contract committing to spend $900,000. Do you understand what you're signing?

The Purchase and Sale Agreement (PSA) is the legal contract between you and the seller. It's not just about price. It covers contingencies, timelines, what's included, who pays for what, and what happens if things go wrong. One missed deadline or misunderstood clause can cost you thousands or kill your deal.

This guide explains the Washington State standard PSA in plain English, with specific deadlines, examples, and practical guidance.

Table of Contents

Washington State Standard Form

NWMLS Form 21

What it is:

  • Standard Purchase and Sale Agreement
  • Used throughout Washington State
  • Created by Northwest Multiple Listing Service
  • Legally binding contract

Who uses it:

  • Real estate agents
  • Buyers and sellers
  • Attorneys (sometimes modify)
  • Standard in Seattle area

Why standard form matters:

  • Familiar to all parties
  • Court-tested language
  • Balanced (protects both sides)
  • Reduces disputes

Alternatives:

  • Attorney-drafted contracts (rare)
  • Builder contracts (new construction)
  • For-sale-by-owner contracts (risky)

Contract Basics

When it's binding:

  • Both parties sign
  • All terms agreed upon
  • Earnest money deposited
  • Fully executed contract

What it controls:

  • Purchase price and terms
  • Contingencies and deadlines
  • What's included in sale
  • Closing date and possession
  • Dispute resolution

What it doesn't control:

  • Loan terms (between you and lender)
  • Title insurance (separate)
  • Home warranty (optional)
  • Moving arrangements

Key Sections Explained

Section 1: Parties and Property

What it includes:

  • Buyer name(s)
  • Seller name(s)
  • Property address
  • Legal description
  • Parcel number

Why it matters:

  • Identifies who and what
  • Must be accurate
  • Legal description from title report

Common issues:

  • Misspelled names
  • Wrong parcel number
  • Incomplete legal description

Section 2: Purchase Price and Financing

What it includes:

  • Total purchase price
  • Earnest money amount
  • Down payment amount
  • Loan amount
  • Loan type (conventional, FHA, VA, cash)

Example:

  • Purchase price: $900,000
  • Earnest money: $20,000
  • Down payment: $180,000 (20%)
  • Loan amount: $720,000
  • Loan type: Conventional

Why it matters:

  • Shows how you're paying
  • Affects seller's confidence
  • Determines contingencies needed

Section 3: Included Items

Typically included:

  • All fixtures (attached to property)
  • Built-in appliances
  • Window coverings
  • Garage door openers
  • Landscaping

Typically not included:

  • Washer and dryer (unless specified)
  • Refrigerator (unless specified)
  • Furniture
  • Decorations
  • Personal property

How to handle:

  • List specific items you want included
  • Be clear about appliances
  • Avoid disputes by specifying

Seattle example: "Included: All built-in appliances, refrigerator, washer, dryer, all window coverings, outdoor furniture on deck, Ring doorbell, Nest thermostat"

Section 4: Title and Closing

Title insurance:

  • Seller typically pays for owner's policy in Washington
  • Buyer pays for lender's policy
  • Protects against title defects

Closing date:

  • When ownership transfers
  • Typically 30–45 days from acceptance
  • Can be negotiated

Possession:

  • When you get keys
  • Usually same day as closing
  • Can be different (rent-back)

Closing costs:

  • Each party pays their own typically
  • Can negotiate seller credits
  • Specified in contract

Section 5: Inspection

Inspection contingency:

  • Buyer's right to inspect property
  • Typical period: 10 days
  • Can cancel or request repairs

What you can inspect:

  • General home inspection
  • Specialized inspections (sewer, roof, structural)
  • At your expense

Seller's obligations:

  • Provide access
  • Maintain property
  • Respond to inspection requests

Section 6: Financing Contingency

What it means:

  • Buyer must obtain financing
  • Typical period: 17 days
  • Must make good faith effort

Your obligations:

  • Apply for loan promptly
  • Provide documents to lender
  • Cooperate with process
  • Notify seller if problems

Seller's rights:

  • Can cancel if you don't perform
  • Keep earnest money if you don't try
  • Require proof of loan application

Removal:

  • Contingency removed when loan approved
  • Or when deadline passes
  • Or when you waive it

Section 7: Appraisal Contingency

What it means:

  • Property must appraise at purchase price
  • Protects you from overpaying
  • Lender requires appraisal

If appraisal comes in low:

  • You can cancel and get earnest money back
  • Or renegotiate price
  • Or pay difference in cash

Appraisal gap coverage:

  • You agree to cover gap up to amount
  • Example: "Will cover gap up to $25,000"
  • Makes offer stronger but costs cash

Section 8: Seller Disclosures

What seller must provide:

  • Form 17 (Seller Disclosure Statement)
  • Lead-based paint disclosure (pre-1978 homes)
  • HOA documents (if applicable)
  • Other material facts

Your review period:

  • Typically 5 days
  • Can cancel if disclosures reveal problems
  • Or request repairs/credits

Section 9: Closing Costs and Prorations

Buyer typically pays:

  • Lender fees
  • Appraisal
  • Inspection
  • Lender's title insurance
  • Recording fees
  • Homeowner's insurance

Seller typically pays:

  • Excise tax (Washington State)
  • Owner's title insurance
  • Real estate commissions
  • Payoff of existing loans

Prorated items:

  • Property taxes
  • HOA fees
  • Utilities
  • Calculated as of closing date

Section 10: Default and Remedies

If buyer defaults:

  • Seller can keep earnest money
  • Or sue for specific performance
  • Or sue for damages

If seller defaults:

  • Buyer can get earnest money back
  • Or sue for specific performance
  • Or sue for damages

Dispute resolution:

  • Mediation first (required)
  • Then arbitration or court
  • Attorney fees to prevailing party

Timeline Structure

Critical Deadlines

Day 1: Mutual acceptance

  • Both parties sign
  • Contract is binding
  • Clock starts

Day 3: Earnest money due

  • Wire to escrow
  • Must be received within 3 days
  • Failure can void contract

Day 5: Seller disclosures due

  • Seller provides Form 17
  • HOA documents
  • Other disclosures

Day 10: Inspection deadline

  • Complete inspection
  • Request repairs or cancel
  • Or contingency removed

Day 17: Financing deadline

  • Loan approval or denial
  • Remove contingency or cancel
  • Provide proof to seller

Day 17: Appraisal deadline

  • Appraisal completed
  • Discuss if low
  • Remove contingency or renegotiate

Day 30–45: Closing

  • Final walkthrough (24–48 hours before)
  • Sign documents
  • Transfer ownership
  • Get keys

How Deadlines Work

Calendar days, not business days:

  • Includes weekends and holidays
  • Count carefully
  • Don't miss deadlines

Notice requirements:

  • Must notify in writing
  • Email acceptable (verify in contract)
  • Before deadline expires
  • Keep proof of delivery

Example:

  • Mutual acceptance: Monday, October 1
  • Inspection deadline: 10 days = Thursday, October 11
  • Must cancel or request repairs by end of day October 11
  • October 12 = too late

Missing Deadlines

What happens:

  • Contingency automatically removed
  • Can't use that reason to cancel
  • Risk losing earnest money

How to avoid:

  • Calendar all deadlines immediately
  • Set reminders 2 days before
  • Communicate with agent
  • Act early, don't wait until last day

Extensions:

  • Must be mutual agreement
  • Get in writing
  • Before deadline expires
  • Seller doesn't have to agree

Common Addenda

Form 22A: Inspection Addendum

What it does:

  • Details inspection contingency
  • Specifies what you can inspect
  • Outlines response process

Key terms:

  • Inspection period (10 days typical)
  • Seller's response time (3 days typical)
  • Your response to seller's response (3 days)

Form 22B: Financing Addendum

What it does:

  • Details financing contingency
  • Specifies loan terms
  • Outlines approval process

Key terms:

  • Loan type and amount
  • Interest rate (if specified)
  • Financing deadline (17 days typical)
  • Good faith effort required

Form 22C: Appraisal Addendum

What it does:

  • Details appraisal contingency
  • Specifies what happens if low appraisal
  • Outlines resolution process

Key terms:

  • Appraisal deadline (17 days typical)
  • Gap coverage (if any)
  • Renegotiation rights

Form 22D: HOA Addendum

What it does:

  • Details HOA review contingency
  • Specifies documents to review
  • Outlines cancellation rights

Key terms:

  • Review period (5–10 days typical)
  • Documents required
  • Cancellation process

Form 35: Escalation Addendum

What it does:

  • Automatically increases your offer
  • If competing offers received
  • Up to maximum price

Form 41: Seller Rent-Back

What it does:

  • Allows seller to stay after closing
  • You become landlord
  • Seller pays rent

Key terms:

  • Rent amount (typically per diem)
  • Duration (days or weeks)
  • Deposit
  • Liability insurance

Notice Requirements

How to Communicate

Acceptable methods:

  • Email (most common)
  • Fax
  • Hand delivery
  • Certified mail

Not acceptable:

  • Text message (unless contract specifies)
  • Verbal (must be in writing)
  • Social media

Best practice:

  • Email with read receipt
  • Copy your agent
  • Keep records
  • Confirm receipt

What Requires Notice

Cancellation:

  • Must be in writing
  • Cite specific contingency
  • Before deadline
  • To seller and escrow

Inspection requests:

  • In writing
  • Within inspection period
  • Specific items and amounts
  • Professional estimates helpful

Financing issues:

  • Notify immediately
  • Provide documentation
  • Before deadline
  • Good faith effort required

Appraisal results:

  • Share with seller
  • If requesting renegotiation
  • Before deadline

Your Rights and Obligations

As Buyer, You Have Right To:

Inspect property:

  • General and specialized inspections
  • At your expense
  • Reasonable times
  • With notice to seller

Review disclosures:

  • Seller disclosure statement
  • HOA documents
  • Title report
  • Other material information

Cancel with valid contingency:

  • Within deadline
  • Get earnest money back
  • Must follow process

Final walkthrough:

  • 24–48 hours before closing
  • Verify condition
  • Check repairs completed
  • Test systems

As Buyer, You Must:

Act in good faith:

  • Make honest effort to perform
  • Apply for financing promptly
  • Provide documents to lender
  • Don't sabotage deal

Meet deadlines:

  • Deposit earnest money
  • Complete inspections
  • Remove contingencies
  • Close on time

Maintain property:

  • Keep insurance
  • Don't damage property
  • Maintain until closing

Communicate:

  • Respond to requests
  • Notify of issues
  • Follow notice requirements

What Happens If Things Go Wrong

Buyer Defaults

Scenarios:

  • Don't deposit earnest money
  • Don't apply for financing
  • Cancel without valid contingency
  • Don't close

Seller's remedies:

  • Keep earnest money
  • Sue for specific performance (force you to buy)
  • Sue for damages
  • Relist property

Seller Defaults

Scenarios:

  • Refuse to close
  • Don't provide disclosures
  • Don't make agreed repairs
  • Damage property

Buyer's remedies:

  • Get earnest money back
  • Sue for specific performance (force them to sell)
  • Sue for damages
  • Find another home

Dispute Resolution

Step 1: Mediation

  • Required before lawsuit
  • Neutral mediator
  • Try to reach agreement
  • Non-binding

Step 2: Arbitration or Court

  • If mediation fails
  • Binding decision
  • Attorney fees to prevailing party
  • Can be expensive

How to avoid disputes:

  • Communicate clearly
  • Follow contract terms
  • Meet deadlines
  • Document everything
  • Work with experienced agent

Summary: Key Takeaways

  • Washington uses NWMLS Form 21 (standard PSA)
  • Key sections: price, financing, included items, contingencies, deadlines
  • Critical deadlines: earnest money (3 days), inspection (10 days), financing (17 days)
  • Common addenda: inspection, financing, appraisal, HOA, escalation
  • Notice must be in writing (email acceptable)
  • Calendar all deadlines immediately and set reminders
  • Missing deadline = contingency removed = risk losing earnest money
  • Both parties have rights and obligations
  • Dispute resolution: mediation first, then arbitration or court

Next Steps

  1. Review contract with your agent before signing
  2. Calendar all deadlines immediately after acceptance
  3. Set reminders 2 days before each deadline
  4. Read all addenda carefully
  5. Ask questions about anything unclear
  6. Keep all communications in writing
  7. Act early on contingencies, don't wait until last day

This article provides general information about Purchase and Sale Agreements and should not be considered legal advice. Contract terms vary. Consult with your real estate agent and attorney for guidance specific to your situation.

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