Land Purchase Agreement: How It Works + Free Template

A land purchase agreement is a contract between a buyer and a seller outlining the terms and conditions of purchasing a plot of land.

Drafting a contract without the help of a lawyer can be daunting, but land purchase agreements can be straightforward if you follow a structured template.

Here’s everything you need to know about a land purchase agreement including a free-to-use template.

What is a Land Purchase Agreement?

As we mentioned, a land purchase agreement is simply a legal document that a buyer and seller sign to transfer land ownership legally. It protects both buyer and seller and legally entitles the buyer to own the land.

The agreement has several standard sections that we’ll go over later in the article, but it should generally include information about the land, its condition, the agreed-upon purchase price, and any contingencies that are required to move forward with the sale.

It’s common to work with a real estate agent or a real estate attorney, but our easy-to-use template that we will include at the end of the article means you can save potentially thousands of dollars in real estate or legal fees.

Simply answer questions step by step and the agreement will automatically generate!

When is a Land Purchase Agreement Used?

A land purchase agreement is typically used for transactions involving land only, meaning no homes or commercial buildings are on the property.

These transactions happen when someone is looking for vacant land to build a home or business. They may also be related to buying and selling farmland, but more often an agricultural land sale contract is used in these instances.

In most cases, the seller (or seller’s agent/attorney) draws up the land purchase agreement to present to the buyer after the buyer makes an offer on the land that the seller accepts.

The following section outlines the key parts of a land purchase agreement. If you’re drafting the agreement yourself, pay close attention to the primary sections and the general structure of the agreement.

Key Components of a Land Purchase Agreement

Land purchase agreements may vary depending on who creates them, but there are nine key components that every agreement should have. Let’s dive into what truly makes up a land purchase agreement.

1. Buyer & Seller Details

It’s important to know and document who is buying the land and who is selling it. Agreements need to include buyer and seller details including legal names (both first and last names) as well as current address information where possible.

During the closing, both buyer and seller will need to prove their identity and the names on the agreement need to match names on respective legal documents. If either party shows up to the closing without the right identification, it can delay the entire purchase process.

2. Property Description

Next, the agreement should provide as much information about the land itself as possible. This should include the location of the land and the size of the land, typically in acres or square feet.

An address should be included on the agreement if possible, but not all vacant lots have a registered address. If the land does not have a registered address, you’ll need to include another unique identifier in the agreement.

Finally, the description should include the tax parcel information (often referred to as the lot number), which is obtained through local government records. Most records can be pulled easily for a small fee.

3. Price of Land & Financing Options

The price of the land and how the land can be financed are important components of any land purchase agreement.

The agreement should clearly indicate the purchase price as well as any contingencies, such as the buyer’s ability to obtain financing through their bank if it is not a cash purchase.

Proof of financing is often required before the purchase can move forward. This section should also detail what happens if a buyer cannot provide proof of financing (which would typically result in the sale being canceled).

It may be a good idea to have a pre-approval letter from your bank before you even begin discussing buying from a seller.

It’s important to note here that the seller in no way informs or determines the interest rate of any amount financed.

4. Closing Details

There are a number of components that make up ‘closing’. This section should include the date of closing, how closing costs will be handled, acceptable forms of payment for closing costs, documentation requirements, and any deliverables from either party.

The closing is most often done in person at a title agency and may take a few hours to complete.

5. Party Responsibilities

Simply put, the party responsibility section outlines who is responsible for what at various points of the purchase process.

For example, the seller may be responsible for upkeep of the land prior to sale, such as removing unwanted tree stumps, leveling the ground, or simply maintaining the appearance of the land.

Here’s where an inspection and survey come in handy. The inspection will list any issues with the land that you can then negotiate later, so include provisions here about general responsibilities post-inspection as well.

If you’re not the one creating the agreement, pay close attention to this section to ensure you fully understand what you’re responsible for.

6. Extra Provisions

There are numerous extra provisions to account for, such as the title transfer, surveys, and inspections. It’s common to identify the title transfer as an independent section as this is a key part of the purchase process.

Warranty Deeds are documents that validate that there are no liens or mortgages on the land and that the title is clear. These are the most common types of deeds when going through a land purchase process.

The survey provision outlines when the buyer can order an inspection and how quickly the seller must remedy defects.

The buyer and seller can also negotiate after the survey has concluded if defects are found and typically a buyer can back out of a purchase at this point if defects are significant enough.

7. Dispute Resolution

As this is a legally binding document, there should be clear expectations on how to handle disputes between the buyer and seller.

In both commercial and residential real estate, including land purchases, mediation is often the first route to resolve a conflict. An impartial third party (the mediator) meets with both parties to guide them toward a resolution. Most disputes are successfully resolved using mediation.

If mediation is unsuccessful, a court ruling may be required. It’s often simplest and most cost-effective to resolve disputes through a mediator.

8. Terms & Conditions

Whether you’re buying land or signing up for a social media platform, we see terms and conditions everywhere.

If you’re like the typical consumer, you likely skip right over the terms and conditions and accept them without thinking twice about it. The terms and conditions of a land purchase agreement are not something to just skip over.

This section will outline additional requirements for the purchase to go through. If you don’t pay attention to this section and violate one of the terms or conditions, the purchase may be void.

This section may include information about specific timelines and deadlines for paperwork, additional financing and eligibility requirements, and even buyer and seller rights.

9. Signatures

The signatures are arguably the most important part of any land purchase agreement. Without them, the purchase simply wouldn’t go through. A purchase agreement requires numerous signatures by both seller and buyer throughout the process. From the initial written offer to the day of closing, both buyer and seller need to sign documents.

The simplest way to sign your land purchase agreement is through Signaturely. Offering free, legally-binding digital signatures, your signing process is easier than ever.

Just upload a document, send, and get it signed. Signaturely allows you to draw or type a signature that’s verified and legally-recognized in just a few clicks.

How a Land Purchase Contract Works

Now that you understand the foundational components of a land purchase agreement, let’s put it all together to see how it actually works.

Step 1: The first step in the process is for a potential buyer to make an offer on a plot of land. The buyer (or their real estate agent or attorney) draws up a formal written offer to submit to the seller. In fast-moving markets, offers should be submitted as soon as possible for seller review.

Step 2: Once submitted, the seller reviews the offer and either accepts or rejects it. If accepted, the buyer is required to provide an earnest money deposit which will eventually be deducted from any costs due the day of closing. Earnest money deposits are also known as good faith deposits and signal a true intent to move forward with a purchase.

Step 3: From there, buyers have a specified timeframe to conduct surveys and inspections. This is called the due diligence period and allows buyers to gather all the information they need to move forward with a purchase or back out of a purchase.

Do not skip surveys and inspections as they are vital for making an informed buying decision and can identify serious deficiencies that should be remedied.

Step 4: If all goes well, a closing date is set. The closing will involve signing final documents and submitting any payments required, such as down payments, inspection and appraisal costs, and agent fees. If the buyer has to finance the purchase, the bank typically requires an appraisal and will only finance up to a certain percentage of the appraised value.

Step 5: Once the closing is complete, funds are transferred and the sale is recorded with the local government. The land is now legally in your name.

How to Write a Land Purchase Agreement

Unless you’re already a real estate agent or attorney, writing a land purchase agreement from scratch can be difficult. Fortunately, you don’t have to – with our easy-to-use template, you can simply fill in the missing fields and have a legally binding purchase agreement in no time.

Keep the sections we reviewed above in mind when drafting a purchase agreement. You’ll need information about the parties involved, the land, details of the purchase, and more.

It can be risky to create a purchase agreement from scratch, and if you’re not diligent, you could be missing key components of the agreement that leave you vulnerable in the transaction. The best, most cost-effective way is to start with a sound land purchase agreement template that we’ve provided below.

Download our free example
Land Purchase Agreement

We’ve got your back here at Signaturely, and we’re ready to help make stress-free contracts a reality. Forget the confusing paperwork and overwhelming legal jargon – get easy, breezy contract templates in minutes with our free template.

Click that download button now and get those wheels spinning!

What You Need to Remember About Land Purchase Agreements

Here are some top questions about land purchase agreements that may be useful the next time you’re looking to buy or sell.

FAQs About Land Purchase Contracts

What is a land purchase option?

A land purchase option is different from a standard land purchase. Much like a stock option, a land purchase option gives the buyer the right to buy land in the future.

There are many reasons to go forward with a land purchase option, but the most common reason is to give the buyer time to plan or research the land. While it gives the buyer the right to purchase land, it does not obligate them to purchase it.

Who benefits from an option contract?

Both the buyer and seller benefit from an option contract. The buyer is given security that they are the only ones able to purchase the land and the seller is assured that someone will purchase the land.

Who can draft a land contract?

Anyone can draft a land contract. With our simple-to-use template, you can save thousands of dollars on real estate or attorney fees and create a solid land purchase agreement in just a few minutes.

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Free Land Purchase Agreement Template

Land Purchase Agreement

This Land Purchase Agreement (“Agreement”) is made as of [Insert Date] by and between:

Seller: [Seller’s Full Name], whose address is [Seller’s Address].
Buyer: [Buyer’s Full Name], whose address is [Buyer’s Address].

PROPERTY DESCRIPTION

The Seller agrees to sell, and the Buyer agrees to purchase, the following real property (“Property”):

Legal Description: [Provide a detailed legal description of the property, including boundaries, dimensions, and any identifying information such as parcel or lot numbers].
Address: [Insert the physical address of the property].
Parcel Number: [Include the official parcel number as designated by the relevant county or municipal authority].

This Property includes all rights, privileges, easements, and appurtenances associated with it, including but not limited to, mineral rights, water rights, and any structures or improvements existing on the Property at the time of this Agreement.

PURCHASE PRICE AND PAYMENT TERMS

The total purchase price for the Property shall be [Insert Purchase Price] (“Purchase Price”), to be paid by the Buyer to the Seller as follows:

Deposit: A non-refundable deposit of [Insert Deposit Amount] shall be paid by the Buyer within [Insert Timeframe, e.g., five (5) business days] following the execution of this Agreement. This deposit shall be held in escrow by [Insert Escrow Agent] until the Closing Date.
Balance: The remaining balance of the Purchase Price, totaling [Insert Remaining Amount], shall be paid in full by the Buyer at the time of Closing. Payment shall be made in [Specify Form of Payment, e.g., wire transfer, cashier’s check] and shall be subject to adjustment for any prorations or credits as provided for in this Agreement.

CLOSING DATE AND DELIVERABLES

The closing of the sale (“Closing”) shall take place on or before [Insert Closing Date], unless mutually agreed upon in writing by both parties, at [Insert Location or specify that the closing may occur electronically or virtually].

At Closing:

The Seller shall deliver a duly executed and notarized [Warranty Deed/Special Warranty Deed/Quitclaim Deed] to the Buyer, conveying good and marketable title to the Property, free and clear of all liens, encumbrances, and defects, except as expressly agreed to by the Buyer.
The Buyer shall deliver the remaining balance of the Purchase Price to the Seller, in accordance with the payment terms specified herein.
Both parties shall execute and deliver any other documents required to complete the transaction, including but not limited to, closing statements, affidavits, and tax forms.

INSPECTIONS AND DUE DILIGENCE

The Buyer shall have the right to inspect the Property and perform any due diligence investigations within [Insert Number of Days, e.g., thirty (30) days] after the Effective Date of this Agreement. The inspections may include, but are not limited to:

Environmental Assessment: A Phase I Environmental Site Assessment to determine the presence of any hazardous substances or environmental conditions that may affect the Property.
Structural Inspection: An inspection by a licensed professional to assess the condition of any structures, improvements, or fixtures on the Property.
Zoning and Land Use Review: Verification that the Property complies with all applicable zoning and land use regulations and that its current use is lawful.

If the inspections reveal any material defects or conditions that are unacceptable to the Buyer, the Buyer may, at their sole discretion, terminate this Agreement by providing written notice to the Seller within the inspection period. Upon such termination, the deposit shall be returned to the Buyer, and neither party shall have any further obligations under this Agreement.

SELLER’S REPRESENTATIONS AND WARRANTIES

The Seller represents and warrants to the Buyer, as of the Effective Date and continuing until Closing, that:

The Seller is the lawful owner of the Property and has the right to sell it.
The Property is not subject to any pending or threatened litigation, liens, judgments, or other encumbrances, except as disclosed in writing to the Buyer prior to the execution of this Agreement.
There are no known hazardous substances, environmental conditions, or violations of local, state, or federal laws affecting the Property that have not been disclosed to the Buyer.
The Property is not in violation of any zoning laws, building codes, or other regulations, and there are no outstanding assessments or fees due to any governmental authority.

CONTINGENCIES

This Agreement is contingent upon the following conditions, which must be satisfied or waived in writing by the Buyer by the Closing Date:

Financing Contingency: The Buyer’s ability to secure financing in the amount of [Insert Financing Amount] on terms acceptable to the Buyer by [Insert Date]. If the Buyer is unable to secure financing, the Buyer may terminate this Agreement and receive a refund of the deposit.
Appraisal Contingency: A satisfactory appraisal of the Property, conducted by a licensed appraiser, confirming a value equal to or greater than the Purchase Price. If the appraisal is less than the Purchase Price, the Buyer may terminate this Agreement and receive a refund of the deposit.
Other Contingencies: [Specify any additional contingencies, such as obtaining necessary permits, clear title, or satisfactory resolution of any survey or boundary issues].

CLOSING COSTS

The parties agree to allocate closing costs as follows:

Buyer’s Costs: The Buyer shall be responsible for all costs associated with obtaining financing, including loan origination fees, appraisal fees, and any costs related to the Buyer’s due diligence inspections. The Buyer shall also pay for title insurance, recording fees, and any other costs typically borne by the buyer in transactions of this nature.
Seller’s Costs: The Seller shall be responsible for the costs associated with releasing any existing liens or encumbrances on the Property, as well as any unpaid property taxes, utility bills, or other charges necessary to convey clear title. The Seller shall also pay for [Specify any additional Seller responsibilities, such as documentary stamp taxes, if applicable].

DEFAULT

Buyer Default: If the Buyer fails to perform any of their obligations under this Agreement, the Seller may, as their sole and exclusive remedy, terminate this Agreement and retain the deposit as liquidated damages. The parties acknowledge that the amount of the deposit is a reasonable estimate of the damages that the Seller would incur as a result of such default.
Seller Default: If the Seller fails to perform any of their obligations under this Agreement, the Buyer may, as their sole and exclusive remedy, either (i) seek specific performance of the Seller’s obligations or (ii) terminate this Agreement and receive a refund of the deposit.

GOVERNING LAW

This Agreement shall be governed by, and construed in accordance with, the laws of the State of [Insert State], without regard to its conflict of law principles. Any legal action or proceeding arising out of or related to this Agreement shall be brought exclusively in the courts of [Insert County and State].

ENTIRE AGREEMENT

This Agreement represents the entire understanding and agreement between the parties with respect to the subject matter hereof and supersedes all prior discussions, negotiations, and agreements, whether oral or written. No amendment or modification of this Agreement shall be effective unless in writing and signed by both parties.

MISCELLANEOUS

Severability: If any provision of this Agreement is found to be invalid or unenforceable, the remaining provisions shall continue in full force and effect.
Counterparts: This Agreement may be executed in one or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument.
Notices: All notices required or permitted under this Agreement shall be in writing and delivered to the parties at their respective addresses listed above, either by hand, certified mail, or recognized courier service.

SIGNATURES

IN WITNESS WHEREOF, the parties hereto have executed this Land Purchase Agreement as of the Effective Date first above written.

Seller:

[Seller’s Name]

Date: [Insert Date]

Buyer:

[Buyer’s Name]