During a real estate transaction you can divide the transaction in to multiple sections.
The pre-closing is the moment where the buyer determines what is the property they wish to buy. Based on the same they will make an offer. And that offer will contain certain terms and conditions that the general buyer wants from the seller. So if that offer is accepted then you move to a second phase which is the during closing process. And at that time in particular that´s when a promissary purchase and sale agreement is executed among the two parties.
Basically, the purchase and sale agreement will be the foundation of your transaction because it contains the most important elements. For example, among others who the buyer and the seller is the terms and conditions of what is a purchase price, what is the description of the property that will be sold if the property is sold with certain characteristics then we usually like to add an exhibit to the purchase agreement that will contain for example a full list of the furniture, items included within the property among others. That purchase and sell agreement as well has certain clauses, certain obligations that both parties will assume in the real estate transaction. The most important one is the buyers because the most important obligation of the buyer is to pay. And the most important obligation of the seller is to provide you with the property based on the characteristics that was agreed in the purchase and sell agreement.
Now the purchase and sale agreement as well contains other types of clauses that from a legal perspective are necessary to be contained. A certain date of when the physical possession will be delivered. A certain date of when the transfer of title will occur because no purchase and sell agreement can not contain at least the date of which the transfer of travel will occur because the seller can then go on forever and not deliver title in a timely fashion. Jurisdiction as well, the city in which it was executed and other things, that is the most important elements of purchase and sell agreement.
One of the most important clauses as well is the penalty clause. Usually the purchase and sell agreement contains a penalty clause through which the buyers assume the obligation to pay or indemnify the other party if they default with a certain percentage of the purchase price. If I´m the buyer and I default then I am obligated to pay you the amount of the purchase price. And if the seller defaults then the seller is obligated to return all the monies that I paid him up front plus the percentage that was agreed. So that private purchase and sell agreement -in view that it´s binding and it´s a legal document- can be enforced in a court of law. Meaning that if one of us, let´s say that the seller does not want to fulfill his obligations because after we executed the document another buyer comes in and offers $10,000 more he cannot back off that easily.
So there are multiple options. He backs out but is in default and is obligated to indemnify the buyer or if he just wants to do everything the hard way then the buyer has the option to sue that gentleman and through the court system request a judge to force the seller to fulfill his contractual obligations and transfer the title.
Those are the most important elements of the promissory agreement. Now that promissory agreement will mature into a final document which is the deed. That is the final document granted before a notary public that will contain the purchase agreement or trust agreement. If you are a Mexican national then a purchase agreement, if you are a foreigner then a trust agreement will be contained in the deed. That deed will be formalized before a notary public, at that moment in particular you pay closing costs and then that document is submitted to the public registry for recording. So in a general sense that is the complete process, but as I explained the purchase and sell agreement, the promissory agreement is the basis of your transaction and everything else will be taking place.
