When pursuing a real estate transaction as either a Buyer or a Seller in Massachusetts, there comes a time when the negotiation gets turned over to the attorneys for both sides. There is usually a negotiation “behind-the-scenes,” and at the other end of this process is a new document, much longer than what you’d seen up to this point, ready for your signature. So what is happening back there?

1. The Initial Offer or Contract to Purchase

Normally, and unfortunately in many cases, by the time buyer and seller have engaged their own attorneys they are already parties to a binding “Offer” or “Contract to Purchase Real Estate.” This document, normally 2-3 pages, sets out the basic and most important terms (what we call the “material terms” of the agreement). In an ideal world, Buyer and Sellers would have the advice of a knowledgeable real estate attorney before signing this document, since it is considered just as binding as the subsequent Purchase and Sales Agreement.

2. Drafting the Purchase and Sale Agreement

Following the acceptance of the offer, the seller’s attorney takes the lead in drafting the P&S. This can either be a customized document or perhaps some modifications to a standardized form provided by a local real estate board. In either case, it will be shaped by the terms agreed upon in the initial contract. The objective here is to formalize the details of the transaction in a comprehensive legal framework.

3. Buyer’s Attorney Review and Modifications

The buyer’s attorney then reviews the draft P&S, focusing on protecting the buyer’s interests and ensuring the contract’s accuracy. This stage involves a careful examination for potential unexpected issues and ensuring the contract aligns with the buyer’s expectations. The buyer’s attorney will likely propose modifications aimed at clarifying points such as the standard of title, financing commitment (what do we mean by “due diligence”?), and some of the unlikely exigencies that could come up.

4. Negotiation Between Attorneys

Subsequent to the buyer’s attorney submitting proposed changes, negotiation ensues between the legal representatives of both parties. The goal is to reconcile differences and align on terms that protect their respective clients’ interests to the fullest extent possible. This negotiation is nuanced, as it occurs within the constraints of the initially agreed terms in the offer or contract to purchase.

5. Finalizing the Agreement

It’s crucial to understand that the room for maneuver in P&S negotiations is limited by the pre-existing agreement. The primary objective is not to “win” concessions but to achieve maximum clarity and mutual understanding in the agreement. Once consensus is reached, the buyer typically signs the P&S first, followed by the seller. The final step for the buyer is submitting the remainder of their deposit, which acts as security for the buyer’s performance. Once that’s done, we have a new, fully-binding contract for real estate and the parties are free to move onto the next stage of the process.