The ‘OFFER AND ACCEPTANCE’ -- Normally referred to as the ‘O & A’ -- Is a seven page
document by which the Buyer with the assistance of the Buyer’s agent, makes an offer to
purchase a property, and lists certain terms, conditions, and contingencies germane to the
sale being completed.
BUYERS:
Once you have found a property you wish to purchase, your agent will prepare the Offer with
you, and explain all the items listed here.
The Buyer’s agent then sends the offer to the Seller’s agent, who presents the offer to the Seller.
SELLERS:
Your agent will review and explain each item of the Buyer’s offer with you, and is required to
give his professional opinion on the worthiness of the terms and the offer to you, and if a
counter-offer should be made.
The Seller then has three courses of action:
1.) Accept the offer as written.
2.) Make a counter-offer.
3.) Reject the offer outright.
Should the Seller choose to make a counter-offer, your agent will prepare it, and send it to the
Buyer’s Agent for consideration, a counter-to-counter, acceptance, or rejection by the Buyer.
BUYERS AND SELLERS PLEASE NOTE:
Your agent works for you, and is obligated to obtain the most favorable transaction terms
ethically possible on your behalf.
What follows next is an overview of the seven pages of the ‘Offer and Acceptance’,
With a ‘thumbnail’ synopsis of each item contained therein, together with explanations,
notes, and examples to help clarify some of the items.
The O & A - Page 1
A. The Buyer(s) list their name(s) – The amount they are offering -- The address of the
property -- If they intend to occupy the property -- The amount of the ‘Earnest Money’
Deposit, -- And The Buyer’s choice (Customary) of the Escrow holder.
B. The Buyer will state the amount of the cash down payment, and the source of funds.
If this is to be a ‘Cash Purchase’; The Buyer will have to provide proof of funds within a
set time frame from the date of the Seller’s acceptance of the offer.
C. Since most purchases are not ‘Cash’, The Buyer lists the type of loan, the terms of the
loan, any ‘Points’ involved, and any additional financing terms and conditions.
D. The Buyer agrees to obtain loan approval within a set time frame.
E. The Buyer sets the desired ‘Close of Escrow’ date.
The O & A - Page 2
A. Contract definitions – Clause requiring that conditions and contingencies be satisfied
or waived in writing.
B. The Appraisal - Included or Waived – Designation of appraisal fee payer.
C. The Buyer indicates if offer is contingent upon the sale of another property.
D. A Clause requiring the Seller to provide a ‘Real Property Disclosure Form’ to the Buyer.
The O & A - Page 3
A. Title to vest per Escrow Instructions
B. Examination of Title - Includes the Preliminary Report, Covenants, Conditions, &
Restrictions (CC&Rs), Rights of Way and Easements of record, which do not materially
affect the value or intended use of the property. – Outlines procedures and timelines
for Buyer’s objections – Seller’s removal of conditions, and Buyer’s options.
C. Closing Costs – When filled in, shows whether the Buyer, or the Seller pays for :
Title Insurance, Escrow fees; and the Transfer Taxes. (Some Fees are split by the
Buyer and Seller)
D. Bonds and Assessments – States how existing balances of bonds and assessments
which are a lien on the property are to be handled.
E. Omissions From Escrow Instructions Clause – Which states that an omission of
any provision from the Escrow instructions does not preclude any party from enforcing
that provision.
F. Proration – States that any and all taxes, HOA fees, payments on bonds and assessments,
security deposits, etc. shall be prorated as of the date of recordation, and credited to the
Buyer at the close of Escrow.
G. Reassessment of Property Tax - Advises Buyer that the property may be reassessed upon
change in ownership, resulting in a tax increase or decrease.
H. Systems and Maintenance – Seller must maintain the property in it’s entirety, including
all buildings and grounds, appliances and systems, in a neat and clean condition, with all
debris removed, and in proper working order, until possession is delivered. Any items or
systems to be excluded are noted here.
I. The Home Warranty Contract - Provides for the purchase of a Home Warranty for a
period of one year from the close of Escrow. This can be included or waived by the Buyer…
with the selection of the warranty provider, and party paying for the contract indicated by
checking boxes next to ‘Buyer’ or ‘Seller’ in each case.
J. Common-Interest Community Disclosure – States if property is located in a Common
-Interest Community. If so, then the party responsible for paying the Association Transfer
Fee. Also, states that resolution of any delinquent fees or assessments, must be paid current
by Seller at close of Escrow. Seller must disclose knowledge of any upcoming or pending
assessments. The payer of existing assessments, and assessments levied, but not yet due,
can be selected. A ‘Resale Package’ must be provided to the Buyers of Common-Interest
properties, and they have 5 days to review. If Buyer does not approve ‘Resale Package’ they
must give written notice to cancel within that same 5-day period.
K. Area Recreation Privileges and Rules – Seller must relinquish to Buyer, on or before the
close of escrow, all passes, identification cards, or keys to the Common-Interest Community’s
recreational facilities or pay for replacement of same.
THE O & A - PAGE 4
A. Items Not Addressed – General maintenance items, or those which are cosmetic in nature,
which do not materially affect the value or use of the property, and existed at the time of the
contract, and are not expressly addressed in the agreement, are deemed accepted by Buyer.
B. Inspections And Final Walk-Thru – If the contract is accepted, the Buyer has the right to
have the property inspected by licensed contractors, certified building inspectors, and by
qualified professionals.
1. Buyer may choose from many kinds of inspections, and while the most common are
listed, and space for ‘other’ inspections is provided.
NOTE: When buying ‘older properties’, it is a good practice to have the sewer line
inspected by a video camera.
2. The party paying for each of the inspections is designated.
3. All inspections are to be completed within a specified time frame from the date of
contract acceptance.
4. Which party will pay for any re-inspections.
5. Buyer at Buyer’s expense, will furnish seller with copies of all inspection reports,
together with a list of required repairs.
6. Seller agrees to provide reasonable access to property to Buyer and inspectors.
7. Buyer has the right to a final Walk-Thru inspection no later than an agreed upon
time frame prior to the close of escrow.
C. Limitation of Repair Costs - The Seller agrees to pay for, and to complete repairs in
an amount NOT to exceed the total sum specified here for conditions indicated on the
Appraisal Report; The Systems and Maintenance of this agreement; from Inspections;
The Final Walk-Thru; or for defects on the ‘Seller’s Real Property Disclosure’.
NOTE: Repairs do NOT mean upgrades! Examples: A Seller cannot be compelled to ‘repair’
a broken single-pane, metal-frame window, by replacing it with a dual-pane, vinyl-frame one.
Also, the Seller is not require to install GFI receptacles, if they were not ‘code’ when the home
was built.
D. If improvements of the property are destroyed, materially damaged, or is found to be
defective prior to the close of Escrow, the Buyer may terminate the purchase agreement by
a written notice to the Seller’s Broker, and the earnest money deposit shall be returned to
the Buyer.
NOTE: Fees for completed inspections and the appraisal which are normally paid at the
close of Escrow, may be deducted if Buyer had previously agreed to pay them.
THE O & A - PAGE 5
A. Oil And Propane – If applicable, any existing heating oil or propane needs to be addressed
and accounted for. It can be included in the sales price; Purchased separately by the Buyer;
Or the Seller given a credit at the close of escrow. In the last two cases, the existing fuel in the
tank needs to be measured by Fuel Company. This should be done no later than 5 days before
the close of Escrow.
B. Physical Possession – While ownership of the property occurs upon recordation of the
deed, and physical possession of the property by the Buyer is possible at that time, per a
separate agreement, the Buyer’s physical possession of the property can be postponed for a
period of days, or even a much longer period with a rent-back agreement. However, the
Seller must relinquish all keys to property locks, community mailbox keys, garage door
openers, alarm and security codes,combinations, plus any equipment manuals, warrantees,
and remote operators.
C. Verification of Information – This is a rather wordy item, which basically states that;
‘Any information relating to square footage, land or its use, and/or improvements of the land
are approximate or estimates only.’ What this means is that neither the Seller, the Brokers
involved, or The Multiple Listing Service make any representation of, or any warrantees
guarantees regarding the accuracy of this information, since errors can and do happen.
And any oral or written representations by the Seller or Brokers regarding the age of any
improvements, the size and square footage of the parcel and buildings, or the location of
property lines may not be accurate.
NOTE: Apparent boundary/property line indicators, such as fences, hedges, walls, or other
barriers, may not be the true boundary lines of the property. Also, Brokers are not obligated
to investigate the status or existence of permits, zoning, and building code compliance.
The Buyer must satisfy any concerns with conditions which are an important or critical
element to the purchase decision. Buyer is responsible for verifying the accuracy of pertinent information. Example: Getting a survey performed to verify property lines, and easements.
Seller agrees to hold harmless, defend, and indemnify all Brokers in the transaction, from any
claim, demand, or action resulting an information error, omission, or alleged omission from
the Seller’s statements.
D. Fixtures – States that all items permanently attached to the property as of the date of the
offer are included in the purchase price, and are free of liens. This includes, but not limited to,
light fixtures, attached floor coverings, draperies, blinds and shades, awnings, satellite dish,
fire and smoke alarms, electric garage door openers, outdoor plants and trees, other than in
movable containers, etc. There is space provided where items to be excluded can be entered.
NOTE: What this means is that the dining room chandelier which you want to keep, will have
to be noted as an exclusion, then replaced by the Seller. It’s a good idea to have items like this
noted in the MLS listing as being excluded.
E. Personal Property – In this item, the Seller’s personal property, which is on the premises
when inspected by the Buyer, is included in the purchase price, and is transferred to the Buyer
free of liens, at the close of Escrow, with no warranty implied as to condition. Space is provided
for listing the items of personal property the buyer wishes. Most common personal items are
the refrigerator, washer, and dryer.
NOTE: Again, it is a good idea to announce that these items are a part of the sale in the MLS
listing. But another way is to state in the listing that these items are available to be purchased.
F. Water Rights – If any, are included with the property, unless specifically excluded by deed
or by a mutual agreement.
G. Water Meters – If no water meter currently exists, the Buyer may be required at some future
date to incur the costs of installation of a water meter to the property, and/or conversion to
metered rates.
H. Wells – If the property includes a private well, the Buyer may be required, at some future
date to incur the costs of connecting to a public water system. See Reno-Sparks Association
of Realtors forms; ‘Authorization for Release of Water Quality and Water Quantity Testing
Results’, and ‘Information Regarding Private Wells and Septic Systems’.
NOTE: Some areas may include/impose additional fees for the remediation of water Systems.
I. Septic Systems – If the property is on a septic system, the Buyer may be required, at some
future date, to incur costs of connecting to a public sewer system. Again, see the RSAR form,
‘Information Regarding Private Wells and Septic Systems.
NOTE: At the close of Escrow, The Buyer assumes all future costs associated with Water Meters,
Private Wells, and Septic Systems.
J. Private Roads – If property shares a Private Common Road, Access Driveway, or Right of
Way with other property(s), the Seller must disclose the existence of any Road Maintenance
Agreement(s).
K. Land Use Regulation – The Buyer is advised the property may be subject to the authority
of the Federal Government, State, County, Tahoe Regional Planning Agency, City, and/or
various courts having jurisdiction. And that land use, and environmental restrictions may
apply restricting New Construction, Expansion, Remodeling, Rebuilding of Buildings, and
other improvements. The Broker makes no representations or warranties regarding existing
permissible uses of the property, or to any future revisions of any use regulations.
L. Environmental Conditions – Buyer is advised the property may be located in an area
found to have special flood hazards as indicated by FEMA; Avalanche Conditions; Snow
Loads; Freezing Temperatures; Seismic Activity; and/or Wild-Land Fires. It may be
necessary to purchase additional insurance in order to obtain a loan from any Federally
Funded Financial Institution.
THE O & A – PAGE 6
A. Tax Withholding (FIRPTA) – This item addresses the sale of property by a Foreign
Investment (Seller). Unless the property is acquired for use as a primary residence, and
is sold for less than $300,000.00 - The Seller provides the Buyer with a ‘Non-Foreign Seller
Affidavit, or an IRS Withholding Certificate through the Escrow Company.
If this is not the case, the Escrow Company must withhold 10% of the Gross Sales Price,
under the ‘Foreign Investment and Real Property Tax Act’.
B. Tax Deferred Exchanges – If either the Buyer or Seller wishes to participate in an IRC
Tax Deferred Exchange on the property in this transaction, each party agrees to cooperate
with the other party in connection with such an Exchange, including the execution of all
reasonably necessary documents to effect the Exchange.
However: Neither party shall be obligated to delay the closing; The party requesting the
Exchange shall bear all additional costs; The other party is not obligated to execute any
note, contract, or other document which will survive the Exchange; And the other party
shall be indemnified and held harmless from any liability arising from the Exchange.
C. Additional Terms And Conditions – This is where the Buyer requests the Seller to agree
to hereby stated terms and conditions not specifically covered in this document.
Examples:
D. The Following Have Been Received and Acknowledged By Buyer – This is a checklist of the Documents the Buyer has already been given, and supposedly has read. Hopefully to preclude
any Buyer claims of not being informed or misinformed.
E. The Following Addenda and Exhibits are Attached and Incorporated – These Documents
cover such items as Residential Disclosure, Lead Based Paint, Range Land, Water Quality and
Quantity Testing Results, Manufactured/Mobile Home Disclosure, Financing Addendum, and
Consent to Act, which may or may not apply to this transaction.
F. Fax Transmissions – This item states that the facsimile Transmission of a signed copy
hereof, or of any counter offer/attachment to the other party, or the Broker, shall constitute
delivery of said signed documents. Faxed signatures may be accepted as originals.
G. Time Is Of The Essence – Means just what it says – Time limits are set for a response to
this offer by the Seller, and for a response to a counter from the Seller by the Buyer.
H. Nevada Law To ApplyNevada Law shall apply in the interpretation and enforcement of this Agreement.
I. Dispute Resolution – FYI only – Both parties are made aware a Dispute Resolution Service
is available from the Local Board of Realtors, should a dispute arise between Buyer and Seller.
A DRS brochure is available from the Local Board of Realtors upon request.
J. Attorney Fees – In the event either party is required to engage an attorney to enforce this
Agreement, the prevailing party will be entitled to an award of reasonable attorney’s fees,
legal expenses, and costs.
K. Code Of Ethics – Not all real estate licensees are Realtors. A Realtor is a member of the
National Association of Realtors and therefore subscribes to a higher ethical standard in the
industry, known as the Realtor Code of Ethics. To receive a copy of the Realtor Code of Ethics,
ask your agent, or the local Association of Realtors.
L. Professional Consultation Advisory – A real estate Broker is qualified to advise clients on
real estate matters and issues. The parties are advised to only consult with professionals in
regard to all other aspects of this transaction.
THE O & A – PAGE 7
A. Brokerage Fee – The Seller agrees to pay in cash from Escrow, as a commission to the
Buyer’s Broker, the percentage of the accepted price as shown in the MLS listing, or cash
amount as set forth here, if not an MLS listing. The Listing Broker’s fee is set forth in the
listing document.
B. Expiration of Offer – Here the Buyer indicates the date and time this offer will expire,
unless acceptance or a counter-offer is received by the Buyer.
C. Entire Agreement – This document, and the documents incorporated and attached,
comprise the entire agreement of the parties, and supersede all prior Agreements. This
agreement may be modified only in writing, which is signed and dated by both parties.
Both parties affirm that they have not relied on any statements of any real estate Brokers
which are not herein expressed.
By signature(s) below the Buyer(s) acknowledge having read and approve of each of the
items and provisions of this Agreement, and agrees to purchase the subject property for
the price, and on the terms and conditions specified. Buyer acknowledges receipt of a
copy of this Agreement, as delivered to the Seller’s Broker.
D. The Buyer(s) then Sign and Date. The Buyer’s agent fills out the contact info for
themselves and the Buyer’s Broker.
E. By signature(s) below the Seller(s) acknowledge having read and approve of each of the items
and provisions of this Agreement. Seller acknowledges a copy of this agreement as delivered to
the Buyer’s Broker. Authorization is given to the Brokers in this agreement to deliver a signed
copy to the Buyer, and to disclose the terms of the sale to members of the MLS or Association
of Realtors at the close of Escrow.
E. Seller’s Acceptance, Counter Offer, or Rejection of Agreement -- The Seller(s) then checks
one of these three options. Then the Seller(s) sign and date the Agreement. The Seller’s agent
fills out the contact info for themselves and the Seller’s Broker.
A Final Note: Each page of the O&A must be initialed by the Seller(s) to indicate that they have
read the page, and understand the provisions therein, which have been explained by their agent.
So it only makes good sense to have an experienced, and knowledgeable agent representing you.
