Purchase & Sale Agreements
Who Prepares The PSA?
In a land transaction, the Purchase and Sale Agreement (PSA) is the key legal document for the agreement between the seller and buyer. Also possibly referred to as the land contract, this agreement will stipulate the price and a host of terms and conditions. Attorneys for both sides will play important roles in the negotiation and execution of this important document.
Depending on who the buyer and seller might be, the initial draft of the PSA can be generated by either party. The offer or Letter of Intent will often indicate which party will produce this initial draft. As a general rule, each party probably wants to start with their own PSA boilerplate as it has more familiarity to each. If you are large master developer with many land buyers lining up to buy your land, it is a good probability that the seller will be preparing the first draft. If the seller is a small private land owner with limited experience in land sales, the parties may agree that the buyer can produce the initial draft. For everything in between, it is negotiable.
But keep in mind that this initial draft is the just the beginning of the process. If the seller produces the first draft, the land buyer and attorney will be reviewing and eventually will provide a redline draft indicating proposed revisions to the document. The seller and attorney will review the proposed revisions and likely create the next redline draft that counters the buyer’s revisions. The process can result in multiple redline drafts from each party, with many times a face-to-face meeting being required to resolve final issues and get to a final PSA document ready for signatures.
Thus, one party prepares the initial PSA draft, but the final PSA is really a result of both parties negotiating and inserting their comments and revisions. Depending on buyer and seller, this PSA negotiation process can go as quickly as a week but often may take 4 – 6 weeks to reach the final agreement.
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