Real Estate specialists say many consumers don’t understand the legal implications of purchase and sale agreements when they sign, particularly the clause that says that deposits can be forfeited to the seller if the buyer does not live up to their end of the deal namely purchasing the property.

The recent experience of a couple who wished to buy a duplex condo shows the perils hidden in purchase and sale agreements. The couple signed a purchase and sale agreement and wrote a check to the Realtor for $5,000, since a "good faith" deposit - standard procedure - was necessary to ensure the offer was serious and would later be put toward the down payment. however, although the couple qualified for a mortgage no lender would provide them financing within days of the agreement because of problems with the condo documents.

In addition, when the couple returned to the Realtor to get out of the deal, they were told that they would lose their $5,000 if they didn’t buy the house. Like many home buyers, the couple never suspected that they could lose their deposit if the sale did not go through. Standard purchase and sale agreements, in which a buyer presents an offer to the seller, make the deal contingent upon successfully obtaining financing and a home inspection just in case the buyer can’t get a loan or there are unforeseen structural issues with the house. Purchase and sale agreements are binding agreements recognized buy courts as specifically enforceable.

Both buyers and sellers should be knowledgeable about what their responsibilities are and what is likely to happen in the course of the purchase and sale of a home. An attorney should look over any purchase and sale agreement before it is signed.