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Another important contract that everyone should know is the sales contract and the agreement to buy and sell. Do you know the difference between them? Pacharakrit Property Co., Ltd. will explain and provide examples to show you the differences and what they look like. Because sales contracts and agreements to buy and sell have very similar names and aspects, many people may misunderstand. Let’s take a look together.
A sale and purchase agreement is a contract whose purpose is to reserve and pay a deposit before the actual purchase and sale takes place. This is because it precedes the transfer of ownership of a property, such as a house or condominium, as some properties may be under construction or awaiting a loan. Therefore, a sale and purchase agreement is created to establish a definite purchase and sale agreement.
Trick: A purchase and sale agreement is formed at the beginning of the purchase process.
A sales contract is a written agreement used for the purchase and sale of real estate, also known as a definitive sales contract. It signifies the transfer of ownership from the seller to the buyer on the day the contract is made. This type of contract must be registered with an official at the Land Department to be considered complete and legally valid.
Trick: A sales contract is finalized at the end, or when the purchase and transfer of ownership are complete.
Summarize the differences.
| Differences | Agreement to buy and sell | Sales contract |
| Legal consequences | Even a verbal agreement has legal effect. | It has legal effect only when registered with the authorities. |
| Intent of the contract | Prepare for buying, selling, and awaiting transfer of ownership in the future. | There is an intention to buy and sell, and then transfer ownership. |
| Refunds and lawsuits. | The buyer must receive a full refund of the deposit if the seller is at fault. Conversely, the seller can forfeit the deposit if the buyer is at fault, or file a lawsuit to enforce the sale. | The seller must refund the buyer. If they fail to do so, they can be sued for fraud, but they cannot sue to force a sale. |
By now, you probably have a good understanding of what these two contracts are and how they differ. So, let’s not wait any longer and take a look at their formats.
We hope the information we’ve shared today will be somewhat useful to our readers. Before entering into any legal transaction or signing any contract, it’s essential to have knowledge and understanding of the contract and its terms. Otherwise, you may fall victim to fraud. Pacharakrit Property Co., Ltd., a leading real estate investment consulting firm specializing in property sales, mortgages, and loan applications, is happy to assist you. If you’re interested in our services after reading this, please feel free to contact us for a free consultation!