All About Purchase Agreements
A purchase agreement is a contract that obligates two parties to do business with one another. Purchase agreements commonly cover the sale of real property and personal property. There are many different types of purchase agreements, and they can range in complexity and length. Purchase agreements can involve small, low-risk transactions, or they can involve large, multi-million-dollar deals. The term "purchase agreement" is generally used in transactions involving real estate property and goods or services, while the term "sales contract" is more commonly used in transactions involving only goods or services. A purchase agreement is essentially an offer for an exchange of something. In many situations, the buyer offers something in exchange for the seller’s property or services. Conversely , the seller may offer a service or property in exchange for the buyer’s money or some other type of property. Purchasing agreements are often used in connection with the sale or purchase of real estate property, manufacturing parts or equipment, employment agreements, natural resource rights, and mineral extraction rights. Additionally, there are different categories of purchase agreements. Retail trade purchase agreements are common for buying most consumer items at retail from a vendor, while wholesale trade purchase agreements are generally used when the consignment is for further distribution. Online and media purchase agreements are product purchase agreements that apply to intangible property sold through the Internet, and streaming or other broadcast services, generally.
Requirements in Law and Notarization
To fully understand the importance of notarization in the home-selling process, it is best to explore the general legal requirements of notarizing documents. A notary public serves as a witness to the signing of important documents, including purchase agreements. During the closing process of selling a house, there is a good chance that all parties involved will sign more than a few documents. If you are wondering if notarization is required, the answer will depend on the document and where you live. However, notarization is generally required for any document that will be filed in public records. This is why most documents related to real estate transactions will require an official notarization, although a notary public may waive the notarization if the buyer and seller are not obtaining financing.
Despite the fact that a notary public does not need to be present for every document signed, a notary public must be present when the actual purchase agreement is signed. Some people believe that notarization is an essential part of the entire financial process. However, the purpose of notarization is to prevent fraud. Therefore, it is critical to avoid deceptive practices during a home sale. In order for a notary public to execute notarization, they must ensure all details of the transaction are available. To accomplish this, they usually have a one-on-one meeting with the buyer and seller, which may be done at the lawyer’s office or via video conferencing.
When You Must Have Notarization
In some jurisdictions, certain types of purchases may trigger notarization requirements, usually as a result of state law. In those cases for which notarization is required it should be noted that persons executing the purchase agreement outside of the U.S.—even if notarized—may not be sufficient for recordation in the United States, as each jurisdiction has its own notarization requirements. If notarization is required, it may be advisable to have the same notary sign in the jurisdiction in which the property is located in addition to the signing in the state where the signer is located.
Why Notarizing Your Purchase Agreement is Helpful
Notarization of a purchase agreement is not a legal requirement for the validity of a contract. However, signing in front of a state-authorized witness carries a number of benefits that could create a safer deal. A notarization gives your agreement a higher-level official "seal," providing greater credibility when the organ of the state issues it. For legal protection, this is the preferred route.
So why else should you have a purchase agreement notarized? Notarization protects you against forgeries and fraud. Not only are you required to prove who you are when signing, but additional verification is needed should a dispute arise. The notary is a witness of the entire process, including the terms of the agreement. In case of a challenge, you will have another person willing to lend testimony on your behalf. The notary’s job is to ensure that you know what you’re signing, understand the implications and advise you of your rights.
However, the notary public is not your public defender. Having your purchase agreement notarized does not mean you’ve hired a lawyer. It’s wise to speak with a Real Estate professional whenever you enter into a real estate transaction.
State Laws for Notarization
Notarization requirements for purchase agreements may vary from state to state. One must also keep in mind that state notary laws are specific to those who are providing notary services—not the persons whose signatures are being notarized. The following are rules specific to California, Texas, and Florida. Please be sure to refer to the law in each respective state.
California
When it comes to California properties, notarization of the signatures in a purchase agreement is not required and dual agency is allowed in California. However, if the transaction involves property in another state, the signing persons will want to check that state’s laws to determine whether notarization is required and whether dual agency is allowed. In California, notaries are allowed to charge $10 per signature. (Cal. Gov. Code § 8202.) In addition, a notary is prohibited from acting as notary public in any transaction where she is a party or has a financial interest. (Cal. Gov. Code § 8223.) An exception to this rule is if the notary is an employee of the financial institution. (Cal. Gov. Code § 8223(b).) While the California Department of Insurance does regulate notaries who are employees of the insurance companies, the Department does not regulate the general activities of all notaries .
Texas
Similar to the law in California, notarization of signatures in a purchase agreement is not required when purchasing real property in Texas. As with California real estate, one must check Texas law if a purchase and sale agreement concerns property in a state other than Texas. Dual agency is allowed in Texas as well. In Texas, a notary is entitled to more than $10 per signature if the services performed by the notary exceed a negligible amount of time or effort. (Tex. Gov. Code § 406.024(1)(A)(i).) However, the notary cannot charge more than $1 per mile traveled for travel fees. (Tex. Gov. Code § 406.024(1)(A)(ii).) A notary is prohibited from receiving a fee greater than $15 for taking the proof of a deed. (Tex. Gov. Code § 406.024(1)(B).)
Florida
In Florida, if an entity (such as a corporation, partnership or limited liability company) is buying or selling real property, the signatures on the purchase agreement must be notarized by a Florida notary public. (See Fla. Stat. §117.05(3) and §117.045(1).) Notaries who are not employees of financial institutions may not charge more than $10 for performing notarial services. (Fla. Stat. §117.045(5).) If a notary is an employee of a financial institution, he or she may charge up to $20 per signature for notarization. (Fla. Stat. §117.045(5)(c)(2).)
How to Get a Purchase Agreement Notarized
Gather the necessary information: and documents. Ensure that you have all required parties’ full printed names, signatures, and the details of the transaction such as the names of buyers and sellers, purchase price and address of the property. You may also need proof of identification for all signatories. This might include a driver’s license, passport, or other government-issued ID.
Make an appointment: Reach out to a notary public in your region. Many businesses, banks, law firms, and postal services have notaries on staff. You can also find a local notary via the American Association of Notaries or the National Notary Association. Make an appointment. Some notaries may allow walk-ins, but it’s more efficient to make arrangements in advance.
Meet with the notary: Ensure that all parties to the purchase agreement be present. Bring all necessary documents and identification. The notary will verify the signatories’ identity.
Affix your signature: Sign the document in the presence of the notary. The notary will then attach their official seal to the document.
Keep your copy of the purchase agreement: after notarization has taken place, keep a copy of the notarized agreement for your records.
Notarization and Common Misbeliefs
Just as there are people who do not understand the purpose of insurance policies and have them anyway, there are those who do not understand what notarization is and pursue it maniacally. The following are not universal, but most states will agree that the purpose of notarization is to give a signature its most authentic form. It provides authenticity, not reliability. Just because the name scrawled on a contract or deed with a big, juicy "X," is the same name as that on a driver’s license or a government issued card, does not mean that the person whose name it was is prepared or entitled to sign, see, read, whatever, the document in which he or she claims to give his or her consent. Under this logic, deciding whether an agreement is enforceable hinges on the validity of the signature rather than the merit of the deal. In fact, under Uniform Commercial Code (UCC) section 3-401, the governing law for negotiable instruments, if the signatory lacked capacity or authority, the signature was forged or the person was the victim of fraud, the signature is still valid for purposes of determining enforceability by holders in due course. Notarization is not compensation for one’s signature. Just because a person pays a witness, or a notary public to put his or her name on a costly document, does not mean the document is binding. Cashing the check earned by that signature is an even worse method of finding out whether the signature was legitimate. This unscrupulous but sometimes irreversible process renders fraud not just possible, but certain. However, when it comes to purchase agreements, the worst that can happen is a purchase is made to which the signer never consented. While that can be devastating, at least the person who purchased the item is happy, satisfied, and in possession (see UCC section 2-403). Notarization is not a guarantee that the document is admissible in court. It is only a guarantee that the signature upon it is authentic. Authentication does not make an otherwise invalid document valid. If the contents of the document would otherwise be considered judicially unenforceable, authentication of the signature will not cure that defect. Courts can still deny enforcement even of notarized documents if the parties and their intentions are not fully revealed by the document itself.
Final Thoughts on Notarization and Advice from an Attorney
In any public or private transaction, there are many factors that are taken into consideration before moving forward; the same rules apply to notarization. When it comes to a purchase agreement, whether a notary is needed will depend on the unique situation of the property, the agreement, and the parties involved. For instance, while a notary may not be necessary for a sales or jural agreement if it is for a residential home and the buyer and seller are both present, there may be scenarios in a commercial property where an agreement absent from notarization can cause headaches for the new owners if a dispute arises later .
The main points to take away from this article are: some purchase agreements require notarization presumptively, while others can still be valid without it. It should be noted that each state has its own laws regarding real estate transactions, and therefore, these are simply for guidance and do not make up the entirety of what needs to be known about the process. By consulting with a legal professional who has detailed knowledge of the village, city, county, or state you are buying or selling a property in, you can be sure that notarization of your purchase agreement is appropriate (or not), and how to proceed in either case.