Purchase and Sale Agreement (PSA)
A purchase and sale agreement is the binding contract governing a commercial real estate transaction — it follows the LOI and controls price, contingencies, representations, and closing mechanics.
What it means
The PSA is the operative document for closing. Core terms include: purchase price, deposit schedule and escrow terms, due diligence period and termination rights, representations and warranties (on title, environmental, leases, financials), conditions precedent to closing, risk of loss, and default remedies.
PSAs are heavily negotiated. Buyer protections include a due-diligence out (termination right during a specified period), financing contingency, clean title, tenant estoppels as a closing condition, and survival of reps for a period post-closing. Seller protections include hard deposits, limited reps, and narrow survival.
Related terms