Buying and Selling Property in Washington: What You Are Actually Signing

What does a Washington purchase and sale agreement commit you to?

A purchase and sale agreement is an enforceable contract to convey land, and in Washington every conveyance of real estate, along with every contract creating an encumbrance on it, must be by deed. RCW 64.04.010. The agreement is the promise; the deed is the performance. Most of what goes wrong happens in the gap between the two.

The agreement fixes the price, the closing date, who pays which costs, what personal property stays, and the condition of title the seller has to deliver. Preprinted forms generally require title to be marketable, which Washington courts have described as title free of reasonable doubt that a reasonably informed and intelligent purchaser would accept. Marketable does not mean perfect, and it does not mean free of every recorded restriction.

That is where buyers get surprised. A recorded easement across the back of the lot, or a covenant forbidding the shop building you intend to put up, may not make title unmarketable at all. The seller can still be fully entitled to close. The problem belongs to you.

How do contingencies work, and why do deals die there?

A contingency makes your obligation to close depend on something happening first. The common ones are financing, a general inspection, review of the title report, and the sale of your current home. Two features matter far more than people expect.

Both sides owe good faith. When both parties accept an agreement containing a contingency, each has a good faith obligation to try to fulfill it. A buyer who simply stops returning the lender's calls is not safely walking away.

The approval standard is not what most people assume. For a contingency to be subject to your approval in your sole discretion, rather than a reasonable discretion standard, the language has to say so specifically. Whether your form says sole discretion or says nothing is the difference between an unreviewable decision and one a court can second-guess.

The financing contingency shows why the drafting matters. Where financing is a true condition precedent to closing and the buyer makes good faith efforts and still cannot obtain the loan, the buyer is not in default, the failure to close is excused, and the earnest money comes back. Restructure that clause and the same buyer, acting identically, forfeits the deposit.

What happens to my earnest money if the deal falls apart?

Washington has a statute on this, and it is more specific than most people expect. A provision making forfeiture of the earnest money the seller's sole and exclusive remedy, where a party fails without legal excuse to complete the purchase, is valid and enforceable regardless of whether the seller incurred any actual damages, so long as the amount does not exceed five percent of the purchase price. RCW 64.04.005(1).

Within five percent, the seller keeps the deposit without proving a single dollar of loss. Above five percent the statutory safe harbor simply does not apply, and the clause is interpreted and enforced without regard to the statute, under the common law. RCW 64.04.005(3).

So the size of the deposit relative to the price changes the legal rules governing it. A buyer putting down a large deposit to make an offer competitive is making a legal decision, not only a financial one.

What is the Form 17 seller disclosure statement, and what does it cover?

Chapter 64.06 RCW requires the seller of residential real property to deliver a completed disclosure statement, commonly called Form 17, on a form set out in the statute itself. The improved residential form is at RCW 64.06.020 and the unimproved form is at RCW 64.06.015. The statutory forms get revised, and the version printed in the RCW is the one that controls.

The timing is tight. Unless the buyer waived the right to receive it, the seller delivers the statement not later than five business days after mutual acceptance or as otherwise agreed, and the buyer then has three business days, or as otherwise agreed, either to approve it or to rescind the agreement. RCW 64.06.030. If the buyer says nothing in that window, the statement is deemed approved.

The limit on seller liability disappoints people on both sides. A seller is not liable for an error, inaccuracy, or omission in the disclosure statement if the seller had no actual knowledge of it. RCW 64.06.050(1). Form 17 discloses what the seller actually knows. It is not a warranty, it is not an inspection, and a seller who genuinely did not know about the failing drain field has not violated the statute by failing to disclose it.

Several transfers are exempt from the chapter entirely, including foreclosures and deeds in lieu, certain family transfers, and transfers by a personal representative or bankruptcy trustee. RCW 64.06.010. A buyer may also expressly waive receipt, with one carve-out: the buyer cannot waive the Environmental section if the answer to any question in it would be yes. RCW 64.06.010(7).

The statute does not replace your other claims. Nothing in the chapter extinguishes a buyer's existing rights against a seller or a seller's agent under common law, statute, or contract, and nothing in it creates any new remedy beyond the rescission it describes. RCW 64.06.070. Fraudulent concealment, misrepresentation, and in some circumstances a Consumer Protection Act claim against an agent live outside the Act.

What does escrow do, and what happens at closing?

Escrow is a neutral third party holding the money and the signed documents until both sides perform. Escrow does not represent you, does not advise you on whether the deal is good, and will not tell you that the easement on the title commitment prevents the use you bought the land for.

Closing ends with recording, and in Spokane County deeds and deeds of trust are recorded with the Spokane County Auditor. Recording is not a formality. An unrecorded conveyance is void as against a later good faith purchaser or mortgagee for value from the same seller whose conveyance is recorded first, and an instrument is deemed recorded the minute it is filed for record. RCW 65.08.070(1). The race to the recorder's office is a real race.

Where this goes wrong

Buyers who waive contingencies to win a bidding war. In a competitive market the quickest way to make an offer attractive is to delete the protections. That works until the furnace, the roof, or the lender turns out to be a problem, and then there is no contingency to invoke and the earnest money is at risk under a clause the buyer never read. Waiving an inspection is a decision to buy the house in whatever condition it is actually in.

Sellers who shade a Form 17 answer. Because liability turns on actual knowledge, the dangerous answers are not the honest "don't know" ones. They are the ones where the seller knew something, chose a softer answer, and left a paper trail. The disclosure statement is signed, dated, and sitting in the file years later, which is exactly when a buyer's lawyer reads it.

Anyone who signs a form agreement with terms they never read. These forms allocate risk with real precision. Whether approval is in your sole discretion, whether a deadline runs in business days, whether the deposit is above or below five percent, whether financing is a condition precedent or a representation. All of these change the outcome, and none of them announce themselves.

Both sides treating the title commitment as somebody else's job. The exceptions in a title commitment are where easements and recorded restrictions appear, and the window to object is short. That document deserves its own read, which is why I wrote separately about how to read a preliminary title commitment.

What a lawyer does here that you cannot do yourself

Most of the value is not in drafting from scratch. It is in reading what you are about to sign against what you actually want the property for, and knowing which preprinted terms are negotiable and which are load-bearing.

In practice that means checking whether the contingency language gives you the approval standard you think you have, sizing the deposit with RCW 64.04.005 in mind, reading the title exceptions against your intended use rather than a generic standard of marketability, and calculating the Form 17 and contingency deadlines in business days from the right trigger date. It also means saying plainly when the problem in front of you is a legal problem and when it is a price negotiation, because those get handled differently and confusing them is expensive.

That is the work I do. I am an independent attorney in downtown Spokane, admitted in both Washington and Oregon, which helps on transactions and disputes that straddle the state line. Real estate is the largest part of my practice: residential and land purchase and sale transactions, title and survey review, disclosure disputes, earnest money fights, easement and boundary matters, and quiet title litigation, in superior courts across Washington, most often in Spokane, Klickitat, Kittitas, Benton, Franklin and Yakima counties.

If you want a second set of eyes

A short conversation before a deadline passes is worth considerably more than a long one afterward. I offer a free initial consultation by appointment at my downtown Spokane office.

Disclaimer

This article is general information about Washington law, not legal advice, and reading it does not create an attorney-client relationship. Law changes, and how it applies depends on facts specific to your situation. If you have a question about your own circumstances, speak with a lawyer.