A Tennessee purchase and sale agreement is the written contract that governs a residential real estate transaction from accepted offer through closing, setting the price, deadlines, disclosures, contingencies, and default remedies that bind both buyer and seller. Tennessee’s Statute of Frauds requires any contract for the sale of land to be in writing and signed by the party against whom enforcement is sought, so a verbal deal on a house is not enforceable.1Justia. Tennessee Code 29-2-101 – Writing Required for Action Most agents work from the Tennessee Association of REALTORS® form (RF401), but the obligations below apply whichever form sits on the closing table.
What the Contract Has to Contain
Several categories of information have to be right for the agreement to hold up. The parties’ full legal names must match their government identification exactly, because mismatches cause problems during title work. The property needs more than a street address. A formal legal description, pulled from the county register of deeds and including the map, parcel number, or lot information, fixes the exact boundaries of what is being transferred.
Financial terms sit at the core. The total purchase price is stated in U.S. dollars, along with the earnest money deposit the buyer puts up to show good faith. The agreement identifies how the buyer plans to pay: conventional loan, FHA or VA mortgage, or cash. The standard Tennessee form treats time as “of the essence,” so every deadline it contains, from the inspection window to the closing date, carries real consequences when missed.
Fixtures and Personal Property
One of the most common disputes before closing is what stays with the house and what the seller takes. Items permanently attached, like ceiling fans, built-in appliances, and light fixtures, are generally treated as part of the real estate and transfer with it. Portable items the seller can unplug and carry out, such as a freestanding refrigerator or window air conditioner, remain the seller’s personal property unless the contract says otherwise. If the buyer wants the backyard shed or the mounted television, that has to be written into the agreement. Vague assumptions about what “comes with the house” are where these disputes start.
Seller Disclosures You Should Expect
Tennessee’s Residential Property Disclosure Act, at T.C.A. §§ 66-5-201 through 66-5-213, applies to sales of residential property with one to four dwelling units, including site-built and manufactured homes.2Justia. Tennessee Code 66-5-201 – General Provisions The seller has to deliver a written disclosure or disclaimer statement to the buyer before the purchase contract is fully executed by all parties.3Justia. Tennessee Code 66-5-203 – Delivery of Disclosure or Disclaimer Statement The disclosure can be included in the contract itself, attached as an addendum, or delivered as a separate document.
Disclosure vs. Disclaimer
Tennessee gives sellers two options under T.C.A. § 66-5-202. The first is a residential property disclosure statement, which requires the seller to identify known material defects such as structural problems, roof issues, or mechanical failures. The second is a disclaimer statement, but a seller can only use a disclaimer if the buyer agrees to waive the full disclosure.4Justia. Tennessee Code 66-5-202 – Required Disclosures or Disclaimers If the buyer does not waive, the seller must provide the full disclosure statement. Buyers should think carefully before agreeing to a disclaimer, because it removes one of their main sources of information about the property’s condition.
Lead-Based Paint and Impact Fees
Federal law adds a layer for homes built before 1978. Sellers and their agents have to disclose any known lead-based paint or lead-based paint hazards before the contract is signed.5US EPA. Lead-Based Paint Disclosure Rule (Section 1018 of Title X) The rule applies to most private, public, and federally assisted housing.
Tennessee also requires a separate disclosure when a dwelling is being sold for the first time. Under T.C.A. § 66-5-211, the seller has to tell the buyer the amount of any impact fees or adequate facilities taxes paid to a city or county on the parcel being transferred.6Justia. Tennessee Code 66-5-211 – Disclosure of Impact Fees or Adequate Facilities Taxes These fees are common in new developments and can run into several thousand dollars depending on the locality.
When Disclosures Are Wrong or Missing
The consequences of a disclosure problem in Tennessee are more nuanced than most buyers expect. If a seller provides a disclosure statement but misrepresents the property’s condition, the buyer has three potential remedies under T.C.A. § 66-5-208: a lawsuit for actual damages caused by defects that existed when the contract was signed, termination of the contract before closing, or other legal or equitable remedies if the misrepresentation was intentional.7FindLaw. Tennessee Code Title 66 Property 66-5-208 A damages claim has to be filed within one year of receiving the disclosure statement or the closing date, whichever comes first.
If a seller simply fails to provide any disclosure or disclaimer at all, Tennessee law does not create a standalone cause of action for that failure. The buyer still has whatever legal claims would exist independently, such as fraud or failure to disclose material facts, but the disclosure statute itself does not add a penalty for skipping the form entirely.7FindLaw. Tennessee Code Title 66 Property 66-5-208 The failure also has no effect on the property’s title.
Contingencies and Their Deadlines
Contingencies are the exit ramps built into the agreement. They let the buyer out of the deal when inspections turn up serious problems or financing falls through. Each contingency comes with a deadline, and missing that deadline usually means the buyer has waived the protection.
Property Inspections
The standard Tennessee agreement gives the buyer a defined inspection period, commonly 10 to 15 calendar days, to hire licensed professionals to evaluate the property. Inspections often cover structural integrity, electrical and plumbing systems, roof condition, mold, radon, and pests. If inspections turn up problems, the contract typically moves into a resolution period where the parties negotiate repairs or price adjustments. If they cannot agree within that window, the buyer can usually walk away with their earnest money. The key mistake buyers make is letting the inspection deadline pass without acting. Silence is generally treated as acceptance of the property’s condition.
Appraisal
An appraisal contingency protects the buyer when a lender’s appraisal comes in below the purchase price. Without this clause, a buyer who cannot get the loan amount they expected has to choose between covering the gap in cash or breaching the contract and losing their deposit. With the contingency in place, a low appraisal opens the door to renegotiation. The buyer can ask the seller to lower the price, agree to bring extra cash, or combine both. If neither side moves, the buyer can terminate and recover their earnest money. Buyers in competitive markets sometimes waive this contingency to strengthen an offer, but the gamble gets expensive when the numbers do not work out.
Financing
The financing contingency gives the buyer a set window, typically 21 to 30 days, to obtain a loan commitment. The agreement specifies the loan type, maximum acceptable interest rate, and loan term. If the buyer cannot secure financing on those terms within the deadline, they have to provide written notice to the seller. Properly invoking the contingency allows the buyer to exit without forfeiting earnest money. Failing to give timely written notice is one of the most common ways buyers lose their deposit in Tennessee transactions.
Where the Earnest Money Sits
Earnest money is the buyer’s financial commitment to the deal. In Tennessee the deposit is typically 1% to 3% of the purchase price, though the amount is negotiable. What happens to that money after it is handed over is tightly regulated.
Tennessee’s real estate commission rules require every principal broker to maintain a separate escrow or trust account for funds that belong to others. Earnest money has to go into that account promptly after the offer is accepted, unless the contract specifies a different timeline.8Cornell Law Institute. Tennessee Comp. R. and Regs. 1260-02-.09 – Managing Escrow or Trustee Accounts Commingling trust money with the broker’s personal or business funds is prohibited. If either party requests disbursement after a deal falls apart, the broker has 21 calendar days to release the funds, interplead them with a court, or turn them over to an attorney for interpleader.
When a transaction collapses and the parties disagree about who gets the deposit, the escrow holder does not pick a winner. The broker freezes the funds and waits for written instructions signed by both parties or a court order. Many Tennessee purchase agreements include a mediation clause to handle exactly this situation, and mediation is generally faster and cheaper than court. If mediation fails, the dispute moves to arbitration or litigation depending on the contract terms.
Transfer Tax and Title Insurance
Tennessee imposes a state recordation tax on every transfer of real property. Under T.C.A. § 67-4-409, the tax rate is $0.37 per $100 of the sale price or the property’s fair market value, whichever is greater.9Justia. Tennessee Code 67-4-409 – Recordation Tax Some counties add local transfer taxes on top of the state rate, so the total varies by location. The purchase agreement should specify which party pays, though in Tennessee the seller traditionally covers the transfer tax.
Tennessee law does not require a buyer to purchase owner’s title insurance, but the person handling the closing has to give the buyer written notice that the coverage is available before any funds are disbursed.10FindLaw. Tennessee Code Title 56 Insurance 56-35-133 The buyer then signs a form electing or declining coverage. Skipping title insurance saves money upfront but leaves the buyer exposed if a lien, boundary dispute, or ownership claim surfaces after closing.
What Happens If Someone Backs Out
The agreement should spell out the consequences if either side fails to perform. Tennessee courts have long recognized that real property is unique, which means a buyer whose seller refuses to close can pursue specific performance, a court order forcing the seller to complete the sale.11Tennessee Courts. Court of Appeals of Tennessee at Knoxville – E2024-00037 Opinion Specific performance is available when the contract is clear, definite, and free from fraud or unfairness.
When the buyer defaults, the most common remedy is forfeiture of the earnest money deposit. Many Tennessee contracts treat the deposit as liquidated damages, meaning the seller keeps it as the sole financial remedy for the buyer’s breach. Some contracts go further and allow the seller to pursue additional damages or specific performance on top of retaining the deposit. The standard Tennessee REALTORS® form also includes a provision allowing the prevailing party in a breach lawsuit to recover attorney’s fees, which raises the stakes for both sides.
Any buyer or seller who wants to terminate the agreement should do so in strict compliance with the contract’s notice provisions. Disputes over whether someone followed the right cancellation procedure are a common trigger for earnest money fights, and informal text messages or verbal statements rarely satisfy the written notice requirements in the standard form.
When the Clock Actually Starts
A Tennessee purchase and sale agreement becomes binding on what the standard form calls the Binding Agreement Date, the date the last party signs the final version of the offer and the other party receives notice of that acceptance. The person who receives the fully executed document records the date and time of receipt. That timestamp is the starting gun for every deadline in the contract, including inspection periods, financing contingencies, and the closing date itself.
After the Binding Agreement Date is set, the buyer delivers the earnest money to the designated escrow holder within the timeframe specified in the contract, usually a few business days. Signed documents are exchanged through electronic signatures or physical delivery. From there, the transaction moves through its contingency periods and toward closing.
Tennessee does not legally require an attorney to handle the closing, and title companies routinely conduct residential closings in the state. At closing, the title company or attorney verifies that all contract conditions have been met, collects and disburses funds, records the deed with the county register, and transfers ownership. The buyer should review the closing disclosure carefully and confirm that all credits, prorations, and fees match what the purchase agreement requires.