Every residential real estate transaction in Pennsylvania — from a South Philly rowhouse to a Chestnut Hill Victorian — is governed by the Pennsylvania Agreement of Sale. This state-specific purchase contract, developed by the Pennsylvania Association of Realtors (PAR), is one of the most detailed residential contracts in the country. It is not the same as a generic "offer letter." It is a binding legal document with contingencies, deadlines, default provisions, and Philadelphia-specific addenda that control how money moves, what happens when things go wrong, and who walks away with what.
Most buyers and sellers sign the Agreement of Sale without fully understanding what they have agreed to. This guide explains what the key clauses mean, what the critical deadlines are, and what buyers in Philadelphia specifically need to know before they sign.
Bottom line: The PA Agreement of Sale creates binding obligations the moment both parties sign. Understanding the contingency windows, deposit forfeiture rules, and Philadelphia-specific requirements before you are under contract is far better than learning them during a dispute.
The Pennsylvania Agreement of Sale (PAR Form ASR) is the standardized real estate purchase contract used in virtually all Pennsylvania residential transactions. It is not legally required to use the PAR form — any written contract for the sale of real estate satisfies the Statute of Frauds — but PAR's form is the industry standard and most brokerages require their agents to use it.
The standard residential AOS is a multi-page document covering:
The AOS is accompanied by required addenda. In Philadelphia, the standard package includes the Seller's Property Disclosure Statement (required by Pennsylvania's Real Estate Seller Disclosure Law), a Lead-Based Paint Disclosure (for pre-1978 properties), and typically a Use and Occupancy Certificate Addendum and a Transfer Tax Addendum reflecting local conventions.
Before you make an offer, run a free property report — violations, permit history, and tax records in under 60 seconds.
Get Free Property ReportPennsylvania uses the term "deposit" where many other states use "earnest money." The deposit is a good-faith payment made by the buyer to demonstrate serious intent. It is typically held in escrow by the buyer's agent's brokerage until settlement.
In the Philadelphia market, deposits typically range from 1% to 3% of the purchase price for owner-occupied sales, and 5% to 10% for investor purchases or competitive bidding situations. There is no legal minimum, but a very low deposit can signal weak buyer commitment to sellers.
The AOS specifies when the deposit must be delivered. Common structures include:
Missing a deposit deadline is a breach of contract that can allow the seller to declare the buyer in default.
This depends entirely on which contingency applies. The deposit is:
Important: A disputed deposit does not automatically go to either party. The escrow holder (typically the broker) cannot release it without mutual written release or a court order. Deposit disputes can sit unresolved for months if parties do not cooperate.
The inspection contingency is one of the most important — and most often misunderstood — provisions in the Pennsylvania AOS.
The standard PAR AOS gives buyers 10 days from the execution date (fully signed contract) to complete all inspections and deliver an Inspection Notice to the seller. This 10-day window is counted in calendar days. Missing the deadline means the contingency expires and the buyer proceeds without it.
After completing inspections, the buyer has three choices under the PAR AOS:
| Option | What It Means | Typical Use |
|---|---|---|
| Accept the property | Buyer is satisfied with inspection results and waives the contingency. Contract proceeds to settlement. | Minor issues, pre-inspected properties, competitive markets where buyers waive repairs. |
| Request repairs or credits | Buyer submits an Inspection Notice identifying items they want repaired, replaced, or credited. Seller has 3 days to accept, reject, or counter. If parties cannot agree within the negotiation window, either side can terminate. | Significant issues found — structural, mechanical, safety, or habitability concerns. |
| Terminate the contract | Buyer elects to void the AOS and receive a full deposit refund. No repair request required — buyer can simply exercise the right to terminate. | Major defects, buyer's financing situation changed, or buyer discovers something in records research that changes the calculus. |
Buyers who do nothing — who neither accept, request, nor terminate within the 10-day window — lose the inspection contingency by default. This is one of the most common mistakes first-time buyers make in competitive markets.
Philadelphia buyer tip: Use the inspection window to research city records, not just run a physical inspection. Pull the L&I violation history, open permit records, 311 complaint log, and tax lien status at atlas.phila.gov. A Flagstone free report covers all four in under 60 seconds. This information can affect your decision to proceed just as much as what the inspector finds in the walls.
An as-is sale in Pennsylvania does NOT eliminate the inspection contingency unless the buyer explicitly waives it. Under a standard as-is addendum, the seller agrees to make no repairs — but the buyer retains the right to conduct inspections and terminate if they are not satisfied with what they find. The distinction is important: as-is means the seller won't fix things, not that the buyer can't look.
The mortgage contingency protects buyers who need financing to close. If the buyer cannot obtain a mortgage commitment by the contingency deadline, the buyer can terminate and receive their deposit back.
| Deadline | Typical Timeline | What Happens If Missed |
|---|---|---|
| Mortgage application deadline | 3–5 days after AOS execution | Buyer is in breach if application is not submitted; can be waived by mutual agreement |
| Mortgage commitment deadline | 21–30 days after AOS execution | If commitment is not obtained and buyer has not properly terminated, contingency expires |
| Settlement date | 30–60 days after AOS execution (negotiated) | Failure to close on the settlement date is a default by the non-performing party |
The mortgage contingency specifies the loan amount, interest rate cap, and loan type (conventional, FHA, VA, etc.). If the buyer gets approved for a loan but at a higher rate than specified in the AOS, the contingency may not apply.
Pre-approval vs. commitment: Pre-approval is not a mortgage commitment. The contingency requires a written commitment from a lender, which comes after full underwriting — appraisal, title review, and verification of financial documents. Many buyers confuse the two and are caught off guard when their lender needs more time than the contract allows.
Pennsylvania's standard AOS includes an appraisal contingency when the buyer is using financing. If the property appraises below the purchase price, the buyer has options:
In competitive Philadelphia markets — Fishtown, Graduate Hospital, South Philly rowhouses in fast-flip zones — appraisal gaps are common. Some buyers submit "appraisal gap" letters or addenda agreeing to cover a specified gap amount to make their offer more competitive.
Pennsylvania's Real Estate Seller Disclosure Law (RESDL) requires sellers to disclose all known material defects on the standardized Property Disclosure Statement before the buyer signs the AOS. The disclosure form covers structural conditions, mechanical systems, environmental hazards (radon, lead, underground tanks), flood zone status, zoning issues, legal claims, and deed restrictions.
The disclosure is attached to and made part of the AOS. Buyers should read it carefully and cross-check it against public records. Common Philadelphia-specific issues that should appear on the disclosure include:
Sellers who knowingly misrepresent or fail to disclose material defects can be held liable for rescission, damages, and attorney's fees. See our PA Seller Disclosure Law guide for full detail.
Pennsylvania's combined real estate transfer tax is 4.278% of the purchase price (PA 1% + Philadelphia 3.278%). The AOS must address who pays. The Philadelphia convention is 50/50 — buyer and seller each pay half — but this is negotiable. In a buyer's market, sellers sometimes agree to pay all or most of the transfer tax as a concession.
At a $400,000 purchase price, the total transfer tax is approximately $17,112. Under the standard 50/50 split, each party pays about $8,556. This is a significant closing cost that buyers often underestimate. See our Philadelphia transfer tax guide for full detail.
Philadelphia requires a Use and Occupancy (U&O) Certificate before any change of occupancy — including a standard home sale. The U&O Addendum, attached to the Philadelphia AOS, specifies who is responsible for obtaining the certificate, who pays for required repairs, and what happens if deficiencies are found during the city inspection.
Key Philadelphia U&O provisions:
See our Philadelphia U&O certificate guide for the full inspection process.
For properties built before 1978 — which includes the vast majority of Philadelphia's housing stock — federal law requires a Lead-Based Paint Disclosure be signed before the buyer is bound. Buyers have a 10-day right to inspect specifically for lead paint (separate from the general inspection contingency) unless they waive it in writing. See our Philadelphia lead paint guide for compliance detail.
The AOS specifies the settlement date — the date when title transfers and money changes hands. In Philadelphia, settlements typically occur at the office of a title company or real estate attorney. The settlement date is a target, not a guarantee; both parties can agree in writing to extend it.
Possession — when the buyer gets the keys and the seller vacates — is a separate negotiated item. Most Philadelphia transactions transfer possession at settlement. If the seller needs to remain past settlement, a Post-Settlement Occupancy Agreement (PSOA) addendum must be executed, specifying the occupancy period, daily rent, and security deposit.
Watch out: Settlement date extensions require written mutual agreement. If a buyer is not ready to close and has not properly extended in writing, the seller may have grounds to declare the buyer in default and retain the deposit. Extensions should always be formalized, not just verbally agreed to.
The AOS requires the seller to maintain the property in the same condition as when the contract was executed, through settlement. This includes:
Most Pennsylvania AOS forms give the buyer a right to a pre-settlement walkthrough — typically within 24 to 48 hours before closing — to verify property condition. If problems are found at the walkthrough (damage, missing fixtures, systems not operating), the buyer can request a credit, escrow holdback, or delay settlement until the issue is resolved.
What happens if a party fails to perform?
| Defaulting Party | What the Other Party Can Do |
|---|---|
| Buyer default (fails to close without valid contingency) | Seller may retain the deposit as liquidated damages. Seller may also sue for specific performance (force the sale) or actual damages exceeding the deposit, though specific performance claims against buyers are rare in practice. |
| Seller default (refuses to close, sells to someone else) | Buyer receives full deposit refund. Buyer may also sue for specific performance (force the sale) or sue for actual damages (cost of finding alternative housing, increased purchase price elsewhere, etc.). Courts do grant specific performance against sellers in Pennsylvania. |
Deposit disputes are the most common AOS litigation in Pennsylvania. Both parties should understand that the escrow holder cannot unilaterally release the deposit without mutual agreement or court order, and that disputed deposits can sit in escrow for extended periods while parties negotiate or litigate.
| Deadline | Typical Timeframe | What Happens If Missed |
|---|---|---|
| Initial deposit delivery | 3–5 days from execution | Buyer in breach; seller may void contract |
| Inspection notice deadline | 10 days from execution | Inspection contingency expires; buyer proceeds without it |
| Mortgage application deadline | 3–5 days from execution | Buyer in breach if not submitted |
| Mortgage commitment deadline | 21–30 days from execution | Financing contingency expires if not met |
| U&O certificate (Philadelphia) | Seller obtains before settlement | Settlement may be delayed; lender may require it for loan funding |
| Additional deposit deadline | 5–7 days after inspection contingency resolves | Buyer in breach; deposit at risk |
| Pre-settlement walkthrough | 24–48 hours before settlement | No legal recourse after settlement closes without objection |
| Settlement date | Negotiated (typically 30–60 days) | Non-performing party in default; deposit at risk |
The Agreement of Sale creates binding obligations the moment it is executed. Doing thorough due diligence before you submit an offer — not during the inspection window — gives you the clearest picture of what you are buying.
Get the full property report — violations, permits, 311 history, and tax records — before you sign the Agreement of Sale.
Run Free Property Report| Item | PA/Philadelphia Standard |
|---|---|
| Deposit amount (typical) | 1%–3% of purchase price (owner-occupied); 5%–10% (investor) |
| Inspection contingency window | 10 calendar days from execution |
| Mortgage commitment deadline | 21–30 days from execution (negotiated) |
| Transfer tax | 4.278% total (PA 1% + Philly 3.278%); typically split 50/50 |
| U&O certificate | Required before settlement in Philadelphia; typically seller's obligation |
| Lead paint disclosure | Required for pre-1978 properties; buyer has 10-day inspection right |
| Seller disclosure (RESDL) | Required; attached to AOS; discloses known material defects |
| Possession | At settlement (standard); post-settlement occupancy requires PSOA addendum |
| Buyer default remedy | Seller retains deposit as liquidated damages (standard); specific performance possible |
| Seller default remedy | Deposit returned to buyer; buyer can sue for specific performance or damages |