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Understand the Purchase and Sales Agreement

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When it comes to buying real estate in Ghana, making sure you fully grasp the property sales contract is essential.

Indeed, not fully understanding the document you will sign can lead to financial losses, including the forfeiture of deposits, payment of penalties, unexpected costs, legal expenses, and potential poor investment decisions.

We've heard countless stories of people making costly mistakes when signing their property agreement in Ghana. We want to help you avoid the same experience.

We'll give here a very brief overview regarding the property sales contract in Ghana ; if you want a full checklist, please check our property pack for Ghana.

What is the Purchase and Sales Agreement in Ghana?

In Ghana, the process of purchasing property involves a key document known as a "Sales Agreement" or "Property Purchase Agreement."

This document is a formal contract that outlines the terms and conditions agreed upon by both the buyer and the seller. It's important to understand its role and implications in the property transaction process.

The Sales Agreement in Ghana serves as a legally binding contract. It confirms the intent to transfer ownership of the property from the seller to the buyer, and it details the conditions under which this transfer will occur.

This includes the agreed-upon price, payment terms, and any other conditions set by both parties. It's essential for both the buyer and seller as it acts as a safeguard, ensuring that both parties adhere to the terms agreed upon.

For international buyers or non-residents looking to purchase property in Ghana, there aren't specific regulations in the Sales Agreement that are different from those for local buyers.

However, international buyers should be aware of additional legal and regulatory requirements, such as compliance with foreign exchange and investment laws. It's advisable to consult with a local legal expert to navigate these aspects.

The signing of the Sales Agreement usually occurs after the buyer and seller have negotiated and agreed on the terms of the sale.

Before signing, it's common practice to pay a deposit. The deposit, often a percentage of the total purchase price, demonstrates the buyer's commitment to the transaction. The exact amount can vary, but it's typically around 10% of the purchase price.

In comparison to other countries, the property purchase process in Ghana may have some differences, particularly in terms of legal requirements, the structure of the agreement, and the way property rights are registered and transferred.

However, the basic principle of a binding Sales Agreement as a guarantee for both buyer and seller remains a common feature in real estate transactions globally.

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What should be included in the property purchase agreement in Ghana?

In Ghana, when you're involved in a real estate transaction, the Property Purchase Agreement is a crucial document.

It's governed by various laws, including the Conveyancing Act of 1973, which sets out the legal framework for property transactions.

A standard Property Purchase Agreement should contain specific details to ensure clarity and legality.

These include:

Step Description

Identification of Parties

The full names and addresses of both the buyer and seller.

Description of Property

A detailed description of the property, including its location, size, and any relevant details about the land or building.

Purchase Price

The agreed-upon price for the property.

Payment Terms

This includes the deposit amount, payment schedule, and mode of payment.

Conditions of Sale

Any conditions that must be met before the sale is finalized, such as the buyer obtaining financing.

Closing Date

The date when the transfer of the property will be completed.


Both parties must sign the agreement.

Mandatory clauses typically found in these agreements include:

- Ensuring the seller has a clear title to the property.

- The buyer's right to inspect the property before finalizing the purchase.

- Consequences if either party fails to meet their obligations under the agreement.

Additional clauses might cover aspects like:

- Provisions for adjusting the purchase price based on property taxes or utility bills.

- Details about what is included in the sale, like appliances or furniture.

Conditions or contingencies can be added too.

These might include:

- The purchase is contingent on the buyer obtaining a mortgage.

- The buyer must sell their current home before purchasing the new one.

In Ghana, it's not mandatory for the Property Purchase Agreement to be authenticated by a notary.

However, it's highly advisable to have legal representation. This ensures that the agreement is legally sound and your interests are protected.

What's the signing process like?

In Ghana, the signing process of a Property Purchase Agreement in real estate transactions is a critical step, involving several key aspects.

The Property Purchase Agreement is a bilateral contract, meaning it requires the signatures of both the buyer and the seller. It's possible for multiple buyers or sellers to be involved in the transaction.

In such cases, each party must sign the agreement to ensure that all are legally bound by its terms.

Both parties need to provide certain documents and information for the agreement.

The seller typically provides proof of ownership, such as a land title certificate or a leasehold interest document, and any other relevant property documents.

The buyer, on the other hand, should be prepared to provide identification and, if applicable, proof of financing or mortgage approval.

Here is the signing process and timeline:

Signing Process Description

Drafting the Agreement

After negotiations, the Property Purchase Agreement is drafted, usually by a legal professional.

Review and Finalization

Both parties review the agreement, often with their respective legal advisors, to ensure accuracy and completeness.

Signing the Agreement

The parties then sign the agreement. This usually happens in the presence of witnesses, often including the legal representatives.

While traditionally, the signing would require physical presence, advancements in technology and legal practices in Ghana now allow for remote signing in some cases. This can be facilitated through digital signatures, subject to the acceptance and agreement of both parties.

There's no fixed deadline for signing the Property Purchase Agreement. The timing depends on the negotiation process and the readiness of both parties.

Once signed, the contract remains valid until the obligations of both parties are fulfilled, typically culminating in the transfer of property ownership.

After signing, the agreement and the transfer of ownership need to be registered with the appropriate local authorities, such as the Lands Commission in Ghana. This is a crucial step to legally recognize the change in property ownership.

Amendments to the contract after signing are possible but must be agreed upon by both parties. Any changes should be made in writing and duly signed.

The timeframe for completing all necessary paperwork and approvals can vary, typically ranging from a few weeks to several months. This depends on factors like the efficiency of local authorities, the complexity of the transaction, and the promptness of both parties in fulfilling their obligations

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How is the payment handled when signing a property purchase contract in Ghana?

In Ghana, understanding the financial aspects of a Property Purchase Agreement in a real estate transaction is vital for both buyers and sellers.

Here's what you need to know.

Typically, when you sign the Sales Agreement, you're expected to pay a down payment or deposit. This amount varies, but it's commonly around 10% of the total property price. However, this percentage can be negotiated between the buyer and seller.

There may be additional upfront costs associated with signing the Sales Agreement. These can include legal fees, real estate agent commissions (if applicable), and possibly a fee for property valuation or inspection.

The payment is generally made directly to the seller or into an escrow account. An escrow account is often preferred as it provides security for both parties; the money is held safely until the transaction is completed.

The due date for the payment is usually specified in the Sales Agreement. It’s not always immediate upon signing; sometimes, it’s scheduled for a later date, depending on what you and the seller agree upon.

There are tax implications associated with property transactions in Ghana. This includes property transfer taxes, which are typically the responsibility of the seller.

However, it's important to clarify this in the agreement to avoid misunderstandings.

You can negotiate the down payment amount with the seller. This flexibility allows both parties to reach a mutually agreeable figure based on the buyer's financial capability and the seller's requirements.

If the sale falls through, the down payment's refundability depends on the terms outlined in the Sales Agreement.

Generally, if the sale doesn't proceed due to a failed inspection or financing contingency (and these contingencies are specified in the agreement), the down payment may be refundable.

You can use a mortgage loan for the down payment, but this depends on the terms of your mortgage agreement and lender policies. Some buyers use personal funds for the down payment to streamline the process.

An attorney or real estate agent can play a crucial role in handling the payment process. They ensure that all financial transactions are conducted legally and transparently. They can also provide valuable advice on the implications and requirements of the transaction.

You should always request a receipt or confirmation of payment when making the down payment. This serves as proof of transaction and is essential for your financial records.

Both the buyer and seller may face tax implications. For the seller, this often involves capital gains tax, while the buyer should be aware of any stamp duty or other property acquisition taxes.

What are the potentials risks and pitfalls?

You might be interested in reading our article about the common risks and pitfalls surrounding a property transaction in Ghana.

In Ghana, as in any real estate transaction, understanding the risks and pitfalls associated with a Property Purchase Agreement is crucial for both buyers and sellers.

Both the buyer and the seller have the potential to withdraw from the agreement, but this is typically governed by the terms set within the agreement itself. For instance, if there are contingencies, such as the buyer securing financing or a satisfactory property inspection, and these are not met, the buyer can legally withdraw.

Unlike some countries, Ghana's real estate transactions do not universally include a cooling-off period. This means once the agreement is signed, it's generally binding unless specific terms within the contract allow for withdrawal.

If a party withdraws without a valid motive as defined in the agreement (like a failure to secure financing or unsatisfactory inspection), they may be subject to penalties. These terms should be clearly stated in the contract.

If one party fails to fulfill their obligations, the penalties can vary. They might include forfeiture of the deposit (for the buyer) or legal action to enforce the agreement or seek damages (for the seller). The exact nature of these penalties would be detailed in the agreement.

In other countries, there might be more standardized practices such as a mandatory cooling-off period, more stringent disclosure requirements, or different legal ramifications for contract breach.

Ghana's real estate transactions might be less regulated in some aspects, emphasizing the importance of a well-drafted and thorough agreement.

Key risks include issues with property title, undiscovered property defects, or failure to comply with local regulations.

Buyers should conduct thorough due diligence, including a title search and property inspection. Sellers must ensure they have the legal right to sell and disclose all relevant property information.

Disputes arising from the agreement are typically resolved through negotiation or, if necessary, legal action. The agreement may specify mediation or arbitration as the first steps in dispute resolution. Engaging legal professionals is advisable in such scenarios.

If defects or issues with the property are discovered after signing, the course of action will depend on the terms of the agreement and local laws. If the seller knowingly hid defects, the buyer might have legal recourse.

However, this can be a complex area and may require litigation to resolve.

Disputes might arise over property boundaries, defects, or misrepresentations. These are often resolved through negotiation, arbitration, or court action.

For example, a buyer discovering undisclosed property damage post-purchase might negotiate a settlement with the seller or pursue legal action for compensation.

This article is for informational purposes only and should not be considered financial advice. Readers are advised to consult with a qualified professional before making any investment decisions. We do not assume any liability for actions taken based on the information provided.