binder agreement

A binder agreement is a sort of preliminary contract that is given to a seller before a sale. The most common uses of a binder agreement are in real estate and insurance. Depending on the laws in the region of purchase, a binder agreement could be written by either the buyer's attorney or the seller's. Without it the buyer or seller will have been unaware of what a contract would have looked like, and might be reluctant to agree had either been presented with a contract upfront. In this way, the binder agreement gives the seller of look at the terms of the time to officiate it arrives. However, binder agreements also have a legal importance. Most times, they also serve as a type of offer - the buyer officially offers to purchase the home or contract, and the seller has the right to deny or reject their offer.

Fast Facts

some binder agreements may also include a down payment or other money as a promise
binder agreements are only valid for a specified time

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