How can I protect myself before I sign this purchase and sale agreement?

For starters, know what you are buying. Ask questions. For example:

• Are there any zoning violations on the property which will have to be corrected?
• Are there any environmental hazards which may be present (someone in the distant past may have dumped environmental hazards on the property so an environmental assessment should be made)?
• Are there any apparent conditions on the property which could potentially harm someone who happens to come on the property?
• Are there any restrictions or covenants in the purchase contract that would be hard to comply with?
• Will you be able to pay the mortgage on time?
• Are there any potential defects in the chain of title? Resolve these issues before you take title, interest or possession.

Real property owners can protect themselves from many of the risks of ownership by purchasing insurance. The two most common forms of insurance for real property includes liability insurance and title insurance.

The time period between the time you give a good-faith deposit check and the closing date is a set time period (normally 30, 60, or even 90 days). Your deposit check will be cashed so be sure you have sufficient funds in your account to cover it. Your deposit money will go towards the purchase price if the sale goes through. But if you back out of the deal for a reason not set forth in the contract, the seller may be entitled to keep the deposit money.
During the time period before closing date, the terms of the purchase contract are to be taken care of. The contract probably includes a financing contingency and inspection contingency, and a provision that the buyer can and will confirm a title to the property free of defects. The inspection provision allows the buyer to have the property professionally inspected. The financing provision gives the buyer time to secure mortgage approval. Because this is often a lengthy process, the buyer should begin seeking financing immediately after the contract is signed.