Real Estate Contract - Frequently Asked Questions

What is a Real Estate Contract?
A real estate contract is a contract between parties for the purchase/sale, exchange, or other transfer of real estate. Real estate contracts are normally two-sided contracts and should have the legal requirements specified by contract law in general.

A Real Estate Contract is also called; Agreement of Sale, Offer and Acceptance, Contract of Sale, Earnest Money Contract, Real Estate Sale Contract.

Does a Real Estate Contract have to be in writing?
Yes. A real estate contract MUST be in writing. Verbal contracts for real estate are void. In the Unites States the Statute of Frauds states that, to be enforceable, any contract for the sale or purchase of real estate must be in writing. In many other countries, real estate contracts must be in writing to be legally binding.

Are verbal Real Estate Contracts legally binding?
No. See above.

Whose name has to be in a Real Estate Contract?
Seller, buyer and the agent (when used). A real estate contract must identify the parties. The full name of the parties must be on the contract. In a sales contract, the parties are the seller(s) and buyer(s) of the real estate. If there are any real estate agents brokering the sale (who would earn the commission from the sale) then they are typically also listed on the real estate contract.

Should the property address I am selling/buying be on a Real Estate Contract?
Yes. A real estate contract must identify the property (real estate). At least the address, but preferably the legal description must be on the real estate contract.

Should the purchase price be in a Real Estate Contract?
Yes. A real estate contract must identify the purchase price. The amount of the sales price or a reasonably ascertainable price figure must be on the real estate contract.

Who should sign the Real Estate Contract?
By everyone included on the contract. A real estate contract must include signatures by the parties. A real estate contract must be entered by own free will and must be signed by the parties, to be legally binding.

Can a minor or mentally impaired person enter into a Real Estate Contract?
Not really. A real estate contract must involve competent parties. Mentally impaired, drugged persons, etc. can not enter into a real estate contract. Contracts in which at least one of the parties is a minor are capable of being voided, but not unless action is taken by the minor to void it.

What else has to be in the Real Estate Contract?
A real estate contract must reflect a meeting of the minds. Each side must be clear and agree as to the essential details, rights, and obligations of the contract.

A real estate contract must have a legal purpose. The contract is void if it calls for illegal action.
A real estate contract must include consideration. Consideration is something of value bargained for in exchange of the real estate. Money is the most common form of consideration, but other consideration of value, such as other property in exchange, or a promise to perform (i.e. a promise to pay) is also satisfactory.

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