Real Estate Contracts

Lea en español

The Laws Governing Real Estate Contracts

Real Estate ContractsThe purchase or sale of real property is governed by both common law (judge-made law), and by state and federal statutes (enacted by state legislatures or Congress). As a result, the requirements for a valid and enforceable real estate contract vary from state to state.

Real Estate Contracts—The Basics

Customarily, a party wishing to buy or sell a home will enter into a “listing agreement.” This is a contractual relationship with an agent or broker, which establishes a wide range of terms—the commission rate to be paid, the length of time the house will be listed, where the property will be listed, and how the property will be shown. In most instances, the listing agreement is an exclusive one, preventing the buyer or seller from using multiple agents or brokers at the same time. Because of the exclusive nature of the relationship, a broker or agent may be entitled to a commission even when a buyer or seller completes a transaction without the broker or agent’s assistance.

Typically, the purchaser of real property initiates the negotiation, submitting an offer to buy the real estate according to specific terms. The seller may accept the offer (in which case, a contract has been formed), or may propose new terms in the form of a counteroffer. The purchase or sale of land is governed by the statute of frauds, which means that such contracts will only be enforceable if they are in writing.
State laws typically specify what provisions must appear in a real estate contract. Though the parties may draft an agreement from scratch, form contracts are typically available through realtor’s professional organizations.
As a general rule, real estate contracts tend to carry a number of conditions—requirements that must be met before the contract will be enforceable in a court of law. These typically include the requirement of a number of inspections, a survey, a policy of title insurance, and approval of financing. A purchase may also be conditioned on the sale of other property.
The Fair Housing Act prohibits discrimination in real estate transactions on account of race, color, religion, sex or national origin.

Latest Articles

Happy Veterans Day 2019

“Honoring the sacrifices many have made for our country in the name of freedom and democracy i…

Read More 08 Nov 2019, Friday

Deficiency Judgment and Foreclosures

A person borrowing money to buy a home assumes the loan is secured by the mortgage lien on the house…

Read More 07 Nov 2019, Thursday

How Can a Lawyer Help You Defend Against Foreclosure?

If you fall behind on your mortgage payments, your house might end up in foreclosure. However, there…

Read More 21 Oct 2019, Monday