A Real Estate Sales Contract To Be Enforceable Must
Be in Writing
In order for a real estate sales contract to be legally enforceable, it must be in writing. This means that verbal agreements between the buyer and seller are not enough to create a binding contract. The written contract should include all of the important details of the transaction, such as the purchase price, closing date, and any contingencies that need to be met.
Include All Essential Terms
The real estate sales contract must also include all of the essential terms of the agreement. These terms may vary depending on the specific transaction, but typically include the legal description of the property, the names of the parties involved, and any financing or mortgage contingency provisions.
Be Signed by Both Parties
Both the buyer and seller must sign the real estate sales contract in order for it to be legally binding. This ensures that both parties have agreed to the terms of the agreement and are willing to move forward with the transaction.
Be in Compliance with Applicable Laws
The real estate sales contract must also be in compliance with all applicable laws and regulations. This includes any state or local laws that govern real estate transactions, as well as any federal laws that may apply.
Be Free of Duress or Fraud
The real estate sales contract must be entered into voluntarily by both parties, without any undue pressure or coercion. If either party was forced or threatened into signing the contract, it may be considered voidable. Additionally, if either party engaged in fraudulent behavior during the negotiation or execution of the contract, it may also be considered voidable.
Include a Description of the Property
The real estate sales contract must include a detailed description of the property being sold. This may include the legal description of the property, as well as any additional information about the property's location, size, or condition.
Specify the Purchase Price
The real estate sales contract must also specify the purchase price of the property. This amount should be agreed upon by both parties and may be subject to negotiation. Additionally, the contract may include provisions for earnest money deposits or down payments.
Include Contingencies
Contingencies are provisions in the real estate sales contract that must be met in order for the transaction to move forward. For example, the contract may be contingent upon the buyer obtaining financing or upon the property passing a home inspection. These contingencies must be clearly stated in the contract and must be satisfied before the transaction can be completed.
Specify the Closing Date
The real estate sales contract must also specify the closing date for the transaction. This is the date on which the buyer will take possession of the property and the seller will receive payment for the sale. The closing date should be agreed upon by both parties and may be subject to change based on the satisfaction of contingencies.
Include Provisions for Default
The real estate sales contract should include provisions for default by either party. This may include provisions for the forfeiture of earnest money deposits, as well as any legal remedies available to either party in the event of default.
Be Executed by Competent Parties
The real estate sales contract must be executed by parties who are legally competent to enter into a contract. This means that both the buyer and seller must be of legal age and must have the mental capacity to understand the terms of the agreement.
Include a Statement of the Parties' Intentions
The real estate sales contract should include a clear statement of the parties' intentions. This may include statements about the purpose of the contract, the goals of each party, and any expectations about the transaction.
Be Consistent with Other Documents
The real estate sales contract should be consistent with any other documents related to the transaction, such as the purchase agreement or any financing documents. This ensures that all parties are on the same page and that there are no conflicting terms or provisions.
Include Provisions for Dispute Resolution
The real estate sales contract may include provisions for dispute resolution in the event of a disagreement between the parties. This may include provisions for mediation or arbitration, as well as any legal remedies available to either party.
Be Recorded with the Appropriate County Office
The real estate sales contract should be recorded with the appropriate county office in order to be legally recognized. This ensures that the transaction is properly documented and that there is an official record of the sale.
Include Provisions for Closing Costs
The real estate sales contract may include provisions for closing costs, which are the fees associated with transferring ownership of the property. These costs may include title fees, appraisal fees, and legal fees, among others.
Be Reviewed by an Attorney
It is always a good idea to have a real estate sales contract reviewed by an attorney before signing. This ensures that the contract is legally sound and that all necessary provisions are included.
Be Signed in the Presence of Witnesses
In some states, real estate sales contracts must be signed in the presence of witnesses in order to be legally enforceable. This ensures that both parties have acknowledged and agreed to the terms of the agreement.
Include Provisions for Property Inspections
The real estate sales contract may include provisions for property inspections, which are typically conducted by a professional home inspector. These inspections may uncover any defects or issues with the property that need to be addressed before the transaction can be completed.
Be Free of Ambiguity
The real estate sales contract must be free of ambiguity or uncertainty. All provisions and terms should be clearly stated and easily understood by both parties.
Include Provisions for Possession
The real estate sales contract should include provisions for possession of the property. This may include the date on which possession will be transferred from the seller to the buyer, as well as any other terms related to possession.
Be Free of Unconscionable Terms
The real estate sales contract must be free of unconscionable terms, which are terms that are excessively one-sided or unfair. If a court determines that a contract contains unconscionable terms, those terms may be deemed unenforceable.
Include Provisions for Disclosure
The real estate sales contract should include provisions for disclosure of any material facts related to the property. This may include information about the condition of the property, any known defects or issues, and any other relevant information that may affect the transaction.
Be Executed with Proper Authority
The real estate sales contract must be executed with proper authority. This means that the person signing the contract must have the legal authority to do so, such as the power of attorney or corporate authority.
Include Provisions for Termination
The real estate sales contract may include provisions for termination in the event that certain conditions are not met. This may include provisions for the return of earnest money deposits or other remedies in the event of termination.
Be Free of Mistakes or Errors
The real estate sales contract must be free of mistakes or errors. Any typographical errors or other mistakes may affect the enforceability of the contract and should be corrected before signing.
Include Provisions for Earnest Money Deposits
The real estate sales contract may include provisions for earnest money deposits, which are deposits made by the buyer as a show of good faith. These deposits may be forfeited if the buyer fails to complete the transaction or breaches the contract in some other way.
Be Clear and Concise
The real estate sales contract should be clear and concise, with no unnecessary or confusing language. This ensures that both parties understand the terms of the contract and reduces the risk of misunderstandings or disputes.
Include Provisions for Title
The real estate sales contract may include provisions for title, which is the legal ownership of the property. These provisions may include requirements for a title search, as well as any other provisions related to the transfer of title.
Be in Compliance with Financing Requirements
The real estate sales contract must be in compliance with any financing requirements related to the transaction. This may include requirements for mortgage insurance, down payments, or other financing provisions.
Include Provisions for Property Insurance
The real estate sales contract may include provisions for property insurance, which is insurance that protects the property against damage or loss. These provisions may include requirements for the buyer to obtain insurance coverage before closing.
Be in Compliance with Zoning and Land Use Laws
The real estate sales contract must be in compliance with all applicable zoning and land use laws. This ensures that the property is being used in accordance with local regulations and that there are no violations or issues that could affect the transaction.
Include Provisions for Repairs
The real estate sales contract may include provisions for repairs that need to be made to the property before the transaction can be completed