If you are buying or selling a home you need to know the basics of a real estate contract. This article lists the simple elements required in a real estate contract for it to be valid and enforceable. Keep in mind this blog is not meant to be legal advice. Do not use this blog to navigate the legalities of any situation or contract!
First, a quick dictionary explanation of what a contract is:
CONTRACT – An agreement between competent parties to do or not to do certain things for a consideration.
To have a valid contract for the sale of a home or real estate there must be eight elements. Those elements are:
- An OFFER
A real estate contract must have an offer. Basically, a buyer offers to purchase a home or real estate for a price or consideration.
2. An ACCEPTANCE
The contract must have an acceptance. This may happen right after the offer, or after some negotiations, but either way there must be an acceptance of the offer with the agreed terms.
3. COMPETENT PARTIES
The contract must be between competent parties with legal capacity. The parties involved must be of legal age and mental capacity. Minors, someone under the influence of drugs or alcohol, or an individual deemed mentally ill could affect the validity of a contract!
Consideration is usually money, but can be other things of value like cars, promises or even love!
5. LEGAL PURPOSE
Legal purpose basically means the contract must have legal elements and be for legal purposes! A contract can’t include illegal elements for consideration, illegal uses, etc.. For example, you cannot sell a house for a pound of cocaine! If the contract has an illegal element, it could be invalid.
6. WRITTEN DOCUMENTATION
All real estate contracts must be in writing to be valid!
7. DESCRIPTION OF THE PROPERTY
A valid real estate contract must include a description of the property to define what is being transferred.
8. SIGNATURES BY PRINCIPALS or their ATTORNEY-IN-FACT
The real estate contracts must be signed by the buyers and sellers to document the agreement and terms.