Required Elements of a Real Estate Contract To establish legality, a real estate contract must include a legal purpose, legally competent parties, agreement by offer and acceptance, consideration and consent. Consideration is anything of legal value offered and exchanged in the contract. This could be money, services, or other valuable goods. Love and affection are even an example of consideration in some contracts.
The consideration must be specified in the contract. In most real estate businesses today, money is the consideration. That doesn't mean cash, as there will often be funding involved as well. The guarantee money moves with the agreement, while the down payment and financing come to close.
This element is the requirement that the parties to the contract have voluntarily and knowingly consented to the terms of the contract. There can be no fraud, misrepresentation, error or undue coercion on any of the parties to the contract. The Real Estate Contracts Act is a legally binding agreement between a buyer and a seller regarding title to a property. For a real estate contract to be enforceable, it must be in writing and contain all the necessary and essential elements for it to be considered valid.
Short-term leases are often exceptions to this requirement. It then becomes legally enforceable, which means that parties can be legally required to comply with the terms of the contract. When one of the parties to a contract has direct influence over the performance of a preceding condition, that party assumes the burden of demonstrating that it made efforts in good faith to satisfy the contractual conditions that supposedly justify its performance. A fundamental premise of contract law, which deals with the law of contract-related obligations, is that commitments must be met.
In the event that a party to the contract fails to comply with the terms or deadlines set out in the contract, it will be in breach and could be legally required to perform or pay damages to the other parties. The other remedy for breach of a real estate contract, available to both buyers and sellers, is a specific enforcement action. It would be easy to think that a contract was formed when it was signed, but, as you've learned, it's more complex than that. Contract signatories should be able to fulfil their responsibilities under the agreement if they are aware of them.
Offer and acceptance go hand in hand and, while acceptance may seem redundant, it is an important element in ensuring that contracts are not formed without being properly recognized, agreed and accepted. There may be more terms, such as personal property accompanying the sale, who pays for title insurance, and financing and inspection contingencies, but an offer from one party and acceptance by another party of the main provisions is the basis for forming a contract. The reason for an agreement, or the terms of the contract, are detailed in your offer, which describes what each party agrees to do or not to do as part of the terms of the agreement. If the buyer has set a deadline for an acceptance date and the offer has not been accepted at that time, there is no longer a contract.
If a contract is enforceable, the parties to the contract may be required to act as agreed in the contract. Similarly, when a buyer breaches a real estate contract, the seller is obliged to put the property back on the market and obtain the highest possible price and the best possible conditions to reduce the damages for which the buyer is responsible. Luckily for him, it's peak season for real estate and within a couple of weeks he has an offer on his house. .
