Key takeaways
- Real estate contracts must be in writing to be enforceable under the statute of frauds.
- Contingencies are conditions that let a party terminate without breaching.
- Deadlines in a purchase contract are typically strict, and missing one can waive a right.
- Remedies for breach include earnest money forfeiture and sometimes specific performance.
Elements of an enforceable contract
Identified parties, adequate property description, price and terms, mutual assent, consideration, and signatures. The statute of frauds requires real estate contracts to be in writing — oral agreements to sell land are generally unenforceable everywhere.
Most transactions use a state or association standard form. Those forms are drafted carefully and their defined terms interact. Custom addenda are common but should be drafted with care; inconsistent addenda create ambiguity that gets resolved against whoever drafted it.
How contingencies function
An inspection contingency permits investigation and termination or renegotiation within a defined period. An appraisal contingency permits termination if value comes in below contract price. A financing contingency permits termination if the buyer cannot obtain the specified loan despite good-faith effort. A sale contingency conditions the purchase on selling another property.
Each has a deadline. Miss it and the contingency generally expires, converting your conditional obligation into a firm one. Calendar every date at contract signing and confirm whether the contract counts calendar or business days — the forms differ.
Earnest money and remedies
Earnest money demonstrates commitment and is credited at closing. If the buyer terminates within a valid contingency, it is returned. If the buyer breaches outside a contingency, the seller may generally retain it, and many contracts make that the exclusive remedy through a liquidated damages clause.
If the seller breaches, buyers may seek return of the deposit, damages, or specific performance — a court order compelling the sale. Because each parcel of real property is considered unique, specific performance is more available in real estate than in most contract contexts.
Amendments and what to watch
Any change after signing requires a written amendment signed by both parties. Common ones: repair amendments after inspection, closing date extensions, price adjustments after appraisal, and possession agreements where a party occupies before or after closing.
Post-closing occupancy agreements deserve particular attention. A seller remaining in the home after closing is effectively a tenant, and if they fail to leave, you may face an eviction rather than a contract dispute. Set a daily rate, a hard deadline, and a substantial holdover penalty.
Frequently asked questions
Can I back out after signing?
Only through a contingency, a contractual right of rescission where one exists, or by negotiating a release. Outside those, walking away is a breach with real consequences.
What is an as-is sale?
The seller will not make repairs. In most states it does not eliminate the duty to disclose known material defects, and buyers usually retain inspection rights for information and termination.
Do I need a real estate attorney?
Several states require attorney involvement at closing. Even where optional, attorney review is inexpensive relative to the transaction and worthwhile on unusual deals.
Sources & further reading
- Statute of frauds provisions by state
- State association standard residential purchase agreements
- Restatement (Second) of Contracts, specific performance
Figures and rules change. Verify current requirements with the issuing agency or a licensed professional before acting.