Real Estate ContractsReal Estate Contracts

Contract LawContract Law

A contract must be:voluntaryan agreement or a promisemade by legally competent partiessupported by legal considerationabout a legal act

Contracts may be express or impliedExpress simply means that the parties

state the terms and show their intentions in writing.

A contract must be:voluntaryan agreement or a promisemade by legally competent partiessupported by legal considerationabout a legal act

Contracts may be express or impliedExpress simply means that the parties

state the terms and show their intentions in writing.

In Alabama all contracts concerning real estate must be in writing.

A good example of an implied contract is what happens when you go into a restaurant and order a meal.

Unilateral vs. bilateral contracts.Executed vs. executory contracts.

In Alabama all contracts concerning real estate must be in writing.

A good example of an implied contract is what happens when you go into a restaurant and order a meal.

Unilateral vs. bilateral contracts.Executed vs. executory contracts.

Essential Elements of a Valid Essential Elements of a Valid ContractContract

Offer and acceptance – there must be a meeting of the minds (mutual assent)What happens when there is a counter-

offer?An offeror may revoke the offer at any

time before receiving the acceptance!Consideration – something of legal

value. There must be a definite statement of

consideration in a contract.

Offer and acceptance – there must be a meeting of the minds (mutual assent)What happens when there is a counter-

offer?An offeror may revoke the offer at any

time before receiving the acceptance!Consideration – something of legal

value. There must be a definite statement of

consideration in a contract.

Reality of consentA mistake, misrepresentation, fraud,

undue influence, or duress would result in a contract that is voidable.

Legal purposeLegally competent parties

Reality of consentA mistake, misrepresentation, fraud,

undue influence, or duress would result in a contract that is voidable.

Legal purposeLegally competent parties

Validity of ContractsValidity of Contracts

A contract can be valid, void (has no legal force), or voidable.

UnenforceableDoesn’t mean that both parties could

not go ahead and fulfill the contract.

A contract can be valid, void (has no legal force), or voidable.

UnenforceableDoesn’t mean that both parties could

not go ahead and fulfill the contract.

Discharge of ContractsDischarge of Contracts

PerformanceAssignment NovationBreach of contract

One remedy is a suit for specific performanceOther reasons for termination:

Partial performance, substantial performance, impossibility of performance, mutual agreement, operation of law, recission.

PerformanceAssignment NovationBreach of contract

One remedy is a suit for specific performanceOther reasons for termination:

Partial performance, substantial performance, impossibility of performance, mutual agreement, operation of law, recission.

Contracts Used in Real Contracts Used in Real EstateEstate

Listing agreementsReal estate sales contractsOptionsLand contracts or contracts for deedLeases and escrow agreements If a contract contains any ambiguity,

the courts generally interpret the agreement against the party who prepared it.

Listing agreementsReal estate sales contractsOptionsLand contracts or contracts for deedLeases and escrow agreements If a contract contains any ambiguity,

the courts generally interpret the agreement against the party who prepared it.

Review of Real Estate FormsReview of Real Estate Forms