Contracts
Contracts govern the rights and obligations of buyers and sellers. This is the largest national topic and demands close attention.
Formation and Validity
A valid contract requires mutual assent, consideration, capacity, and a lawful purpose, and real estate contracts must be in writing under the Statute of Frauds. A minor's contract is generally voidable because of limited capacity. A counteroffer rejects the original offer and creates a new one.
Types and Status of Contracts
Contracts may be bilateral or unilateral and executory (not yet fully performed) or executed (fully performed). Earnest money shows the buyer's good-faith commitment and is credited at closing. Contingencies allow cancellation if conditions like financing or inspection are not satisfied.
Remedies for Breach
If a party breaches, remedies include monetary damages, specific performance compelling completion of the sale, or forfeiture of earnest money. Rescission cancels the contract and returns the parties to their prior positions. The contract terms and state law govern which remedies apply.