How Binding Is a Real Estate Contract?
Real estate contracts are legally binding in most cases. If either party wishes to back out of the contract, she must prove that she has reasonable cause to do so and may have to appear in court if the other party sues for breach of contract. Under certain conditions, however, a real estate contract can be declared null and void, and is not considered to be binding.
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Verbal Vs. Written
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Verbal real estate contracts are not considered legally binding in most cases. In order for a contract to be legal, the terms must be spelled out clearly in writing and it must be signed by both the buyer and the seller.
Valid Signatures
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Minors are not allowed to sign contracts except for when they relate to student loans and other necessary living expenses. Real estate contracts are not included in this category. Signatures on a real estate contract can also be considered null and void when either the buyer or the seller is not of sound mind when the signing occurs.
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Contingency Clauses
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Some real estate contracts have contingency clauses. For example, a contract may state that if the buyer is not approved for the loan that he is expecting to qualify for, the contract is null and void. Other contingency clauses may relate to unsatisfactory home inspections and the failure of the seller to disclose the presence of lead or lead paint to the buyer.
Other Factors
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Contracts that do not clearly outline the terms and conditions of the real estate transaction, and do not clearly state the purchase price, are not considered to be legally binding.
Considerations
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Before signing a real estate contract, buyers should take the time to read through it carefully to ensure that you understand all of the terms and the legalities involved. Failing to fulfill the terms of a valid real estate contract can have serious legal and financial consequences for everyone involved.
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References
- Photo Credit real estate contract image by Keith Frith from Fotolia.com
