Contracts
The Purchase Agreement and What It Obligates
Forms, required disclosures, deposit handling and cancellation rights are written at the state level, and in many states the approved form comes from the commission or the state association. Nothing here substitutes for the form and the license law in your own jurisdiction.
Call it a sales contract, an offer to purchase, or a purchase and sale agreement. The name on the form varies by state and by association; the function does not. It is the document that turns two people's intentions into enforceable duties.
Everything after it in the transaction, from the escrow deposit to the deed handed over at closing, happens because this document said it would. Read it as a set of promises with deadlines attached.
What Has to Be Present for It to Be a Contract
Before any real estate specific term matters, the document has to satisfy ordinary contract law. That means parties with legal capacity, mutual assent shown by an offer and an acceptance of that offer, consideration moving between the parties, and a lawful object. Strip any one of those out and there is nothing to enforce.
Real estate then adds a requirement of its own. Under the Statute of Frauds, as adopted in every state, a contract for the sale of an interest in land has to be in writing and signed by the party being held to it. An oral agreement to sell a house is not a small paperwork problem. It is generally unenforceable, which is the reason licensees are trained never to let a term live in a phone call.
The writing also has to identify the property well enough that a court could tell which parcel was meant. A street address is often sufficient between the parties, but the legal description is what removes the argument, and that is what the deed will carry at closing.
The Clauses to Locate on Any Form
Whatever form your state uses, work through it in this order. Each entry is a place where a missing or careless line produces a dispute later.
Who is bound. Full legal names of every buyer and seller, along with how the buyers intend to take title if the form asks.
What is being conveyed. The property identification, and separately, the fixtures and personal property staying or going. Appliances, window treatments, mounted equipment and anything detached for staging belong in writing.
Price and how it will be funded. The total, the deposit, any seller-carried amount, and the balance due at closing.
The deposit terms. Who holds it, when it is delivered, and the conditions under which it is returned or forfeited. Amounts are customary rather than statutory and the handling rules come from your state's license law.
Loan terms the buyer is committing to pursue. Type of financing, an approval deadline, and whether the obligation survives a denial.
Contingencies and their deadlines. Inspection, appraisal, financing, title review, sale of an existing home, association document review. Each needs a date and a stated consequence for missing it.
Condition and repairs. Whether the property transfers in present condition, what the seller has agreed to correct, and who bears risk of loss before closing.
Dates. Closing, funding, and possession, which do not have to fall on the same day. If possession lags, the form needs an occupancy agreement.
Prorations. Taxes, association dues, utilities, and any rents, along with the method and date used to split them.
Costs. Which party pays each closing cost, including transfer taxes and title charges, following the practice used in that market unless the parties agree otherwise.
Required disclosures and representations, attached or acknowledged as the state directs.
Remedies on default, the dispute resolution method, and the agency relationship of every licensee involved.
The Moment It Becomes Enforceable
An offer is a proposal, not a contract. It binds nobody until it is accepted exactly as written and that acceptance is communicated back to the offeror. Change a single term and you have not accepted anything; you have rejected the offer and made a counteroffer, and the power to accept now sits with the other side.
Communication is the step that gets skipped. A seller who signs and sets the form aside has not formed a contract. The signed acceptance has to reach the buyer or the buyer's agent, in the manner and within any deadline the offer specified, because an offer can be revoked at any point before that delivery happens.
Offers also die on their own. They expire when the stated deadline passes, and they terminate on rejection, on counteroffer, on revocation communicated before acceptance, and in most cases on the death or incapacity of a party before acceptance. Once acceptance is complete and delivered, both parties owe performance and the deadlines start to run.
Some states layer an additional window on top, such as a period for attorney review or a statutory right to cancel a particular type of transaction. Those windows are local, and whether one applies is a question about your state rather than about contract law generally.
Changes and Broken Promises
A signed contract is changed only by another writing that both parties sign. Repair credits negotiated after an inspection, an extended closing date, a revised deadline after a lender delay: each becomes effective through an executed addendum or amendment that references the original contract, not through an email exchange or an understanding between the agents.
When a buyer walks away, look first at whether a contingency covered the reason and whether the buyer gave notice by the deadline. A timely exercised contingency is performance of the contract, and the deposit is returned under its terms. Walking away after the deadline, or for a reason the contract never addressed, is a breach, and the seller's recourse depends on what the form provides. Many forms make the deposit the agreed measure of damages; others preserve a broader claim.
When a seller refuses to close, the buyer has the usual damages remedy plus one peculiar to land. Because every parcel is treated as unique, money is often considered an inadequate substitute, so a court may order specific performance, meaning the seller is compelled to convey. That remedy is the reason a seller cannot simply pay their way out of a better offer.
A licensee's part in all of this is narrow and worth stating plainly. You complete the blanks on approved forms and explain what the form provides. Drafting original contract language, or telling a client what their legal rights are under a disputed clause, is the practice of law, and the answer in that moment is a referral to counsel.
Purchase Agreement Questions
Is a deposit required to make the contract valid?
No. Consideration is required, and the mutual promises to buy and to sell supply it. A deposit is a customary demonstration of seriousness and a fund the seller can look to if the buyer breaches, but a contract without one can still be enforceable. How a deposit must be handled and held is governed by your state's license law.
What is the difference between an addendum and an amendment?
In common usage an addendum attaches additional terms to a contract, while an amendment alters terms already agreed. Many state forms use the words interchangeably. Either way, both parties must sign, and the later document controls where it conflicts with what came before.
How is a letter of intent different?
A letter of intent sketches proposed terms and is normally written to be non binding, which is why it is a commercial practice used before a formal contract is drafted. Residential transactions skip it, since the offer itself is made on a contract form that becomes binding on acceptance.
Can the buyer assign the contract to someone else?
Only if the contract permits it. Many residential forms restrict or prohibit assignment, and financing terms and deposit handling can complicate it further. Read the assignment clause before promising an investor client anything.