The Real Estate Sales Contract

The Real Estate Sales Contract

A sales contract is a written, bilateral, executory, assignable contract that is binding on all assigns and heirs. Parties to a residential sales contract are usually referred to simply as buyer and seller.

When a properly prepared offer is accepted and signed by the offeree then it becomes a contract of sale, or sales contract. A sales contract is an agreement where one party agrees to sell and another party agrees to buy certain real property at the price, terms, and conditions stated in the contract. In a strict legal sense the contract is the agreement between the parties, not the piece of paper. The piece of paper is merely the evidence of the agreement.

In addition to being the agreement that binds a buyer and seller concerning a particular piece of property, the sales contract also serves to direct the terms, conditions, and mechanics of the closing itself. It is important that the parties involved agree in the contract on all of the pertinent terms and closing details, including proration date and date of occupancy.

An executory contract is one in which one or both parties has not yet performed, it is not yet completed. Because it is a document that contains details that have not been performed, the sales contract is referred as an executory contract.

A contract that has been executed, on the other hand, is one that is completely finished - there is nothing left to be done. All terms and conditions have been met and there has been an exchange of a deed (thereby passing legal title from one to another). An executed document is no longer a contract. It is merely evidence of an executed agreement.

Brokers frequently use standard contract forms for sales contracts. They may assist their clients or customers in filling out these forms, and may give advice, as long as they do not charge an extra fee for this service. If a broker charges a separate fee, it would constitute the unauthorized practice of law. A valid legal contract requires legal consideration. Legal consideration for a real estate sales contract must be something of value. The requirement for legal consideration is what distinguishes a contractual obligation from a gift. It is usually the purchase price of the property expressed in a dollar account.

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