Laws are complicated… really complicated, and Real Estate Law is more complicated than your average, run-of-the-mill law. Most buyers and sellers never have any training in this type of thing… why would you? Here’s a little help in understanding what makes a real estate contract valid and enforceable in the eyes of the law. It’s a good thing to know if you ever decide to buy or sell a home.
Real Estate Contracts Must be in writing
Except for leases of 1 year or less, a real estate contract in the state of Arkansas must be in writing. It is best if the forms you use have been pre-approved by an attorney or have your attorney draw up a real estate contract specifically for your property.
Contracts must consist of at least 2 parties of legal age (that’s at least 18). It’s one of the reasons title companies ask for your driver’s license when you are at the closing table… they want to make sure you are of legal age, a legal citizen, and a citizen of the state you say you are.
Names and Signatures of all parties to the contract
You’ve got to have a complete record of all parties to the real estate contract. If you are missing one or more signatures, the contract is voidable (not void) by the opposing party. A voidable contract is one which may be enforceable if all parties so choose. A date and time is now highly recommended as well. I even have all my important clauses initialed.
Consideration is a promise to pay money or offer something of value in exchange. For example, “in consideration of $10…” If there is no consideration, there is no ability to transfer ownership.
Address of property and/or legal description
The address of the property is not enough these days. Make sure to include the lot/block/subdivision, legal description, and county of the property.
Meeting of the Minds
In a valid contract the seller clearly understands the terms of the buyer’s offer and the buyer clearly understands the performance required. If there is not a ‘meeting of the minds’ then there is no contract in place.