Talk:Real estate contract

Comment[edit]

I have never found conveyancing very interesting so I am not the best person to ask about this. However, I offer the following questions:

is the form of the agreement the same regardless as to the nature of the estate being transferred or are there significant differences in the formal requirements depending on whether it is a freehold or leasehold estate and, if the latter, depending on the term of years, or if rights in and over land are being transferred?

A leasehold estate, in my understanding, is a fancy (probably somewhat archaic) legal term for the a tenant's right to occupy real estate when renting it. In the case of leasehold estate, the contract is colloquially and maybe even formally typically referred to as a lease in the case of renting or leasing real estate such as apartments. This would be a good point to include in the Leasing article, in my opinion. The form of a leasehold estate contract or lease is very different from a contract for freehold estates, which this article covers. Leases or leasehold estates practically never involve recordable deeds in the USA, but freehold estates usually do result in deeds or similar recordable documents, which in the USA are recordable with the county. The deeds are typically separate documents from the real estate contract.

The form of the agreement will also vary in other ways depending on the nature of the real estate being transferred. There is no single set form which is abolutely required for a real estate contract in the USA. There are often some rather standard fill-in-the-blank forms written by lawyers for real estate contracts which can be bought by parties interested in using them. However, principals are allowed to write their own real estate contracts typically. Real estate agents that are not lawyers must use a standard fill-in-the-blank form in some jurisdictions if they prepare a contract. H Padleckas 22:37, 17 January 2006 (UTC)[reply]

In Scotland and continental Europe, leasehold is the norm and freehold the exception (although the balance is shifting in Scotland). Therefore, it is anything but archaic. The formalities vary depending on the title and term of years, from verbal to licence occupation at will to deed as the requirement for a term of, say, 999 years. The leasing page is aimed at what we would term periodic tenancy, i.e. weekly or monthly agreements and not at the leasehold estate situation. For the record, I should clarify that a lease is a conveyance because it conveys a possessory interest in land from the title holder to the tenant for term of years. To that extent, the effect of the conveyance is a transfer of an estate comparable to a fee simple subject to a condition subsequent that the tenant pay rent and abide by any covenants.

Although I agree that that distinction should probably be made on the page (did that). Domestic freehold conveyaning through the various Land Registry systems is very mechanical and you just fill in the forms. Agricultural, commercial, and industrial conveyancing requires detailed drafting for agreements (I always avoided it like the plague but did get caught whenever I had to sue someone for screwing it up).David91 06:23, 18 January 2006 (UTC)[reply]

what are the rules of formal invalidity, i.e. if one or more of the required formalities are not complied with, will the estate or the rights be transferred, i.e. will rules of equity perfect any invalidities to ensure that the parties' reasonable expectations are fulfilled?

A counterquestion here is: invalidity of the real estate contract or invalidity of the deed? Invalidity of the deed represents a problem. The conveyance or transfer of real estate may not be valid. Invalidity of the contract due to a lack of compliance with a required formality in the contract does not automatically invalidate a voluntary conveyance by the deed. In fact, no written contract is really required to convey real estate between willing parties in the USA. The real estate contract itself is not recorded with the government and is typically not revealed to the public and often not even to the government unless a problem arises in a court case. As long as at the closing, the parties agree to go through with the sale or transfer of the property, the resulting conveyance will be valid until one of the parties then takes the other to court, asking that the conveyance be invalidated based on a non-compliance with the contract. The contract is just a bilateral promise to go through with the sale as specified in the contract. If before the closing, one of the parties fails to comply with the "promise" in the contract, then the other party can take the non-complying party to court and force them to comply. If the real estate contract is not written, then it is not enforcable by a court in the USA, but not necessarily void. A non-written contract can still be "valid between the parties" and still result in a conveyance with a deed by willing parties. If before the conveyance, the contract is found to be unsatisfactorily flawed, then the contract could be considered void by the parties or will be voided by the court and the status of the parties should be returned to whatever it was before any performance of the contract. The contract can then be renegotiated correctly if the parties are willing. This is USA law; I'm not sure if all these details are valid in other countries.
H Padleckas 00:21, 18 January 2006 (UTC)[reply]

invalidity of the real estate contract or invalidity of the deed? This terminology for a distinction is meaningless to me. For freehold, everything revolves around the registration process and, if one party refuses to complete the process, remedies for damages and/or specific performance would be available. If we are in commercial conveyancing and leasehold territory, a wrongful failure to complete would also give rise to remedies for breach of the initial agreement to buy or lease (assuming it was enforceable). In Scotland, for example, the first offer and acceptance is the contract of transfer. The key is always the document of title (possessory or freehold) and, in England, we have the equitable maxim, "Equity regards that as done which ought to have been done". So, if a technical failure would frustrate a legal transaction, Equity will save the transaction by treating is as having been done. David91 06:41, 18 January 2006 (UTC)[reply]

does it make any difference if the buyer/tranferee is an undisclosed agent?

I'm not aware that it makes any difference. H Padleckas 05:18, 18 January 2006 (UTC)[reply]

do you attach a map to the contract?

Usually it's not done in the USA, although it could be done. Usually there is enough information written in the real estate contract to identify the lot and/or real estate to be sold unambiguously, and that is all that is required. There are several established ways of doing this in the USA for the contract and/or deed. This would be the topic of a separate article. Often, one way to do this is to reference plat maps in the public records in the contract and/or deed. H Padleckas 05:18, 18 January 2006 (UTC)[reply]

what is the effect of duress/coercion on the contract?

If it could be demonstrated to a court of law that duress or coercion was used to force a party to agree to or sign any contract, the contract would be voided. The most fundamental principle of general contract law for any kinds of contracts, including real estate contracts, is that all of the parties must voluntarily agree to the contract at the time it is signed (or formed). This is true not only in the USA, but I'm sure the rest of the world too. H Padleckas 05:18, 18 January 2006 (UTC)[reply]

what happens if the parties are not ad idem, i.e. they are negotiating at cross-purposes or there is a failure to disclose a material problem in relation to the land?

From these two references [1] [2], ad idem effectively means "a meeting of the minds," which is a necessary element for all contracts, including real estate, according to general contract law in the USA. If the parties do not agree to the same thing in a contract, then the contract is void. This is another fundamental aspect of contract law which I think would be true throughout the world. If there was a material problem with the real estate, I think it would be up to the courts to decide if any legal remedy would apply, if the case were brought before a court. H Padleckas 06:47, 25 January 2006 (UTC)[reply]

The reason I asked is that a deed is not treated in the same way as an ordinary contract in English law and, short of fraud, deeds are difficult to avoid. (I hope all this work is useful and will result in a better page. My apologies for prodding you into all this effort.) David91 06:59, 25 January 2006 (UTC)[reply]

if notorization is not required, is there a requirement that the signatures be witnessed by independent persons for evidential purposes?

For a real estate contract, there is no absolute requirement that the signatures be so witnessed, but it might be a good idea if the case ever went to court. Actually, it is impractical to notarize or even have formal witnessing for every real estate contract because there are often numerous offers and/or counteroffers made in order to reach an agreement. Often the offer and acceptance are made in separate locations and times by each of the parties. Some people "fishing" for real estate to buy may send out many signed offers, most of which may be rejected or ignored. The closing is typically a more formal meeting. The deed need only be signed by the grantors (sellers) and the deed-signing is typically notarized. H Padleckas 22:43, 25 January 2006 (UTC)[reply]

The offer and acceptance rules look similar for England but very different in Scotland and continental Europe, The contingency system is not the same at all. I would slightly change the order so that you have some form of provisional agreement accompanied by the payment of a deposit, then the investigation of title and securing of finance, then closing. But otherwise, looks OK to an outsider. David91 12:47, 16 January 2006 (UTC)[reply]

Sumkoolguy 06:18, 24 May 2007 (UTC) Heres the situation: What action can sellers take if the buyers decide not to buy the house after the contract was signed, mortgage approved and inspection done. For Example the House sold for 820k and the allowed downpayment for only 20k given the fact that they seemed very interest and cannot come up with that much funds for downpayment[reply]

To notarize (in BC) the lawyer requiered that another lawyer or notary represent the seller. 216.86.113.16 02:36, 18 September 2007 (UTC)[reply]

Whose laws?[edit]

Can we specify in what countries these laws apply? Monado (talk) 18:29, 23 January 2013 (UTC)[reply]

Add a section for Escalation Clause?[edit]

This article should have a quick summary of Escalation Clauses. Here's one reliable source to start with: http://www.realtor.com/news/what-is-an-escalation-clause-how-does-it-work-and-when-should-you-use-one/. Once the article has a such a section, add the hotlink to the Index of real estate articles, because the "Escalation clause" bullet is currently red.