Real Estate Contracts - Items of Validity and Termination
It is interesting that so many of us sign contracts without really knowing the basis of what makes them valid or what needs to occur for them to be terminated.
Real Estate Contracts
As I study to get my Florida Real Estate License (as being a real estate investor it just makes sense at this point) I have learned a few new things - mainly in regard to law and codes.
Let me share some basic foundation type information in regards to real estate contracts.
Validity
In order for a contract to be valid the following things must exist:
- Competent parties (of sound mind and body)
- Voluntary Act (cannot be under duress)
- Mutual Consent
- Legal Purpose
- Valuable Consideration (something of value being conveyed)
Furthermore, in states such as Florida a real estate contract must be in writing and contain the legal description of the property to be valid.
Termination
A contract is terminated if one of the the following occur:
- The Contract is Executed (performed)
- Infeasibility (not possible to perform)
- Mutual Agreement
- Cooling Period
- Revocation
- Abandonment
- Lapse of Time
- Invalidity of Contract
As you can see from the list - a contract being fulfilled technically terminates the contract. Contracts can also expire if there is a date of performance, such as a seller's listing agreement with a broker is for six months and the home has not sold by then and so on and so forth.
Remember, this is not legal advice and I am not a lawyer. Just wanted to share some general info about contracts in regard to real estate.
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I wonder how close we are for the blockchain to start executing these with smart contracts... It will be interesting to see how the current legal environment will handles disputes that arise from these.
Yeah, I did a post speculating on that a little while ago. It makes so much sense for real estate to transact on the blockchain....way more efficient.
I wanna say Poland has their land registry on a blockchain now. Real estate makes an enormous amount of sense to transcribe into a blockchain format.
What's your game plan when you get your Florida real estate license?
Come on buddy, you know I don't do something without a gameplan already in place ;-)
I'm planning on selling more of my FL properties and am currently on the hunt to acquire multi-families in northern MA so it just makes sense financially. Save 3% on the sales of my stuff and also get that referral fee on anything I buy anywhere in the U.S.
Good stuff, I wish I had interest in real estate, just never did, but great residual income.
As a law student that absolutely loves contract law, I'm excited to see someone else talking about it. It's really important to understand what makes a legally enforceable contract, and what terminates that contract. Glad to hear you're learning about it in the context of real estate! Good luck!
Lot to learn on the journey through life.