Contracting to Sell Land

• Author: Alan R. Romero
• Profession: Professor of law and Director of the Rural Law Center at the University of Wyoming College of Law
• Pages: 249-272

Chapter 15

Contracting to Sell Land

In This Chapter

▶ Creating enforceable contracts

▶ Setting deadlines and conditions that must be met before the sale

▶ Reducing and allocating risk of loss pending the sale

▶ Dealing with breaches of contracts

▶ Understanding duties of disclosure and implied warranties

M

ost landowners get their land by buying it from previous owners.

Almost all land purchases begin with a contract in which the seller

and buyer agree on the terms by which they’ll buy and sell the property at

some time in the future, although such a contract isn’t legally necessary. But

the buyer and seller usually have a lot of work to do before they’re ready

to actually buy and sell anything. Among other things, the buyer probably

needs to borrow money from a mortgage lender to pay the seller, and she

may want to inspect buildings and survey the land. The buyer also needs to

make sure that the seller has good title to the property, and the seller may

have some work to do to clean up the title.

The buyer doesn’t want to do all this work only to have the seller sell the

property to someone else, and the seller doesn’t want to do this work only

to have the buyer change her mind and buy some other property. So both

the buyer and the seller have reasons to enter into an enforceable purchase

agreement before they invest time and money in preparing for the sale.

Because all sorts of things can go wrong before the parties complete the

sale, such purchase agreements typically address what happens if various

things do go wrong and include provisions intended to reduce the chances

that they’ll happen at all. Often, these contracts even include provisions that

excuse either or both parties from completing the sale if certain conditions

aren’t met.

This chapter takes a look at all these typical aspects of real estate purchase

agreements. It explains the parties’ remedies if the other breaches the

contract and examines duties that the seller may owe to the buyer that aren’t

created by their contract.

250 Part IV: Acquiring and Transferring Property Rights

Creating an Enforceable Contract

to Sell Real Property

Real estate purchase agreements are enforceable contracts just like any

other contracts, and they’re subject to the same general rules. Two parties

form an enforceable purchase agreement only when one party makes an

offer and the other accepts it. The agreement also must be supported by

consideration, but the parties’ respective promises to deliver a deed and

to pay the purchase price are themselves sufficient consideration. (For

details on all these generally applicable contract rules, see Contract Law For

Dummies by Scott J. Burnham [Wiley].)

Real estate purchase agreements are also subject to the statute of frauds.

Every state has a statute of frauds that generally says such contracts, as well

as other types of legal documents specified in the statute, are unenforceable

unless the purchase agreement, or some other documentary evidence of it,

is in writing and signed by the party challenging its enforcement. The

following sections explain the requirements of the statute of frauds and

address an exception known as part performance.

Real estate purchase agreements go by many names, including the following:

✓ Sales contract

✓ Earnest money agreement

✓ Buy-sell agreement

✓ Binder

✓ Deposit receipt

✓ Marketing contract

Requiring a signed writing

Purchase agreements generally satisfy the statute of frauds because they’re

in writing and signed by both the buyer and the seller. But a purchase

agreement may be enforceable even if it isn’t in writing and signed by both

parties. An unwritten agreement is enforceable in the following situations:

✓ Written offer and acceptance: Even if the parties never sign a purchase

agreement, if one party submits a written offer and the other party signs

that offer in acceptance, the written offer satisfies the statute of frauds

as long as it includes the essential elements of the contract.