Interested in a real estate career? Before you get your license, you'll have to take pre-license education courses. Each state has a unique set of requirements for pre-license education. But it's safe to say that regardless of where you practice real estate, you'll have to learn the basics of contract law.
A good real estate pre-license course will help you understand the basics of contract law in your state. You’ll need to know what types of contracts exist in your state, how to write them, and what makes a contract valid.
You should also know that there are four possible legal status options for contracts: valid, unenforceable, void, and voidable. Let's go over what each of those terms means.
Valid Contracts
A valid contract is one that possesses the essential elements to be legally enforceable. A real estate contract must meet four essential criteria to be considered valid:
First, it must include a valid home purchase agreement in writing.
Second, the contract must contain an offer from the buyer and an acceptance from the seller.
Third, the purpose of the contract must be legal.
Finally, it must include an exchange of things that have value, like money for property.
As long as the contract meets those four criteria, it is enforceable under the law.
Unenforceable Contracts
An unenforceable contract is one that may or may not be valid, but it is not enforceable under the law. Unfortunately, there are quite a few things that could turn your real estate contract into an unenforceable one. For example, a court may find that either the buyer or the seller lacked the capacity to enter into a contract. Typically, this would apply to children, mentally ill people, or people under the influence of drugs or alcohol.
A contract might also be deemed unenforceable if one or both parties misrepresented the facts of the contract, if there is a mistake in the contract, or if the contract violates the law in some way.
Void Contracts
A void contract is totally unenforceable and probably lacked legal effect from the beginning. In other words, this contract lacks one of the four essential elements of a valid contract listed above. For example, a contract to sell a property in exchange for drugs would be void because it lacks legal purpose.
Voidable Contracts
A voidable contract is one that includes the option to rescind. This contract might be valid when you first create it, but it could be voided in the future. Any contract that contains a contingency clause is voidable.
For example, many real estate contracts include home inspection contingencies. If the home inspection finds that the hot water heater is broken, that makes it voidable. However, it is not automatically void because the buyer could choose to purchase the house anyway after receiving the home inspection report.
Enroll in a Real Estate Contracts Course Today!
Ready to jump-start your real estate career? Register for one of Aceable Real Estate School's online courses today. You'll learn everything you need to know about contracts as a real estate agent, including:
How to use and assess contracts for real estate transactions
Which laws affect your client and your business
The most common mistakes real estate agents make and how to avoid them
The key rights a client has as an owner
Aceable has all of the pre-licensing courses you need for your real estate license. Check out our real estate courses today.