Often, a potential seller of real property and a potential buyer of real property will informally agree with one another on a price, they may shake hands, and they may even expressly say to one another, “I agree to buy your land,” and “I agree to sell you my land.” Unfortunately, this sort of agreement is not legally enforceable, which means that if a disagreement arises between the parties, or if one party decides to back out of the agreement, a Court of law will not force either party to buy or to sell the land in question.
The primary reason why this agreement is not legally enforceable is because, in Florida, a contract for the sale of lands is not enforceable unless the agreement is made in writing and signed by the parties to the agreement.
However, a signed writing is not the only thing that is required to make a real estate contract enforceable. In addition to the requirement that a contract for the sale of lands must be in writing and signed, there are several other provisions of such an agreement that Florida Courts have deemed to be essential terms of a real estate contract. If an essential term is missing from the agreement, then even a written agreement for the sale of land is not enforceable. An example of a provision that has been held to be an essential term of a real estate contract is the price. If a real estate contract fails to specify the price to be paid for the land, then the contract will not be enforceable, even if it is in writing and signed by the parties.
On the other hand, certain provisions that are often found in a real estate contract are not considered essential. If such non-essential terms are not included in the agreement, then the written agreement is still enforceable. An example of a provision that has been held not to be an essential term of real estate contract is a provision that specifies when the closing will occur. As a result, the lack of a closing date would not prevent a real estate contract from being enforceable. If a real estate contract fails to specify a closing date, the Court will likely require that the closing take place within a reasonable period of time.
Other examples of terms that have been held to be essential terms of a real estate contract, which must be included in the written agreement for the agreement to be enforceable, include the following. There may be others.
- The identity of the buyer and of the seller.
- A sufficient description of the real property to be sold.
- The sale price, or consideration to be paid for the real property by the buyer.
- The amount of any earnest money deposit to be paid by the buyer.
- The manner of payment of the sale price by buyer, including when it will be paid.
- Whether the transaction will be a cash closing or will involve financing.
- Financing terms, including any security interest to be retained by the seller.
- Dates when any deferred payments will become due.
- How interest will be calculated in the event of deferred payments.
- Whether the buyer will assume an existing mortgage.
- Whether the seller or buyer will pay to discharge substantial liens on the property.
- Any other acts to be performed by the buyer for the seller, or vice versa.
Ultimately, there is no definitive list of essential terms that must be present and certain. Rather, the essential terms will vary widely according to the nature and complexity of each transaction and will be evaluated on a case by case basis.
On the other hand, terms that have been held not to be essential terms of a real estate contract, so that the written agreement may be enforceable even if these terms are missing, include the following. There may be others.
- The manner of conveyance.
- Whether the buyer or the seller will pay for documentary stamps.
- The closing date.
- Whether the buyer or seller will insure the property prior to closing.
- Whether the buyer or the seller will pay for intangible tax.
- Any warranties to be given by the seller.
- Whether the buyer or the seller will pay for recording fees.
- Whether the buyer or seller will obtain an abstract of title or title insurance.
Ideally, any terms that are important to the parties should be included in a real estate contract. However, the non-essential terms listed above are not required in order to make the agreement legally enforceable.
If a potential buyer or seller of real property intends to buy or sell real property in Florida, they need to be able to rely upon, and to enforce, their real estate contract. In order to do so, they should be sure that their agreement is in writing, signed by all parties to the agreement, and that it is not missing any of the essential terms, discussed above.
Please note that this article is intended for informational purposes only, and that nothing contained in this article may be relied upon as legal advice. Every situation is unique and requires unique attention and advice. If you have any questions or concerns about what is required for a legally enforceable real estate contract, please contact our office to schedule an appointment to discuss your unique situation.