(Oct. 8, 2021) With low inventory in our market, and a high buyer demand, we are experiencing many multiple-offer situations on properties.
It’s important to pay attention to contract details to be sure that verbal agreements are finalized and in writing. The Maryland Realtors Association legal team provides the following explanation for what constitutes a valid contract.
There are five elements of a contract: (1) capacity of the parties; (2) legality of object; (3) consideration; (4) offer and acceptance (the so-called “meeting of the minds”); and (5) delivery.
The capacity of the parties refers to legal capacity to enter a contract (i.e., age 18 or older; mentally competent). Legality of object means it is for the sale of real property that can be lawfully sold. And, consideration is a legal concept meaning something of value that is given in exchange for something else, usually money.
To address acceptance and delivery, pursuant to the statute of frauds, a contract for the sale or lease of real property must be in writing to be enforceable by a party in a court of law.
When a buyer and seller have agreed to the terms of the contract, but neither party have signed the contract, the parties have still not created an enforceable contract because there has been no written acceptance, and either party may still change his or her mind.
Emails between agents do not constitute a contract, nor do they obligate the seller to accept the buyer’s offer. The requirements of a valid contract for real property include offer, written acceptance and delivery.
Another specification is that “delivery” of a contract can be verbal. When a seller has signed a contract and a listing agent has the signed contract in their possession and has given verbal confirmation to a buyer’s agent of having possession, the verbal confirmation from the listing agent to the buyer’s agent constitutes “delivery” under Maryland law.
The legal team stated that it’s important to note that knowing that “delivery” can be verbal, first, the buyer and seller must sign the offer to indicate acceptance and form a contract. A text, email or phone call from either party saying, “I’m going to sign” is not sufficient.
— Lauren Bunting is an Associate Broker with Atlantic Shores Sotheby’s International Realty in Ocean City.