When Is a Real Estate Contract Not Enforceable?

When Is a Real Estate Contract Not Enforceable?
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A real estate contract is a bilateral agreement between the seller and the buyer, and it involves the transfer of title for real property. In order for the contract to be enforceable, it must also be binding and it must offer legal remedies if the full terms are not met. A binding contract can also become unenforceable if certain instruments pertinent to the contract are not valid or are found to be fraudulent.


  • A real estate contract that is not legally compliant is also not enforceable. The buyer and seller must both be of legal age and sound mind, and the seller must be the legal owner of the property to convey it to the buyer.

A Binding Contract

An enforceable real estate contract is written, and it includes all the essential elements of the transaction – including sales price and contingencies. Once a written contract is signed by both parties to the transaction and delivered to both parties, it becomes a binding contract agreed upon by mutual assent and satisfies the Statute of Frauds obligation.

Legal Capacity Requirement

Both parties to the contract must be of legal age and of sound mind for it to be enforceable. A minor may enter into a real estate contract, but the terms aren’t enforceable, and the minor may withdraw from the contract at his will. Determining competency is up to the courts. In addition to mental incompetency, drug and alcohol abuse might cause a party to the contract to be determined mentally incompetent.

A Deposit as Consideration

Something of value must change hands for a real estate contract to be enforceable. This is why a deposit is taken when an offer is delivered. That deposit is the “consideration” and shows the buyer’s intent is serious. Title to another property can be used as consideration or something else of value, but in real estate, consideration usually takes the form of a cash deposit that’s placed into escrow.

However, "something of value" doesn't have to be monetary, even though typically it is. If a buyer stops looking for another house after making an offer, and the seller takes the house off the market, each party has exchanged "something of value" and shown "consideration." Simply the mutual promise of an offer and an acceptance of an offer constitute consideration. Without some form of consideration, the contract does not become enforceable.

Fraud Negates a Contract's Enforcement

The seller of real estate must be legally entitled to sell the property. If it’s found that the seller is not the rightful owner, the contract is considered unenforceable. Real estate contracts include the legal description of the property according to the locality’s tax assessor. If the title holder is not the seller, an investigation as to the legal owner reveals whether the contract is enforceable.