Purpose of Contract

• The typical real estate contract is a promise to transfer land, but only if all conditions, requirements, and promises in the contract are met. Most real estate contracts build in a period, known as escrow, which gives the parties to the contract time to make inspections, fulfill conditions and do other things. The contract itself is only a promise; it does not affect the transfer. Actual legal transfer of the real estate does not take place until the seller transfers to the buyer another legal document, a deed. Deeds typically replace the contract, although a deed may reference the contract and keep its promises alive.
  
  

Statute of Frauds

• Each state follows a doctrine called the Statute of Frauds, which requires certain contracts in writing. Real estate contracts must always be in writing; however, the writing need not be a formal contract. A written document as simple as instructions for escrow may be sufficient in some states. The written document must, however, detail such essential items as the parties to the contract, any price or payment instructions, and a sufficiently detailed description with which to identify the property. Real estate transfer contracts made orally, or without containing the required language, may be unenforceable.
  
  

Capacity to Contract

• Courts will refuse to enforce a real estate contract in which one or more parties did not have legal capacity to contract. Typically, a party to a contract must have reached the state's majority age and must be mentally capable of understanding that he's entering into a legally binding contract. However, in some states, if an underage party shows that she has either married, or otherwise legally emancipated herself from guardianship to become independent, a court will enforce her contract despite her lack of majority age.
  
  

Generally Unenforceable Contracts

• If a party entered a real estate contract due to threats, improper pressure or duress, courts will refuse to enforce the contract. Courts also won't enforce any real estate contract that obligates a party to act illegally, or any contract that effectuates an illegal purpose. Some types of real estate contracts may also be unenforceable because they violate public policy: for instance, a contract that obligates the buyer to keep the premises in a dangerous condition. When one party uses fraud, or misrepresents or fails to disclose important facts in order to induce the other party to sign the real estate contract, courts won't enforce the contract.