When buying or selling real estate, a contract must be drawn up between the buyer and the seller. In order to satisfy the requirements of the Statute of Frauds, the contract must be in writing and signed by the parties. Ordinarily, the contract consists of a blank form that is provided by the seller's broker, but an attorney may also draw up the contract. Other times, the seller will draft the contract himself. The responsibility for drafting the contract may vary from one location to the next, depending on local custom and statutes


Contents of the Contract

Regardless of who drafts the contract, certain information must be included in order for the contract to be valid. The contract will identify the seller and the buyer by name. It will also identify the property. Sometimes, it is sufficient to merely state the address of the contract; however, some jurisdictions may also require a legal description to be attached to the contract. The final requirement that must be stated in the contract is the price to be paid for the property.
Other terms may be included in the residential real estate contract. Such terms might include a provision that time is of the essence of the contract. When time is of the essence of the contract, the parties adhere to time periods established in the contract. Other provisions may be added to allow the buyer a period of time during which to obtain financing at a certain rate, to complete a home inspection, to order title and a survey, or to obtain a building permit. Most of these provisions are common in real estate transactions, but none is required in order to validate the contract.


Good and Marketable Title

Implied within every residential real estate contract is the seller's duty to provide good and marketable title. This means that the title transferred by the seller to the buyer will not subject the buyer to a lawsuit because of any defect in the title. Defects in the title can be either in the nature of the seller's chain of title or in the nature of an encumbrance. An encumbrance may be a tax, repair, judgment mortgage or other lien that has been recorded against the property. A mortgage that will be paid off at the closing is not considered to be an encumbrance. Generally, the seller provides proof of good and marketable title at the closing.


Breach of the Contract

If either the buyer or the seller defaults under the residential sales contract, the other party may sue for breach of contract. In order to be able to maintain such a cause of action, the complaining party must have fully performed his obligations under the contract and demanded performance from the other party. For instance, the seller can sue the buyer if the seller tenders title to the buyer and the buyer refuses to tender payment. Likewise, the buyer can sue the seller if the buyer tenders payment and the seller refuses to tender title. Remedies for breach of contract include rescission of the contract, specific performance, and damages.