Memorandum of Agreement (MOA) vs Signed Contract in Real Property

[Aidan Mulligan]

I recently watched a video that talked about common errors to avoid. One of the common errors was "Not getting a Memorandum of agreement when buying real estate." The little explanation that followed said that in their opinion, everyone should obtain an MOA, a memorandum of contract, or an affidavit, and have it notarized along with a signed contract so that the seller can't back out or sell to someone else and cancel your contract.

Where I'm confused, if you have a signed contract, then why do you need an MOA (MOU) or affidavit. Isn't the contract legally binding enough? I couldn't find the answer through a google search because MOAs can apply to a lot of different areas. I'm located in Charlotte, NC.

[Elizabeth Goforth]

Well a bank wouldn't lend on it, and title insurance wouldn't insure it. So technically, yes, someone with cash who did not do a title search or did and was okay with a clouded title could buy it. But then they'd either have to do quiet title action to clear it up or pay you to get off the chain title to resell it. 

So either way, you'd just hang out there on the chain of title until you pop up later and someone has to deal with your Memorandum. 

BUT if no money has passed for option fee or earnest money, your original option or purchase and sale isn't binding, so your memorandum wouldn't be either.