1 Page Contract - Legality

[E J]

I created a 2 page PSA to be used when wholesaling deals, but my attorney was concerned there was so much missing from it that's in the standard form. But really, does it even matter if a lot of the specifics are missing?

The fact is (and this has been said on other threads) that the purchase contract really is worthless until the time of closing. As the buyer, I could blow the contract off and I would only lose my $10 EMD. As the seller, they could blow the contract off and I couldn't really do anything about it because I am not going to take expensive legal action- I would rather just move on. Also written into the contract is that the earnest money is the sole remedy for buyer's default, so I'm protected from specific performance.

So, in the event that a murky issue arises that is not directly addressed in my short contract, such as the house burning down the day before closing, or the condition of the home being different than originally agreed on, then I can just back out of the deal! Let them keep the $10 bucks if they won't give it back claiming there was nothing in the contract saying I get it back if something happens to the house.

If the homeowner remains intent on selling, and I remain intent on buying, then there should be no problem with the short contract.

What do you guys think about this? Does anyone have a 1 or 2 page contract that they CURRENTLY USE to do deals? If anyone could share, that would be invaluable to me.

[J Scott]

As usual, let me reiterate that I'm not an attorney or a legal professional of any kind. But, again, I do have some knowledge of contract law.

There are a couple things here that should be understood:

- The definition of a "valid" contract is one that is legally binding because it conforms to all legal requirements for the contract.

- The definition of an "enforceable" contract is one where there is legal remedy if the contract is breached.

- A contract can be valid or invalid. If a contract is valid, it can be either enforceable or unenforceable.

Now, at the very least, you are going to WANT/NEED your real estate contract to be valid. In order for a real estate contract to be valid, it must:

1. Be in writing;

2. Be between two competent parties of legal age (18);

3. Have names and signatures of both parties;

4. Must have a legal description of the property.

5. Have consideration on both sides (which may be the property from the seller and the purchase price from the buyer -- earnest money is not required);

If it has those things, I believe it's safe to say it's a valid contract.

Now, without additional language that discusses the roles and responsibilities of each parties, you may not have an enforceable contract. There's nothing saying you need to have an enforceable contract, but as Bill pointed out, it's generally a good idea. This is where Mr. Attorney comes in.

As for a legal description of the property, it certainly needs to be more than just the address, but if the standard state contract calls for a "Permanent Index Number," then that's probably how it's done in your state.