Real Estate Contracts
Formation and validity
A valid contract needs offer, acceptance, consideration, capable parties, and a lawful purpose, and it must satisfy the Statute of Frauds when it concerns land. Alabama requires land sale contracts to be in writing and signed by the party to be charged; leases for more than one year also fall within the Statute of Frauds. Contracts may be bilateral or unilateral, express or implied, executory or executed. A void contract has no legal effect, a voidable contract may be disaffirmed by one party, and an unenforceable contract is valid but barred by a legal defense such as the Statute of Frauds.
Negotiation mechanics
A counteroffer operates as a rejection of the original offer and creates a new offer, ending the original offeree's power of acceptance. Acceptance must be communicated in the manner authorized by the offeror. Revocation must be communicated before acceptance, and death of the offeror terminates the offer.
Key clauses and remedies
Watch for financing, appraisal, inspection, and sale-of-the-other-property contingencies; time is of the essence clauses; earnest money as liquidated damages; and as-is provisions. Remedies include damages, rescission, specific performance, and forfeiture of the deposit. Options and rights of first refusal are not sales contracts. Novation substitutes a new party or obligation; assignment transfers rights and generally requires consent when the contract says so.
Practice limits
Alabama licensees may complete blanks on preprinted contract forms but may not draft contract language, which is the unauthorized practice of law. Worked example: buyer offers 300,000 dollars; seller replies 310,000 dollars in writing. The buyer's original offer is dead, and the buyer may accept, reject, or counter the seller's new offer.