Contracts, Transfer of Title, and Settlement
Contracts
Formation and Enforceability
A valid contract needs offer, acceptance, consideration, capacity, legality, and - for real estate - a writing under the statute of frauds. Acceptance must be communicated and must mirror the offer; any change is a counteroffer, which kills the original. Real estate contracts need an adequate property description and the essential terms, but not every detail. Classify correctly: bilateral vs. unilateral (an option is unilateral until exercised), executory vs. executed, valid vs. void vs. voidable. Note the special rules - an option is supported by consideration and must be exercised strictly according to its terms.
Performance, Breach, and Remedies
Time is of the essence only when stated. Contingencies (financing, inspection, appraisal) must be satisfied or waived by their deadlines. Remedies include damages, specific performance (used for land because it is unique), rescission, and liquidated damages where stated. Earnest money is not automatically liquidated damages. Assignment transfers rights; novation substitutes a new party. The parol evidence rule limits prior oral statements, but a latent ambiguity or fraud can open the door.
Traps and Rule of Thumb
Trap: an acceptance with a small change - a counteroffer, not a contract. Trap: treating a voidable contract as void. Trap: confusing assignment with delegation of duties.
Rule of thumb: real estate contracts must identify the parties, the property, the price, and the signature of the party to be charged - if any of the four is missing, suspect statute of frauds.
Transfer of Title and Settlement
Deeds and Conveyance
Voluntary transfer by deed requires a competent grantor, a named grantee, words of conveyance, a legal description, and the grantor's signature - consideration is not required. Delivery with intent and acceptance completes the transfer; recording protects priority. Compare general warranty (six covenants: seisin, right to convey, quiet enjoyment, warranty, further assurance, encumbrances), special warranty (limited to the grantor's own acts), bargain and sale, and quitclaim (no covenants).
Notice and Recording
Arkansas is a race-notice jurisdiction: the later purchaser wins only if it takes without notice and records first. Notice is actual, constructive (recording), or inquiry. Torrens registration and title insurance are alternatives to the abstract-and-opinion method.
Settlement Mechanics
At closing, each item is a debit or a credit. Earnest money is credited to the buyer; loan payoff, broker fees, and the seller's share of prorated taxes are debits to the seller. Prorations are computed to the closing date. Federally related loans trigger TRID disclosures (Loan Estimate, Closing Disclosure); Arkansas also imposes a real property transfer tax on the consideration, and the deed is stamped and recorded.
Traps and Rule of Thumb
Trap: crediting the buyer twice for earnest money. Trap: confusing special warranty with general warranty. Trap: forgetting that recording protects, but does not cure, a defective deed.
Rule of thumb: whoever owned the property for the days in question pays for those days - seller pays through the day before closing, buyer pays from closing day.