Real Estate Contract & Tort
Elements of a Real Estate Contract
For a real estate contract to be valid and enforceable, it must contain the following elements:
* Intention to create legal relations;
- The court would presume that there is such an intention
- Customers are often strangers to one another until the introduction by an agent
* Offer;
- a financial proposition made by one person to another, with a specific promise that he is willing to be bound by that proposition.
** Difference Between Offer & "An Invitation To Treat"
- When an owner or his agent invites prospects to view a property, he is not making an offer. He is inviting offers.
- The owner is not bound to accept the highest offer at the end of the viewing.
- The same reasoning applies in the case of an auctioneer inviting the audience to put in their bids.
** An Option to Purchase is An Offer
- Where a vendor gives an "option" to a prospective purchaser, he is making an offer to sell his property at a specified price.
- In consideration of the "option money", the vendor agrees to keep the offer open for the purchaser's acceptance, until the option’s expiry.
- Without the payment of the "option money", the vendor is free to revoke his offer, at any time before acceptance by the prospective purchaser.
* Acceptance;
- A contract is formed when there is an unqualified acceptance of an offer.
- A conditional "acceptance" equals to a counter-offer.
- The contract is not formed when there is a counter-offer.
** Mode of Acceptance
- In an OTP, the seller may instruct the buyer to accept the offer in a certain mode or manner, failing which there will be no contract formed.
- However, if the seller accepts a different mode of acceptance, he is deemed to have waived the term.
* Consideration
- For a real estate contract to bind the parties, it requires consideration. The person to whom the promise has been made must have given some benefit or suffered some detriment in return.
- In real estate transactions, consideration must be money.
** Consideration Need Not be Adequate
- It can Be $1.00
** Agreements Under Seal
- Where there is no consideration, for example in a deed of gift, the agreement must be made under seal. Stamp duty is payable in this case.
Legality of A Real Estate Contract
- must be in writing
- must be sufficiently documented and signed by all parties.
- must not be illegal e.g. foreigner buying landed property.
- Special approval is needed from the Law Minister or the sale contract contravenes the Residential Property Act.
Subject to Contract
- Agreements 'subject to contract' do not give rise to a binding contract until the contract is signed. E.g. Option to Purchase
- A Letter of Intent in a rental case signed by both parties do not give rise to a binding contract until a formal Tenancy Agreement (TA) is signed.
For a real estate contract to be valid and enforceable, it must contain the following elements:
* Intention to create legal relations;
- The court would presume that there is such an intention
- Customers are often strangers to one another until the introduction by an agent
* Offer;
- a financial proposition made by one person to another, with a specific promise that he is willing to be bound by that proposition.
** Difference Between Offer & "An Invitation To Treat"
- When an owner or his agent invites prospects to view a property, he is not making an offer. He is inviting offers.
- The owner is not bound to accept the highest offer at the end of the viewing.
- The same reasoning applies in the case of an auctioneer inviting the audience to put in their bids.
** An Option to Purchase is An Offer
- Where a vendor gives an "option" to a prospective purchaser, he is making an offer to sell his property at a specified price.
- In consideration of the "option money", the vendor agrees to keep the offer open for the purchaser's acceptance, until the option’s expiry.
- Without the payment of the "option money", the vendor is free to revoke his offer, at any time before acceptance by the prospective purchaser.
* Acceptance;
- A contract is formed when there is an unqualified acceptance of an offer.
- A conditional "acceptance" equals to a counter-offer.
- The contract is not formed when there is a counter-offer.
** Mode of Acceptance
- In an OTP, the seller may instruct the buyer to accept the offer in a certain mode or manner, failing which there will be no contract formed.
- However, if the seller accepts a different mode of acceptance, he is deemed to have waived the term.
* Consideration
- For a real estate contract to bind the parties, it requires consideration. The person to whom the promise has been made must have given some benefit or suffered some detriment in return.
- In real estate transactions, consideration must be money.
** Consideration Need Not be Adequate
- It can Be $1.00
** Agreements Under Seal
- Where there is no consideration, for example in a deed of gift, the agreement must be made under seal. Stamp duty is payable in this case.
Legality of A Real Estate Contract
- must be in writing
- must be sufficiently documented and signed by all parties.
- must not be illegal e.g. foreigner buying landed property.
- Special approval is needed from the Law Minister or the sale contract contravenes the Residential Property Act.
Subject to Contract
- Agreements 'subject to contract' do not give rise to a binding contract until the contract is signed. E.g. Option to Purchase
- A Letter of Intent in a rental case signed by both parties do not give rise to a binding contract until a formal Tenancy Agreement (TA) is signed.
posted by Teddy Wu Jun Yu at 2:11 AM
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