Question

Why should a real estate listing contract be in writing and what are the essential elements of a listing contract? In answering this thread, recall that we have already discussed the 5 elements of a basic legal contract and you need not repeat those elements. This thread must focus on provisions of a real estate contract that are crucial to the sale of real estate.

Answer 1

There are certain contracts that must be in writing in order to prevent fraud or misunderstandings. One of such is the real estate contract. A contract to buy or sell real estate is one of those that must be in writing to be enforceable.

The rule that real estate sales contracts must be in writing is true throughout the country, although state laws may differ. This is also part of the "Statute of Frauds." The Statute of Frauds began in English common law codified into state statutes today. It contains a list of types of agreements that are particularly susceptible to fraud if made orally and mandates that these be in writing to be enforceable. The Statute of Frauds has been adapted to some extent by all states.

One contract that the Statute of Frauds requires to be written is a sale of land or real estate. The requirement that the contract be in writing doesn't necessarily mean that all elements must be spelled out in detail in writing, just that there be some written memorandum of the deal. Although state laws vary, all include some type of writing requirement for sales or transfer of land or real estate.

Essential elements of a listing agreement:

• Writing-For real estate contracts to be enforceable they must be in writing.
• Employment-The listing agreement is an agreement with the broker employing the agent or property owner.
• Compensation-The listing agreement will show amount paid to broker which is usually a percentage of the sales.
• Title-Some properties have more than one owner. In this case all owners have to agree to the listing agreement.
• Term-Because the broker acts on the seller’s behalf the listing agreement should have a term. It usually is 180 days but not less than 60 days.
• Fine Print-Always read the fine print. If you do not understand something your agent or broker can explain.

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