When it comes to real estate transactions, agreements can be made verbally instead of in writing. This is commonly referred to as a verbal agreement, or an oral contract. While verbal agreements are legally binding, they can often lead to confusion and disputes down the line. In this article, we’ll take a closer look at verbal agreements in real estate and what you should know before entering into one.

What is a Verbal Agreement in Real Estate?

A verbal agreement in real estate is any agreement made between two parties regarding the sale or purchase of a property that is not put in writing. This type of agreement is typically made by word of mouth or through a phone call or email. In a verbal agreement, the buyer and seller agree to certain terms and conditions without legally documenting them. Some common examples of verbal agreements in real estate include agreeing to purchase a property for a specific price, agreeing to close on a certain date, or agreeing to make certain repairs to the property.

Are Verbal Agreements Legally Binding?

Yes, verbal agreements in real estate are legally binding. However, proving the existence of a verbal agreement can be difficult if there is no written record of the agreement. This can lead to disagreements and disputes, as each party may remember the terms of the agreement differently. Additionally, verbal agreements are subject to the statute of frauds, which requires certain types of agreements to be in writing in order to be enforceable.

What are the Risks of Verbal Agreements in Real Estate?

The risks of verbal agreements in real estate are numerous. As previously mentioned, proving the existence of a verbal agreement can be difficult if there is no written record of the agreement. This can lead to disagreements and disputes, as each party may remember the terms of the agreement differently. Additionally, verbal agreements are subject to the statute of frauds, which requires certain types of agreements to be in writing in order to be enforceable. This means that a verbal agreement may not be enforceable in court.

Another risk of verbal agreements in real estate is that they leave important details out. Without a written agreement, it’s easy to forget important details or to misunderstand the terms of the agreement. This can lead to costly mistakes or misunderstandings down the line.

How to Avoid the Risks of Verbal Agreements in Real Estate?

The best way to avoid the risks of verbal agreements in real estate is to put everything in writing. While it may seem easier to make a verbal agreement, putting the terms in writing ensures that everyone is on the same page. A written agreement should include all of the details of the transaction, including the purchase price, closing date, and any contingencies or repairs that need to be made. Both parties should review and sign the agreement to ensure that they are in agreement with the terms.

In conclusion, while verbal agreements in real estate are legally binding, they can often lead to confusion and disputes down the line. To avoid the risks of a verbal agreement, it’s important to put everything in writing. This ensures that everyone is on the same page and that there are no misunderstandings or costly mistakes. If you’re considering entering into a real estate transaction, be sure to consult with a qualified real estate attorney to ensure that your rights are protected.