A Handshake is Not Binding in Real Estate

In the world of real estate, property transactions involve substantial financial investments and legal complexities. A handshake agreement, although well-intentioned, lacks the necessary legal framework to hold parties accountable in case of disputes or changes in circumstances.

Unlike a written contract, a handshake does not provide clear terms, conditions, or remedies in case of breaches. The same holds true for verbal agreements. These types of “agreements” can lead to misunderstandings, disagreements, and even legal battles that could have been avoided with a properly real estate executed contract. So for those who are asking “Is a handshake legally binding in real estate?” the answer is no!

The Power of a Written Contract

In stark contrast to a handshake, a written contract is the cornerstone of a legally binding agreement in real estate transactions. A well-drafted real estate contract will outline the specifics of the deal, including the property details, purchase price, payment terms, contingencies, and deadlines. It offers protection to all parties involved by setting clear expectations in writing, so there is no confusion.

The main elements of a real estate contract, no matter what state the property is located in, will include:

1. Party Names: All parties involved in the transaction, both the buyer and seller, will be named.
2. Property Description: Accurately identifying the property being sold will prevent confusion.
3. Purchase Price: Clearly stating the agreed-upon price, so the buyer knows how much they’re paying and the seller knows how much they’ll be receiving.
4. Payment Terms: How the buyer intends to pay for the property needs to be disclosed. Will they be paying cash or will they be obtaining financing? If financing, how much will they be financing, and through what loan program?
5. Inclusions: Everything included in the sale, such as appliances, and furnishings needs to be spelled out.
6. Contingencies: If there are any contingencies they need to be included, such as home inspections, appraisals, and financing.
7. Deadlines: Deadlines need to be set for various stages of the transaction to maintain a smooth process and avoid unnecessary delays. This includes deadlines for all of the contingencies along with a closing date.
8. Legal Remedies: Defining the remedies for breach of contract or failure to perform helps parties understand the consequences if either party defaults on the contract.

Protecting Your Interests

As a buyer and seller, you need to make sure your interests are protected in a real estate transaction:

1. Consult with Professionals: Enlist the services of an experienced real estate agent, and/or real estate attorney who can draft, review, and advise on all real estate contracts, addendums, and disclosures.
2. Get Everything in Writing: Refrain from relying solely on verbal agreements or handshakes. Insist on having all terms documented in a written real estate contract.
3. Thoroughly Review Contracts: Don’t just blindly sign a real estate contract. Take the time to carefully review every page and seek clarification for anything that’s unclear before signing.
4. Negotiate and Amend: If certain terms do not align with your expectations, negotiate with the other party and amend the contract accordingly. Make sure all parties initial or sign off on any changes.
5. Consider Mediation: In case of disputes, consider mediation as an alternative to litigation. Some real estate contracts already have mediation written in for the first step when there is a dispute, but if it doesn’t this is something to consider.

Final Thoughts

While a handshake may embody trust and agreement, it falls short of the legally binding requirements in real estate transactions. The power of a written contract cannot be overstated and it is a must when it comes to buying and selling real estate. By having an executed contract all parties will be able to ensure their interests are protected and pave the way for a successful real estate transaction. Remember a handshake is not binding in real estate.

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About the Author

Top Wellington Realtor, Michelle Gibson, wrote: “A Handshake is Not Binding in Real Estate”

Michelle has been specializing in residential real estate since 2001 throughout Wellington Florida and the surrounding area. Whether you’re looking to buy, sell, or rent she will guide you through the entire real estate transaction. If you’re ready to put Michelle’s knowledge and expertise to work for you call or e-mail her today.

Areas of service include Wellington, Lake Worth, Royal Palm Beach, Boynton Beach, West Palm Beach, Loxahatchee, Greenacres, and more.

A Handshake is Not Binding in Real Estate