New This Month
Print Article Archives
Reprints / Subscriptions
Editorial Calendar
Media Kit
Popular Features
Architecture Guide
Cost vs. Value Report
Good Neighbor Awards
Handouts for Customers
Top 100 Companies
Take a Quiz
30 under 30
Young Professionals
REALTOR® Emeritus
Architecture Guide
Cost vs. Value Report
Good Neighbor Awards
Handouts for Customers
Top 100 Companies
Take a Quiz
30 under 30
Young Professionals
REALTOR® Emeritus |  | Risk management Minimizing Liability From Contracts | | ||
|  Three Lines of Defense Against Risk Keeping Risks Under Control Controlling Transaction Risks Agency Disclosure Avoiding Antitrust Risks Minimizing Liability from Contracts Fair Housing Risks Controlling Personnel Risks Communications Policies to Minimize Risks Insuring Against Risks More Resources: Controlling Business Risks Code of Ethics: Controlling Business Risks | Listing agreements, sales agreements, and leases are commonly used contracts in real estate. Contract Requirements Although specific requirements may vary from state to state, valid contracts must all contain five essential elements: 1. Mutual agreement. All parties recognize that an offer has been made and accepted. All must agree to the other's requirements. 2. Consideration. Refers to the benefit received by the parties. It can be money, transfer of ownership, transfer of rights, exchange of services, or anything of value. 3. Legally competent parties. Refers to parties whom the law allows to enter into contractual arrangements. They may be people or business organizations such as corporations. 4. Legal purpose. A contract requiring any of its parties to violate the law is usually void. 5. Legal form. Some contracts must follow a certain form or be drawn in a certain way. Deeds and, in some jurisdictions contracts of sale, for example, are not valid unless they include a legal description of the property. 2 Contract Caveats > | Keep It Ethical Recommend legal counsel when required by the transaction; avoid activities that might constitute the unauthorized practice of law. (Article 13 ) |