CONTRACT LAW 010 . . . err . . . I mean 101

Real Estate Broker/Owner with | Portland Metro Exclusive Buyers Agent | 100% Buyer Representation ~ 100% of the Time Licensed State of Oregon

I am NOT an attorney, and I don't play one on T.V.

But I AM a licensed Real Estate Agent, Broker in the State of Oregon. 

Real estate IS all about legal.  Sure it's "location, location, location.  But it's also "legal, legal, legal!"

It's the "LAW of Agency" . . . that governs who represents whom, for example.

When it comes to property, land, chattel, personal property, fixtures . . . ALL fall under:


Contracts have to MEET THE TEST:  In order for a contract to be valid, there are specific "tests" which have to be met.  They are 1) Consideration, 2) Mutual Agreement, 3) and a few other things -- and since I'm NOT an attorney I forget!  I think "performance" is another one (a CLOSE DATE would be "performance" since the parties are agreeing on a specific TIME for events under the contract to take place.)

Contracts CAN BE VERBAL!  And acceptance CAN BE ORAL.  Not a good idea.  So always get it in writing!

When you buy a cup of coffee, it's under CONTRACT!  Consideration can be done with a POS (point of sale) transaction.  I go in to my favorite coffee shop, and there are the "terms and conditions" -- it's called a MENU!  In this type of situation, I have NO bargaining power.  I either pay the $3.65 for a double-latte, choco-mocho, grande decaf no foam -- or I don't.  The coffee shop is OFFERING their goods, I can either agree to purchase, or not.  To form a valid contract there does not need to be negotiation.  When I PAY the $3.65, that is the consideration.  There is also mutual acceptance -- I'm agreeing to the price of a 6 oz coffee -- why?  I haven't the foggest . . . but I pay!  And performance takes place when I get my cup of coffee -- which is MORE then I would pay for a gallon of gas . . . sorry, call it my "VENTE". 

If I don't get my cup of coffee, the coffee house breached the contract, and I would be entitled to 'remedies' -- either another cup of coffee without charge OR they refund my money.

Think you can handle the contract?  Fine . . . list the home yourself. 

Think you can write up your own offer?  Fine . . . put pen to paper and remember . . .

Buying real estate IS NOT like buying a cup of coffee.

MISTAKES CAN BE MADE -- which is why I deliberately erred on my title.  Would you be able to tell if a mistake was made on your contract?  A seasoned, licensed Realtor(r) would!!

One final word about contracts:  It's the "burden" of the person (entity) preparing the contract to write it containing language that benefits them.


That $3.65 cup of coffee was priced to BENEFIT the owners of the coffee shop . . .  'Nuff said!

Do yourself a favor:  Find yourself a GOOD Realtor(r)!  Someone who UNDERSTANDS the contract they will prepare in your behalf (whether selling OR buying  --  a contract IS involved!)


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Buyer Focused ~ Buyer Results


Representing Buyers in the Portland Metro Real Estate Market | Clackamas Multnomah and Washington Counties | Since 1999

Carla Muss-Jacobs, REALTOR®, ABR, CEBA, ePro
Principal Broker/Owner

Direct: 503-810-7192 | |

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Carla Muss-Jacobs, Principal Broker (503) 810-7192 | Portland Metro Exclusive Buyers Agent | 100% Buyer Representation ~ 100% of the Time - Portland, OR
Buyer Focused ~ Buyer Results

Hey Gary . . . my coffee is so-so, but I know where to buy a good cup!  Thanks for you comments!

Hi Lori -- Yup that C-Tann is a STAR '-) . . . you too!  I agree, I've run across a few "rule breakers" in my tenure.

Brian, I concur!  I help people appreciate our contracts!  Thanks for your comments too!  

Aug 17, 2009 06:23 PM #28
Patricia Aulson
Realtor - Portsmouth NH Homes-Hampton NH Homes

Hey, this is a really good post.
Congrats on the feature!


Patricia Aulson/portsmouth nh real estate

Aug 17, 2009 06:27 PM #29
Phil Anderson
Principal Broker & Owner of New Portland Home - Portland, OR

Northwest Equity Home Sales' comment that in Washington, all real estate transactions and amendments to contracts pertaining to real property MUST in writing, carries over into Oregon, also.  It's the law here.

And it's a RELIEF to know that one cannot (easily) be held accountable for verbal agreements, also known as verbal disagreements!

Great post, Carla.  As always!   :)

Aug 17, 2009 06:53 PM #30
Sharon Paxson
HÔM Sotheby's International Realty, BRE License 01501912 - Newport Beach, CA
Newport Beach Real Estate - HOM Sotheby's Int'l Re

Carla - excellent post here, and congratulations on the feature. A contract is involved with real estate.

Aug 17, 2009 07:20 PM #31
Carla Muss-Jacobs, Principal Broker (503) 810-7192 | Portland Metro Exclusive Buyers Agent | 100% Buyer Representation ~ 100% of the Time - Portland, OR
Buyer Focused ~ Buyer Results

You are always a nice commenter, Patricia!  Thanks!

Hi there Phil . . . thanks for the clarity and YES it's the law.  I was commenting that in contract law, oral contracts can be valid (for clarity, not in real estate in Oregon) but as other bloggers mentioned verbal/oral -- might not be enforceable.  THANKS!!

Aug 17, 2009 07:22 PM #32
Damon Gettier
Damon Gettier & Associates, REALTORS- Roanoke Va Short Sale Expert - Roanoke, VA
Broker/Owner ABRM, GRI, CDPE

Carla Great Post!  I have to disagree with you in your response to Richard above though.  If Agent A represents a buyer client and then Agent B lists the perfect home for Agent A's client, Agent A's Client was a client of the brokerage first.  Designated agency works perfectly fine here in Virginia.  I think if you ever experience it you will appreciate it.

Aug 17, 2009 08:46 PM #33
Carla Muss-Jacobs, Principal Broker (503) 810-7192 | Portland Metro Exclusive Buyers Agent | 100% Buyer Representation ~ 100% of the Time - Portland, OR
Buyer Focused ~ Buyer Results

Hi Damon -- I never have the problem of dual agents in my office, no matter what the law states.  We are an EXCLUSIVE Buyer Agency -- so our buyers never have to deal with the broker's listing.  Listing A is the listing of the office. How many times does the LISITNG get the call from an unrepresented buyer -- and then it's 'baited and switched' (handed over, passed on to) another agent in the office who will be the "buyers agent."  Yeah right! What's the percentage of your "scenario" . . . the buyer first, then the listing!  I would imagine it's marginal, at best.  And I don't even know why Richard flamed my blog with his comment.  This has NOTHING to do with AGENCY!  I was thinking of deleting his comment altogether, but decided not to.  But thanks for convoluting my blog.  You don't know me, so please reserve your comments on what you "think" I'll appreciate.

Aug 17, 2009 09:05 PM #34
Jean Terry
Keller Williams Realty Spartanburg, S.C. - Spartanburg, SC

Carla, Great post and great info. It is amazing to see how the law changes from state to state.

Aug 17, 2009 09:44 PM #35
Judi K Barrett
Judi Barrett~Integrity Real Estate Services~Idabel, Oklahoma - Idabel, OK
BA, Integrity Real Estate Services -IDABEL OK

Carla, Like Your Style.  Great writer!  I thoroughly enjoyed this post and it makes really really good serious points in a fun way. 

Aug 17, 2009 10:15 PM #36
Damon Gettier
Damon Gettier & Associates, REALTORS- Roanoke Va Short Sale Expert - Roanoke, VA
Broker/Owner ABRM, GRI, CDPE

Carla, I don't know why you took such offense to my post unless it hit a nerve. I am sorry that you have had experiences with bait and switch agents (unlikely I would think) in the past.  Why do you assume that if an agent gets a call on their listing, they have to do dual or designated agency?  If they represent the seller and disclose that, than they satisfy the law (in Virginia at least).  There is no law saying that a buyer must be represented. 

Since you run a business model that is limited at best in its scenario's, I would highly suggest that you limit your observations to what you actually know, rather than taint those of us who do our jobs and do it well.

I don't think that Richard "Flamed" your blog, he simply made a comment and you responded to it.  I don't think anything in my original post was inflammatory although this one might be.

You are right, I do not know you.  It was my mistake that I thought you posted this for an open discussion.  In the future I will make sure that I give you an "Atta Girl" on every post.


Aug 17, 2009 10:31 PM #37
Roland Woodworth
Keller Williams Realty - Clarksville, TN
Short Sale and Foreclosure Resource- SFR - Clarksv

Carla .. interesting post. I see many for sale by owners calling and asking for our state contract. It is a legal contract that is illegal for them to use without a Realtor

Aug 18, 2009 12:00 AM #38
Christine Donovan
Donovan Blatt Realty - Costa Mesa, CA
Broker/Attorney 714-319-9751 DRE01267479 - Costa M

Valid contract requires 3 things - offer, acceptance and consideration.  There are other complications from there, but those are the basics.

As to verbal contract, always a bad idea in my opinion.  Additionally, I don't believe that contracts to purchase real estate are legal if they are verbal - another reason to get it on paper.

Great idea for a post - contracts are central to the sale of real estate.

Aug 18, 2009 12:10 AM #39
Darrell Walters
W. Darrell Walters - Newnan, GA

Great post and congrats on the feature. I don't think a lot of people realize that real estate is legal, legal, legal.

Aug 18, 2009 09:08 AM #40
Richard Weeks
Dallas, TX
REALTOR®, Broker


Very well said.  It is extremely important that an agent knows the in's and out's of the contract for the state where they sell real estate.

All the rights and obligations are in the contract.  And both parties have agreed to those rights and obligations.

Aug 18, 2009 09:23 AM #41
Rebecca Gaujot, the Go To Realtor®
RE/MAX Vision Quest - Lewisburg, WV
Lewisburg WV Real Estate, Greenbrier County

Carla, I enjoyed reading your post this well as all the comments.

Aug 18, 2009 10:20 AM #42
DriveBuy Technologies
DriveBuy Technologies - Austin, TX

In my Texas real estate classes, I learned that oral contracts are valid and enforceable in theory, but good luck presenting adequate proof. That said, Texas is a one-party recording state, so getting conversations on record is that much easier.

Aug 18, 2009 11:37 AM #43
Christopher Horlacher
DHR, P.L. - Sarasota, FL

I am an attorney....and I wish I could also play one on TV---and I could not agree more with you; legal, legal, legal.  Proof of that is how many deals don't close because of some legal aspect of the deal.  Further proof is just how many times buyers and sellers sign their names on pieces of paper throughout the home buying/selling process. Contract law is confusing and complex.  It goes way beyond mere offer, acceptance, consideration, and a lack of defenses.  That being said, I believe that a grasp of the basics goes a long way for agents, brokers, buyers and sellers. 

A great point was made above; CONTRACT LAW IS STATE SPECIFIC.  Many business law classes offered in colleges are based upon the Uniform Commercial Code Article II.  UCC Article 2 is not itself the contract "law of the land."  While it has been adopted by states (I think all states but LA) must understand YOUR states contract law.  States modify the UCC and you must be aware of the differences.  Furthermore, you could have taken a contract law class taught using the 2003 UCC Article 2 modifications which have not been adopted by a single state.

I am happy to say that the best brokers and agents I have met know contract law very well.  I doubt knowing contract law has itself made them great at their job.  But, I think the drive to be great led them to realize that a firm grasp on contract law is one of the skills necessary to thrive and also to protect themselves.

Oct 03, 2009 06:15 PM #44
Carla Muss-Jacobs, Principal Broker (503) 810-7192 | Portland Metro Exclusive Buyers Agent | 100% Buyer Representation ~ 100% of the Time - Portland, OR
Buyer Focused ~ Buyer Results

Hi Christopher -- thank you so much for your (more than) 2 cents.  As a "Fiduciary" it's important to know what that means. 

Oct 03, 2009 11:56 PM #45
Stefan C. Jezycki
Pacific Union International - Christie's Great Estates - Napa, CA

So when discussion commission with a seller and they bring up some sort of reduction this is one of the points that I make. The seller is trying negotiate at the wrong time or with the wrong person. A qualfied and seasoned Realtor can show there value and save the seller much in excess, dollarea and future legal protection, than the 1% or so many sellers try to negotiate.

Great post.


Stefan in the Napa Valley

Oct 07, 2009 12:50 PM #46
Carla Muss-Jacobs, Principal Broker (503) 810-7192 | Portland Metro Exclusive Buyers Agent | 100% Buyer Representation ~ 100% of the Time - Portland, OR
Buyer Focused ~ Buyer Results

Stefan . . . now, now, now . . . everyone is entitled to their business model ;-)  But the saying "you get what you pay for" certainly does have merit!

Oct 07, 2009 07:05 PM #47
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