Key Takeaways
- Alaska follows the Statute of Frauds requiring real estate contracts to be in writing
- Valid contracts require offer, acceptance, consideration, legal capacity, and lawful purpose
- Earnest money should be deposited into the broker's trust account within specified timeframes
- Alaska purchase agreements typically use standardized forms from real estate associations
- Contingencies (financing, inspection, appraisal) must be clearly specified in the contract
Alaska Contract Requirements
Alaska real estate contracts must meet specific legal requirements to be valid and enforceable.
Statute of Frauds
Under Alaska's Statute of Frauds, contracts for the sale of real property must be:
- In writing
- Signed by the party to be charged (or their authorized agent)
Key Point: Oral agreements to sell real estate are generally unenforceable in Alaska. The contract must be in writing to be legally binding.
Essential Elements of a Valid Contract
| Element | Description |
|---|---|
| Offer | Clear proposal with definite terms |
| Acceptance | Unequivocal agreement to the offer's terms |
| Consideration | Something of value exchanged (usually earnest money) |
| Legal capacity | Parties must be competent to contract (age 18+, sound mind) |
| Lawful purpose | Contract cannot be for illegal purposes |
| In writing | Required for real estate contracts |
Common Contract Forms
Alaska real estate professionals typically use standardized forms:
| Form | Use |
|---|---|
| Residential Purchase Agreement | Standard home purchase |
| Commercial Purchase Agreement | Business property transactions |
| Vacant Land Purchase Agreement | Land without improvements |
| Lease Agreement | Rental property |
| Listing Agreement | Seller representation |
| Buyer Agency Agreement | Buyer representation |
Note: The Alaska Association of Realtors and other organizations provide standardized forms used by most licensees.
Earnest Money
Earnest money (also called a good faith deposit) shows the buyer's serious intent:
Handling Requirements
| Requirement | Details |
|---|---|
| Deposit timeline | As specified in contract (typically 3-5 business days) |
| Where deposited | Broker's trust account |
| Who holds | Broker (not salesperson) |
| Disbursement | Per contract terms or mutual agreement |
If Transaction Fails
| Situation | Earnest Money Disposition |
|---|---|
| Buyer defaults | May be forfeited to seller |
| Seller defaults | Returned to buyer |
| Contingency not met | Returned to buyer |
| Mutual cancellation | Per written agreement |
| Dispute | May require court resolution or mediation |
Common Contract Contingencies
Contingencies allow parties to exit the contract if certain conditions aren't met:
Financing Contingency
| Element | Details |
|---|---|
| Purpose | Buyer can cancel if financing not obtained |
| Deadline | Must apply for loan within specified days |
| Documentation | May require denial letter from lender |
| Timeframe | Usually 30-45 days for conventional loans |
Inspection Contingency
| Element | Details |
|---|---|
| Purpose | Buyer can inspect property and negotiate repairs |
| Timeline | Inspection period specified in contract (7-14 days typical) |
| Options | Accept, negotiate repairs, or cancel |
| Alaska factors | Consider climate impacts, permafrost, access issues |
Appraisal Contingency
| Element | Details |
|---|---|
| Purpose | Protects buyer if property appraises below price |
| Options | Seller reduce price, buyer pay difference, or cancel |
| Lender requirement | Most lenders require appraisal |
Alaska-Specific Contingencies
| Contingency | Purpose |
|---|---|
| Well/septic | Inspection of water and septic systems |
| Access | Verification of legal access to property |
| Survey | Boundary confirmation (important in remote areas) |
| Utility availability | Confirmation of power, water, sewer |
Contract Termination
Contracts may be terminated by:
| Method | Description |
|---|---|
| Performance | Both parties fulfill obligations |
| Mutual agreement | Both parties agree to cancel |
| Contingency not met | Condition specified in contract fails |
| Breach | One party fails to perform |
| Impossibility | Performance becomes impossible |
| Rescission | Contract voided due to misrepresentation |
Time is of the Essence
Many Alaska real estate contracts include a "time is of the essence" clause:
- Deadlines are strict and legally binding
- Missing a deadline may constitute breach
- Extensions require written agreement
Exam Tip: Understand that "time is of the essence" makes all deadlines critical. Missing a deadline could void the contract or give the other party grounds to cancel.
Under Alaska's Statute of Frauds, which statement is TRUE about real estate contracts?
Where should earnest money be deposited in an Alaska real estate transaction?