Key Takeaways
- Minnesota uses standardized purchase agreement forms in most transactions
- The standard residential purchase agreement contains standard contingencies
- Earnest money is typically held by the listing broker or title company
- Contracts must identify parties, property, price, and terms to be valid
- Time is of the essence clauses are common but must be specifically included
Last updated: January 2026
Purchase Contracts
Understanding Minnesota contract practices is essential for the exam.
Standard Contract Forms
Minnesota Purchase Agreement
| Feature | Description |
|---|---|
| Widely used | Standard form |
| REALTORS form | Most common |
| Contingencies | Standard options |
| Disclosure included | Reference to seller disclosure |
Required Elements
| Element | Description |
|---|---|
| Parties | Buyer and seller names |
| Property | Address and legal description |
| Purchase price | Amount |
| Earnest money | Deposit amount |
| Closing date | Target date |
| Contingencies | Conditions |
| Signatures | All parties |
Common Contingencies
Financing Contingency
| Feature | Details |
|---|---|
| Purpose | Buyer obtains loan |
| Timeframe | Specified in contract |
| Failure | Return earnest money |
Inspection Contingency
| Feature | Details |
|---|---|
| Purpose | Property inspection |
| Timeframe | Typically 10-14 days |
| Options | Accept, request repairs, cancel |
Sale of Buyer's Property
| Feature | Details |
|---|---|
| Purpose | Buyer must sell home |
| Kick-out clause | Common addition |
| Protection | For seller |
Appraisal Contingency
| Feature | Details |
|---|---|
| Purpose | Property appraises at value |
| If low | Renegotiate or cancel |
| Lender requirement | Usually required |
Earnest Money
| Aspect | Details |
|---|---|
| Amount | Typically 1-3% |
| Held by | Listing broker or title co. |
| Trust account | Separate account |
| Disposition | Per contract terms |
Earnest Money Disputes
| Action | Details |
|---|---|
| Hold funds | Until dispute resolved |
| Interpleader | File with court |
| Written agreement | Both parties consent |
Time is of the Essence
| Feature | Meaning |
|---|---|
| Strict deadlines | Must be met exactly |
| Must be stated | Not automatic |
| Consequences | Breach if missed |
Contract Termination
| Method | Description |
|---|---|
| Mutual release | Both parties agree |
| Contingency failure | Contract fails |
| Breach | One party violates |
| Expiration | Deadline passes |
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Test Your Knowledge
What typically happens to earnest money if a financing contingency fails?
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Test Your Knowledge
What does "time is of the essence" mean in a real estate contract?
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