Key Takeaways
- South Carolina 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 must be deposited into the broker's trust account per contract terms
- South Carolina uses standard forms prepared by the South Carolina Association of Realtors
- Contingencies (financing, inspection, appraisal) must be clearly specified in the contract
South Carolina Contract Requirements
South Carolina real estate contracts must meet specific legal requirements to be valid and enforceable.
Statute of Frauds
Under South Carolina'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 South Carolina.
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 money) |
| Legal capacity | Parties must be competent to contract |
| Lawful purpose | Contract cannot be for illegal purposes |
| In writing | Required for real estate contracts |
Types of Real Estate Contracts
Purchase Agreement (Sales Contract)
The primary contract used to buy and sell real property:
| Component | Description |
|---|---|
| Parties | Buyer(s) and seller(s) identified |
| Property description | Legal description or address |
| Purchase price | Agreed price and terms |
| Earnest money | Deposit amount and handling |
| Contingencies | Conditions that must be met |
| Closing date | When transaction will close |
| Signatures | All parties must sign |
Other Contract Types
| Contract | Use |
|---|---|
| Listing Agreement | Seller representation contract |
| Buyer Agency Agreement | Buyer representation contract |
| Lease Agreement | Rental property |
| Option Contract | Right to purchase property |
| Land Contract | Seller-financed purchase |
Earnest Money
Earnest money (also called a good faith deposit) shows the buyer's serious intent:
Handling Requirements
| Requirement | Details |
|---|---|
| Who holds | Broker-in-charge's trust account |
| Deposit deadline | Per contract terms (typically within 48 hours) |
| Cannot hold | Salespersons cannot hold earnest money |
| Disbursement | Per contract terms or mutual agreement |
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 |
Inspection Contingency
| Element | Details |
|---|---|
| Purpose | Buyer can inspect property and negotiate repairs |
| Timeline | Inspection period specified in contract |
| Options | Accept, negotiate repairs, or cancel |
Appraisal Contingency
| Element | Details |
|---|---|
| Purpose | Protects buyer if property appraises below price |
| Options | Seller reduce price, buyer pay difference, or cancel |
Sale of Buyer's Property Contingency
| Element | Details |
|---|---|
| Purpose | Buyer must sell existing home first |
| Risk | Seller may accept backup offers |
Contract Performance and Termination
Ways Contracts Are Fulfilled or Ended
| Method | Description |
|---|---|
| Performance | Both parties fulfill all obligations |
| Mutual agreement | Both parties agree to cancel (mutual release) |
| Contingency not met | Condition in contract fails |
| Breach | One party fails to perform |
| Impossibility | Performance becomes impossible |
Breach of Contract Remedies
| Remedy | Description |
|---|---|
| Specific performance | Court orders completion of sale |
| Monetary damages | Payment for losses suffered |
| Rescission | Contract cancelled, parties restored |
| Liquidated damages | Pre-agreed damages (often earnest money) |
Time is of the Essence
Many South Carolina 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 the difference between an executory contract (obligations not yet performed) and an executed contract (all obligations fulfilled).
Under South Carolina's Statute of Frauds, which statement is TRUE about real estate contracts?
Where should earnest money be deposited in a South Carolina real estate transaction?
Which is NOT an essential element of a valid real estate contract?