California Real Estate Contract: Different Types and Key Terms to Include
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What is a California Real Estate Contract?
A real estate contract in California, often referred to as a real estate purchase and sale agreement, is a contract that is executed by a party selling a property and a party who is offering to purchase the property.
The contract is initiated when the buyer makes an offer. Once the seller accepts the offer and the terms of the contract are negotiated, the parties will sign the contract making it legally binding and enforceable.
Common California Real Estate Contracts
There are several types of real estate contracts that can be used in California. The three most popular contracts are:
- Purchase agreement. The most common type of real estate contract that is used for the transfer of property between a buyer and a seller.
- Real estate assignment contract. Used when purchasing “distressed properties” as a wholesale investment strategy. This contract allows the buyer to assign the contract to a second buyer.
- Lease agreement. Used when a landlord wants to rent their property to a tenant for use in exchange for a monthly rent.
4 Essential Elements of a California Real Estate Contract
All contracts must include specific essential elements to be valid and legal. In California, a real estate contract must have the following four essential elements:
- The contract must be executed by parties who are legally capable of entering a contract
- There must be mutual consent
- The contract must have a lawful objective
- The terms must include consideration (an exchange of things of value)
If the real estate contract is missing any of these elements, it will be deemed invalid and will not be legally enforceable under California law.
What Must Be Included in a California Real Estate Contract?
A California real estate contract lays out the terms and conditions surrounding the purchase of real property. This contract should include the following essential information:
- Purchase price. One of the most important parts of a real estate contract is the negotiated purchase price that the buyer has agreed to pay the seller.
- Closing date. This is the date that the sale is finalized and when payment must be made for the property. The timeframe for a closing date is usually 30 to 60 days out from signing the real estate contract.
- Agent commissions. Most buyers and sellers hire real estate agents to help facilitate the sale of the property. Both agents are entitled to commissions in this process.
- Earnest money deposit. The deposit made by the buyer when the contract is signed to show the seller they are committed to purchasing the property. In California, the standard deposit is 1%-3% of the total purchase price.
- Contingencies. Contingencies are the conditions that must be met by either the buyer or the seller to complete the deal. Common contingencies include the buyer selling their previous home or the home passing a home inspection.
- Contingency removal period. The date that contingencies will be removed to show that the buyer intends to close escrow.
- Disclosure requirements. Disclosures are conditions about the property that could lower the property value that the seller must reveal to the buyer before closing the sale. California requires 12 different disclosures that must be included in the real estate contract.
Do Real Estate Contracts Have to Be in Writing in California?
Yes. Real estate contracts in California must be in writing. In California, the Statute of Frauds governs which contracts must be in writing and which contracts are valid as oral agreements. Under this law, any contract used to purchase or sell land must be in writing. In addition, any property lease lasting for more than one year must also be in writing.
Frequently Asked Questions
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Having overseen over $1.2 billion in transaction value, we are able to provide top-tier service at affordable rates, with much more personalized attention and fast turnarounds. After working for a AM Law Top 100 firm, I started my own firm and have been lucky enough to represent numerous conglomerates (FOX, Endeavor, etc.), promising startups, small businesses and private individuals. Our areas of expertise - Business Formations and Operating Agreements; Capital Raises and Debt Financing; Commercial Transactions; M&A; Real Estate; Intellectual Property; Employment and Hiring; Outside General Counsel; Corporate Agreements and Governance; Litigation and Dispute Resolution. We have been featured in The Wall Street Journal, Marketwatch, Yahoo Finance, Variety, Business Insider, Los Angeles Magazine, the LA Times, and others. We are driven by an unwavering commitment to our clients, going above and beyond to deliver results.
"Alex Nahai Law Office handled contract counsel for my business and made the whole process painless. Alex was responsive, explained the terms in plain English, and flagged the things that actually mattered instead of burying me in legalese. I felt genuinely protected on the deal. Highly recommend for any small business owner who needs contracts done right."
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Justine F.
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Georgia
How many years does a quick claim become effective?s
Number of years for quick claim to be effect ive
Meghan T.
A quit claim deed is effective upon execution so long as the deed is dated as of the date of signature. Execution means that the deed is signed, in front of a witness and a notary. The witness and notary must also sign the deed. Finally, the deed must be recorded. This means that the deed must be submitted to the Superior Court recording office of the County in which the property sits. Please let me know if you have any questions. Thanks, Meghan K Thomas
Real Estate
Real Estate Contract
Georgia
WHAT ARE YOUR FEES TO PERFORM QUIT CLAIM DEED COMPLETE BUTTS COUNTY GEORGIA 30233
SON AND EX
Meghan T.
Hi. The cost for my practice to prepare a Quit Claim Deed is $99. The Cost for me to handle the closing is $250 plus recording fees. These costs apply for any county within the state of Georgia. Let me know if you have any more questions. Meghan K Thomas
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Real Estate Contract
New York
Can you purchase or refinance under a land contract?
I’ve been living here for 2 years. Currently have been working with my credit union and they are having a terrible time trying to understand the legalities of my land contract first off, and secondly they just don’t seem to know what they are doing. It’s been over 8 months, 4 different loan officers and I’m once again waiting for someone else to help finish this thing out. It’s only $60,000 with a $120,000 appraisal. So, as of now I am stuck paying 2.5x monthly under this land contract than I was promised would be an easy mortgage process. So any guidance in the right direction would be very helpful. It’s a New York home. 20 yr fixed, no balloon, with a (brace yourself) 12% apr. HELP ME PLEASE! One month I’m being told to authorize a credit check for a first time homebuyer grant method of mortgaging this property. The next it’s authorizing it for a refinance. I do have earnest money deposits for over $3,000 and another $3000 paid towards principal under this land contract also.
Jane C.
I suggest you speak with a New York real estate attorney. That attorney needs to review the documents related to the transaction.
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Illinois
what is better to buy land or rent for construction in US?
we are a construction company from Ukraine, we are planning to build a cottage town in the USA
T. Phillip B.
I suppose it doesn't matter if you have the lease giving you permission and the lease is long enough to justify the building expense when you won't own it. But I'd buy the land so you could eventually sell the property with the building on it.
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