Minnesota Real Estate Contract: Different Types and Key Terms to Include

What is a Minnesota Real Estate Contract?

A Minnesota real estate contract is a legally binding agreement that facilitates a real estate transaction between a buyer and a seller. The purpose of the contract is to outline each party’s rights and responsibilities throughout the buying and selling process.

Real estate contracts typically include information like the purchase price, closing date, property address, and any contingencies or conditions that must be met before the sale can be completed.

It is common for a real estate contract to be prepared by a real estate agent or attorney. However, many real estate agencies and title companies provide contract templates that can be used by seller’s who wish to complete the sale privately.

Whether the parties use realtors, hire attorneys, or complete the sale themselves, all real estate contracts in Minnesota must comply with the state laws and regulations that govern real estate contracts laid out in the Minnesota state statutes.

Common Minnesota Real Estate Contracts

The most commonly used real estate contract in Minnesota for residential real estate is the Minnesota Standard Residential Purchase Agreement approved by the Minnesota State Bar Association. There are additional real estate contracts that can be used for different purposes, and these include:

• Real estate assignment contract. Used for investment properties that may need repairs or maintenance. This contract allows the buyer to assign the contract to a second buyer as an investment strategy.
• Lease agreement. Used when a landlord wants to maintain ownership of their property but grants a tenant use in exchange for a monthly rent.
• Commercial property purchase agreement. Used when buying or selling a commercial property that is zoned for business purposes like an office building or storefront.

4 Essential Elements of a Minnesota Real Estate Contract

Under the Minnesota Statutes governing agreements related to property, all real estate contracts must be in writing otherwise the contract will be void. In addition to this requirement, real estate contracts in Minnesota must include four essential contract elements:

1. Legal purpose. The contract cannot include any terms that break the law, violate public policy, or encourage either party to break the law.
2. Mutual assent. The parties intended to enter the agreement – usually proven by party’s signatures.
3. Offer, acceptance, and consideration. A valid offer made by the buyer, acceptance by the seller, and an exchange of items of value. In a real estate transaction this is usually money in exchange for the title to the property.
4. Competent parties. Parties entering the contract cannot be minors, incapacitated, or under the influence of drugs or alcohol.

If a real estate contract does not include these elements, or a party is found to be legally incompetent, the contract will be void.

Can a Seller Accept Another Offer While Under Contract in Minnesota?

In Minnesota, once a seller has entered a contract for the sale of their property, they are generally not allowed to accept another offer until the current contract has been rescinded or terminated. If the seller does accept another offer, it would be considered a breach of contract.

How Does a Contract for Deed Work in Minnesota?

A contract for deed in Minnesota is a type of agreement between a buyer and a seller where the buyer makes payments to the seller for a specific period of time, with the understanding that the property will be transferred to the buyer at the end of the contract period.

The buyer is responsible for maintaining the property and paying taxes during the contract period, and the seller retains the legal title to the property until the contract is fulfilled. The buyer can typically obtain financing from a lender to purchase the property through a contract for deed.