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

What is a Missouri Real Estate Contract?

A Missouri real estate contract, often referred to as a residential purchase and sale agreement, is a legally binding contract that is executed between a buyer and seller for the purpose of transferring the ownership of real estate.

A real estate contract is usually drafted by the buyer’s realtor after the buyer makes an offer on a property. If the seller accepts the offer, the parties will negotiate the terms of the contract to move forward with the sale. The contract becomes legally binding and enforceable once it is signed by all parties.

A real estate contract must include specific details about the transaction to ensure that the sale runs smoothly and the interests of both the buyer and the seller are protected. Most real estate contracts include the following information:

• Agreed upon purchase price
• Legal description of the property
• Contingencies to be met by both parties
• Deadlines and closing date
• Which party is responsible for certain fees like closing costs

Common Missouri Real Estate Contracts

The most commonly used Missouri real estate contract is the Missouri Association of Realtors Purchase Agreement. This contract template is used for the sale of residential real estate and is approved for the use by realtors who are members of the Missouri REALTORS.

Other types of real estate contracts you may use in Missouri include:

• Commercial real estate contract . Used when buying or selling property zoned for operating a business like a store or an office building.
• Real estate assignment contract. Used when purchasing investment properties that may need repairs. This agreement allows the buyer to assign the contract to a second buyer.
• Lease agreement. Also called a rental agreement, this contract is used when a property owner wants to rent their property to a tenant.

4 Essential Elements of a Missouri Real Estate Contract

The four essential elements of a Missouri real estate contract include:

1. A valid offer made by a buyer for purchase of the property
2. Acceptance of the offer by the seller
3. Consideration, which in real estate contracts is usually the exchange of money for the property
4. A legal purpose meaning that the contract cannot violate any laws or encourage parties to violate laws

Under the Missouri Statute of Frauds, all real estate contracts are also required to be in writing. A verbal contract for the sale of real estate will not be upheld or enforced by a court.

Is Missouri a Buyer Beware State in Real Estate?

Missouri is considered a "caveat emptor" state, which means that the state adheres to the principle of "buyer beware" in real estate transactions. This means that the buyer is responsible for researching and investigating the property and any potential issues with it before making a purchase.

Unlike many other states which require sellers to provide property disclosures with a real estate contract, in Missouri the seller is not required to disclose certain information about the property like known defects. Even though it isn’t required, a seller can opt to provide disclosures to ease a buyer’s concerns which usually helps move the sale along.

The only exception to the buyer beware law is found in Chapter 442 of Missouri state statutes which requires sellers to inform buyers if the property was ever used for the production of methamphetamine.

Can a Buyer Back Out of a Real Estate Contract in Missouri?

Yes. In Missouri, a buyer can back out of a real estate contract under certain conditions, like if the buyer is unable to obtain financing or insurance. Many real estate contracts will include contingencies that allow the buyer to back out of the contract if certain conditions are not met, like a satisfactory home inspection and appraisal.