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

What is a Utah Real Estate Contract?

A Utah real estate contract is a legally binding agreement that is created when a buyer makes an offer on real estate that is for sale. If the seller accepts the buyer’s offer, the parties can agree to contract terms and then sign the real estate contract to make it legally binding. This stage of the real estate buying process is known as being “under contract”.

The purpose of a real estate contract is to establish terms and conditions surrounding the transaction to ensure that both party’s interests are protected. For this reason, real estate contracts must include specific information about the property and payment terms.

It is common to find the following terms included in a Utah real estate contract:

• Purchase price. The agreed upon sale price that the buyer will pay the seller.
• Earnest money deposit. A deposit made by the buyer to serve as collateral to the offer. If the buyer breaches the real estate contract by backing out without cause, they forfeit the deposit.
• Appliances and fixtures. Any additional items included in the sale of the house which could include appliances, furniture, or certain fixtures.
• Contingencies. Conditions that must be met before the sale is finalized. These are also called “buyer’s conditions of purchase”. In Utah, the three most common contingencies in a real estate contract are due diligence, appraisal, and financing.
• Closing date and settlement. The date that all documents are signed, money is paid, and the title is transferred.
• Possessions. The official date that the buyer takes possession of the property and can move in.

Common Utah Real Estate Contracts

In Utah, the Division of Real Estate has two popular contract templates that are approved by the Utah Real Estate Commission and the Utah Attorney General.

1. Standard Purchase Agreement. The standard contract template used for buying and selling residential real estate. Only licensed real estate agents in Utah are permitted to use this form.
2. Lease with Option to Purchase. A contract between a landlord and a tenant in which the tenant has the option to purchase the property they are renting at a later date for a previously agreed upon price.

4 Essential Elements of a Utah Real Estate Contract

All real estate contracts in Utah should contain these 4 essential contract elements:

1. An offer and acceptance of the offer
2. Consideration or the exchange of items of value
3. At least two parties with the legal capacity to enter a contract
4. A legal purpose that doesn’t violate any laws or public policy

If a real estate contract is missing any of these elements, a court could rule that the contract is void and unenforceable.

Is Utah a “Buyer Beware” State in Real Estate?

Yes. Utah is considered a "caveat emptor" state, which means "buyer beware”. This means that the buyer is responsible for conducting their own due diligence and inspections before purchasing a property, and the seller is not required to disclose certain information about the property's condition.

Under Utah law, there is one exception to this rule. The seller must disclose if the property has ever been contaminated due to the storage, manufacturing, or use or methamphetamine.

Can a Seller Back Out of a Real Estate Contract in Utah?

In Utah, a seller can back out of a real estate contract if the contract includes a contingency or escape clause that allows them to do so under certain conditions. For example, a common contingency in real estate contracts is a "home sale contingency," which allows the seller to back out of the contract if they are unable to sell their current home.