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Oral Agreement in Real Estate

As someone looking to buy or sell a property, it is important to understand the legalities involved in every part of the process. One such element is the concept of an oral agreement in real estate.

An oral agreement, also known as a verbal agreement, is an agreement between two parties that is not in writing. In a real estate context, this can refer to an agreement between a buyer and a seller, or between a landlord and a tenant, where no written contract has been signed.

While oral agreements can be legally binding in some cases, they are generally not recommended in real estate transactions. This is because without a written contract, it can be difficult to prove the terms of the agreement if any dispute arises.

For example, let`s say a buyer and seller agree orally on the price and closing date for a property. Later, the buyer claims that the seller agreed to cover certain closing costs, but the seller denies it. Without a written contract, it becomes a matter of one party`s word against the other`s, and it can be difficult to determine who is telling the truth.

In addition to the risk of disputes, oral agreements can also be more difficult to enforce. Without a written contract, there is no clear record of the agreed-upon terms, making it harder to hold either party accountable if they fail to fulfill their obligations.

That being said, there are situations where an oral agreement may be deemed legally binding. For example, if both parties act as though an agreement has been made and act accordingly, it may be considered a binding contract. Additionally, some states have laws that recognize oral agreements for certain types of real estate transactions, such as lease agreements under a certain dollar amount.

However, it is always preferable to have a written contract in place to ensure that both parties are on the same page and to protect against potential disputes. This contract should include all relevant terms, such as the purchase price, closing date, any contingencies or conditions, and any other important details related to the transaction.

In conclusion, while oral agreements in real estate can be legally binding in certain situations, they are generally not recommended. To ensure a smooth transaction and protect against potential disputes, it is always best to have a written contract in place that clearly outlines all of the relevant terms and conditions.