In the preceding chapters of the present volume, every proposition is fortified by the citation of authority. In this chapter the citation of authorities is omitted. This is so because a discussion of contracts for the sale and exchange of real estate, adequate for reference on all of the many varying occasions which are constantly arising, might of itself occupy an entire volume.
The present chapter therefore makes no pretence to be a reference help, but confines itself to a practical discussion of the more important matters to be considered when such contracts are drawn.
It is often supposed that there is something palpably illegal in attempting to sell real estate without entering into a preliminary written agreement designed to bring about the conveyance of the property. This, however, is erroneous, for two persons may lawfully agree orally to the sale and purchase of real estate, and if they carry out their oral agreement by the final conveyance of the property by deed, the absence of a written contract is of no consequence. Indeed, very anciently the transfer of title to real estate was itself quite informal. An oral declaration of transfer made upon the land, or the symbolic delivery of the property by the delivery of a twig of a tree growing on the land, and the like, were among the early methods of transferring title.
However satisfactory these methods may have been in primitive days, they would be utterly insufficient now. If employed, they would lead to endless confusion and litigation and to a deplorable lack of certainty in the security of one's title to land. To avoid all this, the law makers long ago required such agreements to be in writing. The subject is almost universally regulated by statute, known in nearly all jurisdictions as "The Statute of Frauds."1
Ordinarily a sale of real estate is brought about by real estate agents, or less frequently by the parties themselves. The services of a lawyer are scarcely ever sought until the negotiations are well under way and frequently not until all the details have been practically agreed upon and a deposit paid on account. The wisdom of this is doubtful, but the conditions are sometimes such as to render it unavoidable.
When the seller of real estate has been offered terms with which he is satisfied, he is anxious to "strike while the iron is hot." And the purchaser, offered the property at a price satisfactory to him, is more than willing to have the transaction "clinched " at once by a written contract. Also, the broker when he has performed his part in the sale of real estate by bringing about a meeting of the minds of the parties, is naturally anxious to see that understanding perfected by a written contract.
1 See Sec. 350 infra.
In some states he must secure an enforceable contract before he is entitled to his commissions.2
Under such circumstances no deliberation is indulged in and the contract is usually drawn on the spot or at the nearest convenient place, with such knowledge, or lack of knowledge of the requirements and effect of an agreement of sale of real property as the parties may themselves possess. And yet, as we shall see later, the contents of the written contract are of the utmost importance.
A contract for the sale of real estate should be drawn with the greatest care, and, whenever circumstances permit, before signing it the vendor should produce his title deeds, abstracts, or title insurance policies and be ready to furnish accurate information concerning the property and his title thereto.
The reason for submitting the title deeds, abstracts, or title insurance policies for examination is found in the fact that from such documents it will usually appear what encumbrances and defects the vendor's title is burdened with, and provision may be made in the contract accordingly. Usually the purchaser makes up his mind to buy after a physical inspection of the property, and it is quite immaterial to him whether there are party walls, restrictions, street railroads, etc. In fact, all these may only serve to make the property more desirable to him, and if discussed at the time of making the contract, little difficulty will usually be found in arriving at an agreement properly providing for or against such matters.
But after a contract is once signed, if nothing is said therein about these matters, "experienced purchasers" - or perhaps their attorneys - scent all manner of future difficulty on account of these very things, and, as the existence of some of them may sometimes afford sufficient ground to justify the purchaser in refusing to carry out the contract, the vendor has the alternative of making an
2 See Sec. 117-119 supra.
" allowance " on the price, or of involving himself in litigation which may tie up the property for many months.