Necessity of a Written Contract for the Purchase or Sale of Commercial Property
Under the Statute of Frauds, contracts involving the sale or transfer of real property must be in writing. The original 1677 English statute was meant to help prevent fraud that can occur in oral contracts. Every state has adopted this statute in a more or less modified form as a devise to prevent nonexistent agreements from being enforceable.
Understanding Contract Requirements and the Statute of Frauds
The transfer of commercial real estate can be a complex financial transaction. Often one party must get a mortgage and the other has to pay one off. There is usually a title search to ensure there are no outstanding liens, so title insurance is usually purchased. Money and documents may be placed into escrow with an escrow agency. However, the actual contract itself can be simply drafted and legally enforceable as long as it contains the essential terms, such as the sales price, description of the property, and signatures of the parties. Of course, the contract can also become as complex and detailed as you'd like to protect your legal rights.
Getting Help Putting a Contract in Writing
It is advisable to ask an attorney to review your commercial real estate contract, and determine if there should be any modiifications to further protect your legal interest in the property.