PSI New Jersey Real Estate State Practice Exam

What is required for a real estate contract to be legally enforceable?

1. A verbal agreement between parties

2. The signatures of both parties

3. No need for written documentation

4. A deposit to be made at signing

The correct answer is: The signatures of both parties

For a real estate contract to be legally enforceable, the signatures of both parties are fundamental. This requirement establishes mutual assent, indicating that both parties have agreed to the terms and conditions set forth in the contract. Signing a contract signifies that the parties acknowledge and accept their responsibilities and rights, creating a binding legal obligation. While verbal agreements may hold some weight in certain contexts, they are typically not sufficient for real estate contracts due to the Statute of Frauds, which necessitates that contracts related to real estate be in writing. Likewise, a contract does not have to be enforceable without the inclusion of a deposit at signing or similar financial commitments, as these are not essential to validate the contract’s legal standing. Hence, the act of signing is the crucial element that provides the necessary enforceability to the real estate agreement.