We have a signed offer, but no deposit. What now?
A contract to purchase real estate is binding if there is a written offer, acceptance, and consideration. “Consideration,” while commonly thought to be the equivalent of money, simply means “something of value,” which may be an act, a forbearance, a material item, or some other form of compensation.
In real estate, agreements to purchase property are bilateral contracts in which there is a mutual exchange of promises, whereby the promises themselves act as the consideration necessary to bind the contract – i.e. the buyer has promised to purchase the property for a set price and the seller has accepted this offer by promising to sell. A deposit typically serves to demonstrate good faith and adds a layer of protection for the seller in the event of a buyer’s default.
If the contract to purchase specifically calls for the remittance of a deposit to bind the offer, such as MAR’s Contract to Purchase, failure on the part of the buyer to deliver a deposit as specified in the contract would result in no binding contract being formed.
However, if the contract to purchase does not state that a deposit is required to bind the offer, a buyer’s failure to remit a deposit would likely constitute a breach of the contract, but a binding contract would still exist.