Key Takeaways
- Idaho follows the Statute of Frauds requiring real estate contracts to be in writing
- Valid contracts require offer, acceptance, consideration, legal capacity, and lawful purpose
- The RE-21 (Idaho Real Estate Purchase and Sale Agreement) is the standard contract form
- Earnest money must be deposited into the broker's trust account per contract terms
- Idaho uses the term "escrow" for the closing process, handled by title companies or attorneys
Idaho Contract Requirements
Idaho real estate contracts must meet specific legal requirements to be valid and enforceable.
Statute of Frauds
Under Idaho's Statute of Frauds, contracts for the sale of real property must be:
- In writing
- Signed by the party to be charged (or their authorized agent)
Key Point: Oral agreements to sell real estate are generally unenforceable in Idaho.
Essential Elements of a Valid Contract
| Element | Description |
|---|---|
| Offer | Clear proposal with definite terms |
| Acceptance | Unequivocal agreement to the offer's terms |
| Consideration | Something of value exchanged (usually money) |
| Legal capacity | Parties must be competent to contract |
| Lawful purpose | Contract cannot be for illegal purposes |
| In writing | Required for real estate contracts |
Standard Idaho Contract Forms
Idaho Association of REALTORS provides standard forms:
| Form | Use |
|---|---|
| RE-21 | Purchase and Sale Agreement (Residential) |
| RE-23 | Commercial Real Estate Purchase and Sale Agreement |
| RE-14 | Vacant Land Purchase and Sale Agreement |
| RE-11 | Residential Listing Agreement |
| RE-13 | Buyer Representation Agreement |
The RE-21 Form
The RE-21 is the standard residential purchase and sale agreement used in Idaho:
| Section | Contents |
|---|---|
| Property description | Address, legal description |
| Purchase price | Price and payment terms |
| Earnest money | Amount, holder, disposition |
| Financing | Loan terms, contingencies |
| Closing | Date, location, costs |
| Title | Insurance, defects |
| Inspections | Types, deadlines, remedies |
| Inclusions/Exclusions | Items included/excluded |
| Agency | Confirmation of representation |
Important: Licensees should never modify the pre-printed terms of standard forms without proper authorization and understanding of legal implications.
Earnest Money
Earnest money (also called a good faith deposit) demonstrates the buyer's serious intent to purchase.
Handling Requirements
| Requirement | Details |
|---|---|
| Deposit timeline | Per contract terms (typically within 3-5 business days) |
| Where deposited | Broker's trust account OR escrow/title company |
| Who specifies | Named in the contract |
| Disbursement | Per contract terms or mutual agreement |
Earnest Money Disputes
If the parties disagree about who should receive earnest money:
| Scenario | Action |
|---|---|
| Mutual agreement | Disburse per written instructions |
| Dispute | Hold in trust until resolved |
| Court order | Follow court instructions |
| Interpleader | Broker may file interpleader action |
Key Rule: Never disburse disputed earnest money without written agreement from all parties or court order.
Contract Contingencies
Contingencies allow parties to exit the contract if certain conditions aren't met:
Common Idaho Contract Contingencies
| Contingency | Purpose |
|---|---|
| Financing | Buyer can cancel if loan not approved |
| Inspection | Buyer can negotiate repairs or cancel |
| Appraisal | Protection if property appraises low |
| Sale of buyer's home | Buyer must sell current home |
| Title | Clear title must be deliverable |
Inspection Contingency
Idaho contracts typically provide for:
| Element | Details |
|---|---|
| Inspection period | Usually 10-15 days |
| Types | General, pest, radon, well, septic |
| Options | Accept, request repairs, negotiate, cancel |
| Deadline | Must respond by specified date |
Time is of the Essence
Idaho real estate contracts typically include a "time is of the essence" clause:
- Deadlines are strict and legally binding
- Missing a deadline may constitute breach
- Extensions require written agreement from all parties
Exam Tip: Always track deadlines carefully. A missed deadline can result in loss of earnest money or contract termination.
Idaho Closing Process
Idaho uses the term "escrow" for the closing process. Closings are typically handled by:
| Entity | Role |
|---|---|
| Title company | Most common in Idaho |
| Escrow company | Some transactions |
| Attorney | Less common but available |
Standard Closing Timeline
| Step | Typical Timing |
|---|---|
| Contract acceptance | Day 0 |
| Earnest money due | 3-5 business days |
| Inspections | 10-15 days |
| Appraisal | 2-3 weeks |
| Loan approval | 3-4 weeks |
| Closing | 30-45 days |
Common Closing Costs
| Buyer Typically Pays | Seller Typically Pays |
|---|---|
| Loan origination fees | Real estate commission |
| Appraisal fee | Title insurance (owner's policy) |
| Credit report | Transfer taxes (if any) |
| Lender's title insurance | Prorated taxes (pre-closing) |
| Prepaid items | Recording fees for deed |
| Inspection fees | HOA transfer fees |
Note: Idaho does NOT have a state transfer tax. Closing costs are negotiable between parties.
Contract Termination
Contracts may be terminated by:
| Method | Description |
|---|---|
| Performance | Both parties fulfill obligations |
| Mutual agreement | Both parties agree to cancel |
| Contingency failure | Condition specified in contract fails |
| Breach | One party fails to perform |
| Impossibility | Performance becomes impossible |
Default and Remedies
| If Buyer Defaults | If Seller Defaults |
|---|---|
| Seller may keep earnest money | Buyer may seek specific performance |
| Seller may sue for damages | Buyer may sue for damages |
| Contract specifies remedies | Buyer may recover earnest money |
Under Idaho's Statute of Frauds, which statement is TRUE about real estate contracts?
What is the standard residential purchase and sale agreement form used in Idaho?
Where should earnest money be deposited in an Idaho real estate transaction?