Key Takeaways
- Maine follows the Statute of Frauds requiring real estate contracts to be in writing
- Valid contracts require offer, acceptance, consideration, legal capacity, and lawful purpose
- Earnest money should be deposited into the broker's trust account within specified timeframes
- Maine uses standard contract forms, though custom contracts are also permitted
- Contingencies (financing, inspection, appraisal) must be clearly specified in the contract
Maine Contract Requirements
Maine real estate contracts must meet specific legal requirements to be valid and enforceable.
Statute of Frauds
Under Maine'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 Maine.
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 |
| Legal description | Property must be adequately described |
Common Contract Forms
Maine real estate professionals typically use:
| Form | Use |
|---|---|
| Purchase and Sale Agreement | Standard purchase contract |
| Listing Agreement | Seller representation |
| Buyer Agency Agreement | Buyer representation |
| Transaction Brokerage Agreement | Facilitation without representation |
| Lease Agreement | Rental property |
Note: The Maine Association of REALTORS provides standardized forms used by many licensees.
Earnest Money
Earnest money (also called a good faith deposit) shows the buyer's serious intent:
Handling Requirements
| Requirement | Details |
|---|---|
| Deposit timeline | As specified in contract (typically within 3 business days) |
| Where deposited | Broker's trust account |
| Who holds | Designated broker (not salesperson) |
| Disbursement | Per contract terms or mutual agreement |
Common Contract Contingencies
Contingencies allow parties to exit the contract if certain conditions aren't met:
Financing Contingency
| Element | Details |
|---|---|
| Purpose | Buyer can cancel if financing not obtained |
| Deadline | Must apply for loan within specified days |
| Documentation | May require denial letter from lender |
| Common period | 30-45 days |
Inspection Contingency
| Element | Details |
|---|---|
| Purpose | Buyer can inspect property and negotiate repairs |
| Timeline | Inspection period specified in contract |
| Options | Accept, negotiate repairs, or cancel |
| Common period | 10-15 days |
Appraisal Contingency
| Element | Details |
|---|---|
| Purpose | Protects buyer if property appraises below price |
| Options | Seller reduce price, buyer pay difference, or cancel |
Termination of Contracts
Contracts may be terminated by:
| Method | Description |
|---|---|
| Performance | Both parties fulfill obligations |
| Mutual agreement | Both parties agree to cancel |
| Contingency not met | Condition specified in contract fails |
| Breach | One party fails to perform |
| Impossibility | Performance becomes impossible |
Time is of the Essence
Many Maine real estate contracts include a "time is of the essence" clause:
- Deadlines are strict and legally binding
- Missing a deadline may constitute breach
- Extensions require written agreement
Maine-Specific Contract Considerations
Heating Season Provision
Maine contracts often address:
| Issue | Consideration |
|---|---|
| Heating oil | Who gets oil in tank at closing |
| Propane | Transfer or purchase arrangements |
| Winter occupancy | Timing of possession in cold months |
Septic and Well
| Concern | Requirement |
|---|---|
| Septic inspection | Often required, especially with financing |
| Well water testing | Recommended for quality and quantity |
| Radon testing | Common in Maine due to geology |
Under Maine's Statute of Frauds, which statement is TRUE about real estate contracts?
Where should earnest money be deposited in a Maine real estate transaction?