Key Takeaways
- New Hampshire 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 escrow account promptly
- The NHAR provides standardized contract forms used by most licensees
- Contingencies (financing, inspection, appraisal) must be clearly specified in the contract
New Hampshire Contract Requirements
New Hampshire real estate contracts must meet specific legal requirements to be valid and enforceable.
Statute of Frauds
Under New Hampshire'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 New Hampshire.
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 |
Common Contract Forms
New Hampshire real estate professionals typically use standardized forms from the New Hampshire Association of REALTORS (NHAR):
| Form | Use |
|---|---|
| Purchase and Sale Agreement | Standard residential transactions |
| Commercial Contract | Business property transactions |
| Lease Agreement | Rental property |
| Listing Agreement | Seller representation |
| Buyer Agency Agreement | Buyer representation |
Earnest Money (Deposits)
Earnest money (good faith deposit) demonstrates the buyer's serious intent:
Handling Requirements
| Requirement | Details |
|---|---|
| Who holds | Principal broker (not salesperson) |
| Where deposited | Broker's escrow account |
| Deposit timeline | Promptly, as specified in contract |
| Account type | Separate from personal/business funds |
| Location | NH-insured financial institution |
Interest on Earnest Money
| Rule | Details |
|---|---|
| Interest-bearing allowed | Yes, if agreed in writing |
| Who receives interest | Party making deposit (unless agreed otherwise) |
| Use of interest | Applied toward purchase price (unless agreed otherwise) |
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 |
| Timeline | Application deadline specified in contract |
| Documentation | May require denial letter from lender |
Inspection Contingency
| Element | Details |
|---|---|
| Purpose | Buyer can inspect property and negotiate repairs |
| Timeline | Inspection period specified in contract |
| Options | Accept, negotiate repairs, or cancel |
Appraisal Contingency
| Element | Details |
|---|---|
| Purpose | Protects buyer if property appraises below price |
| Options | Seller reduce price, buyer pay difference, or cancel |
Sale of Buyer's Property Contingency
| Element | Details |
|---|---|
| Purpose | Buyer must sell existing home first |
| Risk | Less attractive to sellers |
| Timeline | Must be clearly specified |
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 New Hampshire 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
Exam Tip: Understand the difference between an executory contract (not yet performed) and an executed contract (fully performed).
Under New Hampshire's Statute of Frauds, which statement is TRUE about real estate contracts?
Where should earnest money be deposited in a New Hampshire real estate transaction?
What happens to interest earned on earnest money deposits in New Hampshire?