Key Takeaways
- Nevada 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 must be deposited into the broker's trust account per contract terms
- Nevada uses standardized purchase agreement forms prepared by the Nevada Association of Realtors
- Contingencies (financing, inspection, appraisal) must be clearly specified in the contract
Nevada Contract Requirements
Nevada real estate contracts must meet specific legal requirements to be valid and enforceable.
Statute of Frauds
Under Nevada's Statute of Frauds (NRS 111.205), 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 Nevada.
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 identified |
Common Contract Forms
Nevada real estate professionals typically use:
| Form | Use |
|---|---|
| Residential Purchase Agreement | Standard home purchase |
| Commercial Purchase Agreement | Business property transactions |
| Vacant Land Purchase Agreement | Raw land sales |
| Residential Lease Agreement | Rental property |
| Listing Agreement | Seller representation |
| Buyer-Broker Agreement | Buyer representation |
Note: The Nevada Association of Realtors provides standardized forms used by most 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 |
| Where deposited | Broker's trust account |
| Who holds | Broker (not salesperson) |
| Disbursement | Per contract terms or mutual agreement |
Important: Earnest money belongs to the buyer until the contract conditions are met or it is forfeited according to contract terms.
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 |
| Buyer's duty | Apply for financing in good faith |
Inspection Contingency
| Element | Details |
|---|---|
| Purpose | Buyer can inspect property and negotiate repairs |
| Timeline | Inspection period specified in contract |
| Options | Accept, negotiate repairs, request credits, or cancel |
| Typical 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 |
| Lender requirement | Often required by mortgage lender |
Due Diligence Period
Nevada contracts often include a general due diligence period:
| Feature | Description |
|---|---|
| Purpose | Time for buyer to investigate all aspects |
| Scope | HOA review, title review, inspections, etc. |
| Cancellation | Buyer may cancel for any reason during period |
Termination of Contracts
Contracts may be terminated by:
| Method | Description |
|---|---|
| Performance | Both parties fulfill obligations |
| Mutual rescission | Both parties agree to cancel |
| Contingency failure | Condition in contract not met |
| Breach | One party fails to perform |
| Impossibility | Performance becomes impossible |
| Expiration | Offer or contract term expires |
Time is of the Essence
Many Nevada 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 from both parties
Exam Tip: Understand the difference between an executory contract (not yet performed) and an executed contract (fully performed).
Under Nevada's Statute of Frauds, which statement is TRUE about real estate contracts?
Where should earnest money be deposited in a Nevada real estate transaction?