Key Takeaways
- Utah 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
- Utah uses the Utah Real Estate Purchase Contract (REPC) as the standard form
- Contingencies (financing, inspection, appraisal) must be clearly specified in the contract
Utah Contract Requirements
Utah real estate contracts must meet specific legal requirements to be valid and enforceable.
Statute of Frauds
Under Utah'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 Utah.
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
Utah real estate professionals typically use:
| Form | Use |
|---|---|
| Real Estate Purchase Contract (REPC) | Standard residential purchase agreement |
| Commercial Real Estate Purchase Contract | Business property transactions |
| Lease Agreement | Rental property |
| Exclusive Right to Sell Listing Agreement | Seller representation |
| Exclusive Buyer-Broker Agreement | Buyer representation |
Note: The Utah 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 | Principal broker's trust account |
| Who holds | Principal broker (not sales agent) |
| Disbursement | Per contract terms or mutual agreement |
Important: Only principal brokers may maintain trust accounts. Sales agents must turn over earnest money to their principal broker.
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 |
Inspection Contingency
| Element | Details |
|---|---|
| Purpose | Buyer can inspect property and negotiate repairs |
| Timeline | Inspection period specified in contract (Due Diligence Period) |
| 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 |
| Timeline | Usually includes kick-out clause |
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 Utah 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
Utah Real Estate Purchase Contract (REPC)
The REPC is the standard form used for residential transactions in Utah:
| Section | Contents |
|---|---|
| Offer | Price, property description, buyer information |
| Earnest money | Amount, holder, default provisions |
| Settlement/Financing | Closing date, loan type, amounts |
| Property condition | Inspection rights, seller warranties |
| Due diligence | Buyer's investigation period |
| Closing costs | Who pays what |
| Signatures | All parties must sign |
Exam Tip: Understand the difference between an executory contract (not yet performed) and an executed contract (fully performed).
Under Utah's Statute of Frauds, which statement is TRUE about real estate contracts?
Where should earnest money be deposited in a Utah real estate transaction?