3.1 Oklahoma Contract Requirements
Key Takeaways
- Oklahoma's Statute of Frauds (Title 15 O.S. §136) requires real estate sale contracts to be written and signed by the party to be charged
- A valid contract needs offer, acceptance, consideration, legal capacity, and lawful purpose
- Escrow/earnest money must be deposited before the end of the third banking day following acceptance (OREC Rule 605:10-13-1) unless all parties agree otherwise in writing
- Oklahoma uses the OREC Uniform Residential Sale Contract and the Notice of Treatments, Repairs and Replacements (TRR) form for inspection negotiations
- On an earnest-money dispute the broker follows Rule 605:10-13-3 or files an interpleader — the broker never just picks a side
The Five Elements Plus a Writing
Every enforceable Oklahoma real estate contract needs five common-law elements and a writing. The exam loves to remove one element and ask whether a contract exists.
| Element | What it means in Oklahoma | Common exam trap |
|---|---|---|
| Offer | Definite, communicated proposal with price and property | An ad or "for sale" sign is an invitation, not an offer |
| Acceptance | Unqualified "yes" to the exact terms | Any change is a counteroffer that kills the original |
| Consideration | Bargained-for value (price, promises) | Earnest money is evidence of consideration, not the consideration itself |
| Legal capacity | 18+ and mentally competent | A minor's contract is voidable by the minor |
| Lawful purpose | Object cannot be illegal | A contract to violate fair-housing law is void |
Statute of Frauds (15 O.S. §136)
Under Oklahoma's Statute of Frauds, a contract to sell or lease real property for more than one year must be in writing and signed by the party to be charged (the one being sued) or that party's authorized agent.
Key point: An oral agreement to sell land is generally unenforceable — even if both parties admit it. A handshake deal on a $300,000 house gives neither side a remedy for breach.
Exception to remember: an oral lease for one year or less can be enforceable in Oklahoma, which is why month-to-month tenancies need no writing.
OREC Uniform Forms
The Oklahoma Real Estate Commission (OREC) Contract Forms Committee publishes the standardized forms used in most residential deals. Licensees must use the current approved version.
| Form | Purpose |
|---|---|
| Uniform Residential Sale Contract | The core purchase agreement |
| Confirmation of Disclosures | Confirms the seller's disclosure was delivered |
| Notice of TRR | Buyer's written list of items to be treated, repaired, replaced |
| Counteroffer | Modifies any term of the pending offer |
Executed vs. Executory
An executory contract is signed but not yet performed (between contract and closing). An executed contract has been fully performed by both sides (after closing). Most disputes the exam describes happen during the executory stage.
Bilateral vs. Unilateral and Validity
A purchase contract is bilateral — a promise for a promise (the seller promises to convey, the buyer promises to pay). An option to buy is unilateral until exercised: the optionor is bound, but the optionee is not.
Classify the contract's validity carefully — the exam mixes these terms:
| Status | Meaning |
|---|---|
| Valid | Meets all elements; fully enforceable |
| Void | No legal effect from the start (illegal purpose, no capacity) |
| Voidable | Valid until a protected party (e.g., a minor or defrauded buyer) rescinds |
| Unenforceable | Otherwise valid but a court will not enforce it (e.g., oral land sale under the Statute of Frauds) |
Earnest Money and the Trust Account
Earnest money is a good-faith deposit showing the buyer is serious. It is not a down payment and not the consideration — it is partial payment credited at closing.
| Rule | Oklahoma requirement (OREC) |
|---|---|
| Deposit deadline | Before the end of the third banking day after acceptance |
| Override | Allowed only by written agreement of all interested parties |
| Who holds it | The broker (in the firm's trust/escrow account), never the sales associate personally |
| Commingling | Prohibited — trust funds cannot mix with the broker's operating money |
Worked example: A seller accepts an offer on Monday. "Banking days" exclude weekends and bank holidays. The broker must deposit the earnest money no later than the close of business Thursday (Tuesday = day 1, Wednesday = day 2, Thursday = day 3).
The TRR Inspection Negotiation
Oklahoma does not use a generic "repair contingency." After inspections, the buyer delivers a Notice of Treatments, Repairs and Replacements (TRR) listing only items not in normal working order. The seller then chooses to agree, decline, or negotiate.
- If the seller-response blank is left empty, the seller has 5 days after receiving the completed TRR form to obtain cost estimates.
- The seller is never required to make TRRs; in a hot market sellers often decline.
- If the parties cannot agree within the contract's time periods, the buyer may cancel and recover the earnest money.
Time Is of the Essence & Termination
OREC contracts state "time is of the essence" — every stated deadline is strictly enforced, and only a written extension signed by all parties moves it.
A contract may end by performance (closing), mutual rescission, failure of a contingency, or breach. On a breach, remedies include forfeiture of earnest money, suit for damages, or specific performance (a court order to complete the sale, available because land is unique).
Resolving Earnest-Money Disputes
| Path | What the broker does |
|---|---|
| Written release | Buyer and seller both sign a disbursement agreement |
| OREC Rule 605:10-13-3 | Follow the rule's notice/disbursement procedure |
| Interpleader | Broker deposits the disputed funds with the court and lets a judge decide |
Exam trap: When buyer and seller fight over earnest money, the broker must not simply hand it to either party. Holding the funds and filing interpleader protects the broker from liability.
Under Oklahoma's Statute of Frauds, which statement is TRUE about real estate contracts?
A seller accepts a buyer's offer. By when must the broker deposit the earnest money under OREC rules?
Buyer and seller disagree about who is entitled to the earnest money after a deal collapses. What is the broker's proper action?