3.1 South Carolina Contract Requirements

The Statute of Frauds in South Carolina

South Carolina's Statute of Frauds (S.C. Code Ann. Sec. 32-3-10) requires that any contract for the sale of land, or any interest in land, be in writing and signed by the party to be charged (the party you are trying to enforce the contract against) or that party's authorized agent. An oral promise to sell a house is generally unenforceable, even if both sides clearly agreed and shook hands.

The writing must contain the essential terms: the parties, an identifiable property, the price, and the signature of the party being sued. A narrow part-performance exception exists in equity (buyer takes possession, pays part of the price, and makes improvements), but the exam answer for sales contracts is always: it must be written.

Trap: A listing agreement and a buyer-agency agreement are also commonly written, but the Statute of Frauds itself targets the conveyance of an interest in land. A lease for one year or less can be oral; a lease for more than one year must be written.

The Five Elements of a Valid Contract

Earnest money is not a sixth element. A contract can be valid with zero earnest money. The exam loves this distinction.

Offer, Counteroffer, and Acceptance

Acceptance must be the mirror image of the offer. If the seller changes the closing date or price, the seller's response is a counteroffer that terminates the buyer's original offer and gives the buyer the power to accept, reject, or counter again. An offer can be revoked any time before acceptance is communicated, and it terminates automatically on the offeree's death, rejection, lapse of a stated deadline, or a counteroffer.

• Executory contract - obligations remain to be performed (signed but not yet closed).
• Executed contract - all obligations are fully performed (after closing).

Most South Carolina deals use forms published by the South Carolina Association of Realtors (SCR), but a licensee may not draft custom clauses that constitute the unauthorized practice of law; fill-in-the-blank standard forms are permitted.

Earnest Money and the Trust Account

Earnest money is a good-faith deposit showing the buyer's serious intent. It is held by the broker-in-charge (BIC), never by a salesperson and never in the licensee's personal or operating account.

The South Carolina Real Estate Commission (under LLR, the Department of Labor, Licensing and Regulation) audits trust accounts. A BIC who cannot reconcile the account, or who disburses disputed earnest money to one party without authorization, risks suspension or revocation.

Contingencies

Contingencies are conditions that must be satisfied or the buyer may cancel and (usually) recover earnest money.

• Financing contingency - buyer must apply for the loan within a set number of days and provide a denial letter to terminate.
• Inspection / due-diligence contingency - buyer may inspect and request repairs, renegotiate, or void within the inspection period.
• Appraisal contingency - if the property appraises below the contract price, the buyer may renegotiate, pay the gap, or cancel.
• Sale-of-buyer's-home contingency - buyer must sell a current home first; sellers often reserve a kick-out clause to accept backup offers.

Breach and Remedies

A "time is of the essence" clause makes every stated deadline strict; missing one can be a material breach, and extensions must be in writing. Without such a clause, courts may allow a reasonable time to perform, but South Carolina contracts routinely include it, so treat every contingency and closing date as a hard deadline on the exam.

Remember that specific performance is uniquely available in real estate because land is treated as one of a kind, so money damages may be inadequate; a court can order the defaulting party to actually convey or buy the parcel.

Exam Tip: If a buyer defaults and the contract names earnest money as liquidated damages, the seller's typical remedy is to keep the earnest money - not to also sue for specific performance on the same default.