3.1 Virginia Purchase and Sale Agreements
Key Takeaways
- A Virginia real estate contract must be in writing and signed under the Statute of Frauds (Va. Code § 11-2) to be enforceable.
- The Virginia REALTORS (formerly VAR) standard residential purchase agreement is used in most resale transactions and is the form the state exam draws from.
- A contract is "ratified" when all parties sign and acceptance is communicated and delivered to the offeror.
- Virginia applies a "reasonable time" default; deadlines become strictly enforceable only when the contract states "time is of the essence."
- Financing, home-inspection, appraisal, and home-sale contingencies allow a buyer to exit without forfeiting earnest money when their conditions are not met.
Why Contracts Dominate the State Exam
The Six Essential Elements
Every enforceable Virginia real estate contract needs all six elements below. Missing any one makes the agreement void or voidable.
| Element | What it means in practice |
|---|---|
| Competent parties | 18+ and mentally capable; a minor's contract is voidable by the minor |
| Offer and acceptance | Mutual assent — a genuine "meeting of the minds" on price and terms |
| Legal purpose | The conveyance and use must be lawful |
| Consideration | Something of value (the purchase price; earnest money is evidence, not consideration itself) |
| Written form | Va. Code § 11-2 (Statute of Frauds) requires a signed writing for any contract for the sale of land or any interest lasting more than one year |
| Legal description | The property must be identifiable; a street address often suffices for a binding contract |
The Virginia REALTORS Standard Form
Most residential resales use the Virginia REALTORS (the trade group renamed from the Virginia Association of REALTORS, or VAR) Residential Purchase Agreement. Memorize what each core clause controls:
- Purchase price and payment terms — total price, loan vs. cash, and any seller credits.
- Earnest money deposit (EMD) — amount, who holds it, and the deposit deadline. The amount is fully negotiable; there is no statutory minimum.
- Financing contingency — loan type, maximum interest rate, and the date by which the buyer must obtain a commitment.
- Home-inspection clause — the inspection window and the buyer's repair/terminate rights.
- Settlement date and location — Virginia calls closing "settlement."
Earnest Money: Who Holds It and When
The EMD is held by the listing firm's broker, the buyer's broker, a title/settlement company, or a closing attorney as named in the contract. If the broker receiving the deposit will NOT hold it in the firm's own escrow account, Va. Code § 54.1-2108.2 requires the broker to deliver it to the named escrow agent by the end of the fifth business banking day after receipt, unless the parties agree otherwise in writing. A common trap: students assume "immediately" or "three days" — the statutory backstop is five business banking days.
Exam tip: Earnest money is NOT consideration and is NOT a down payment. It is a good-faith deposit credited toward the buyer's funds at settlement.
Ratification: When the Deal Becomes Binding
A Virginia purchase contract is ratified (binding) only when three things all occur:
- All parties sign the agreement (including any counteroffer terms).
- Acceptance is communicated back to the offeror.
- The signed contract is delivered to the offeror or their agent.
Until that moment, an offer can be revoked, and a counteroffer legally rejects and terminates the original offer — the original cannot then be "accepted" later. The ratification date starts the clock on every contingency and deadline, so it is one of the most tested dates on the exam.
Time Is of the Essence
Virginia's default rule is "reasonable time." A minor delay — a lender funding a day late, an inspection report arriving an hour past noon — usually does not allow the other party to walk. That changes only when the contract expressly states "time is of the essence." Once that phrase is in the contract, every stated deadline becomes a hard cutoff and late performance is grounds for termination.
| Situation | Default (reasonable time) | With "time is of the essence" |
|---|---|---|
| Buyer's loan commitment is two days late | Likely still curable | Seller may declare buyer in default |
| Settlement slips by 24 hours | Often allowed if both cooperate | Either party may terminate |
| Inspection objection filed a day past deadline | May still be considered | Waived; buyer accepts as-is |
Contingencies — The Buyer's Exit Ramps
Contingencies let a buyer cancel and recover earnest money if a stated condition is not satisfied by its deadline.
| Contingency | Protects the buyer when... |
|---|---|
| Financing | The loan is denied, the rate exceeds the stated cap, or terms are unacceptable |
| Home inspection | Material defects are found; buyer may request repairs, a credit, or terminate |
| Appraisal | The home appraises below the contract price |
| Home sale | The buyer cannot close until their current home sells |
A Worked Scenario
A buyer ratifies on June 1 with a financing contingency requiring a loan commitment by June 21 and "time is of the essence." On June 22 the buyer still has only a pre-approval, not a commitment. Because the deadline passed and time was of the essence, the seller may terminate and the buyer is entitled to a refund of earnest money under the financing contingency (the buyer acted in good faith but the condition failed). If instead the buyer simply changed their mind with financing in hand, the seller could claim the deposit as liquidated damages if the contract so provides.
Amending a Ratified Contract
After ratification, all changes must be in writing and signed by every party — an oral side agreement is unenforceable under § 11-2.
| Change | Correct mechanism |
|---|---|
| Before ratification | Counteroffer or new offer |
| Adjusting price or repairs after ratification | Written addendum or amendment, all signatures |
| Extending a deadline | Signed extension addendum |
Common trap: A buyer's verbal "yes, push closing a week" means nothing. Without a signed extension, the original "time is of the essence" settlement date still controls.
A Virginia buyer hands a $5,000 earnest money check to the listing broker, who will NOT hold it in the firm's escrow account but must deliver it to the title company named in the contract. By when must the broker deliver the funds, absent a written agreement otherwise?
What is Virginia's default rule for contract deadlines, and how does it change?