Alabama Real Estate Contracts: What the Exam Tests

Contracts appear throughout Alabama's 140-question exam. Here's what you need to know.

Essential Elements of a Valid Contract

1. Offer and acceptance (mutual assent)
2. Consideration (something of value from both parties)
3. Legal capacity (19+ in Alabama, mentally competent)
4. Legal purpose
5. In writing (Statute of Frauds — real estate contracts must be written)

Note: Alabama's legal age for contracting is 19, not 18 — this affects capacity requirements.

Earnest Money in Alabama

• Negotiated amount; held in broker's trust account
• Salesperson delivers to broker promptly (next business day)
• Broker deposits in trust account within a reasonable time
• If buyer defaults: seller may retain as liquidated damages (per contract terms)
• If seller defaults: buyer recovers earnest money + may seek specific performance

Statute of Frauds

Alabama's Statute of Frauds requires real estate contracts to be in writing and signed. An oral real estate contract is unenforceable — not void, but the court won't enforce it.

Default Remedies

Specific performance: Available in real estate because each property is unique. A buyer can compel a seller to sell (or vice versa) by court order.

Liquidated damages: Contract may specify that earnest money is the seller's remedy if buyer defaults — limits the seller's recovery but provides certainty.

Common Exam Scenarios

Q: An Alabama minor (18 years old) signs a real estate purchase contract. The contract is: A: Voidable by the minor (who is under 19, Alabama's legal age) — the minor can affirm or disaffirm. The adult cannot void it.

Q: A seller backs out after an Alabama purchase contract is signed. The buyer wants to force the sale. What remedy? A: Specific performance — available because real estate is unique.

[Practice Alabama contract questions at CARealestate.com/states/alabama](https://carealestate.com/states/alabama)