Florida Real Estate Contracts: What the Exam Tests

Contracts are tested in both the national and Florida-specific sections of the Florida real estate exam. Here's what you need to know.

Essential Elements of a Valid Contract

For a real estate contract to be valid and enforceable, it must have:

Offer and Acceptance (mutual assent / meeting of the minds)
Consideration (something of value exchanged by both parties)
Legally competent parties (18+, mentally competent, not under duress)
Legal purpose (contract cannot be for an illegal act)
In writing (Florida Statute of Frauds requires real estate contracts to be in writing)

Contract Status: Valid, Voidable, Void, Unenforceable

Valid: All elements present; fully enforceable
Voidable: One party can choose to void it (e.g., minor signs a contract — minor can void it, but adult cannot)
Void: No legal effect from the start (e.g., contract for illegal purpose)
Unenforceable: Valid contract but courts won't enforce it (e.g., oral real estate contract — violates Statute of Frauds)

The FAR/BAR Contract

Florida transactions typically use the Florida Realtors/Florida Bar (FAR/BAR) As Is Residential Contract for Sale and Purchase or the standard FAR/BAR contract with repair provisions.

Key FAR/BAR provisions tested on the exam:

Financing Contingency: Buyer has a specified period to obtain loan approval. If financing falls through, buyer can cancel and recover deposit.

Inspection Period: Standard FAR/BAR "As Is" contract includes an inspection/due diligence period (typically 10-15 days). Buyer can cancel for any reason during this period with deposit returned.

Closing Date: Failure to close by closing date can constitute a default. Extensions must be agreed to in writing.

Default Provisions: - If buyer defaults: seller may retain the deposit as liquidated damages (if seller elects this remedy, it's the only remedy — seller can't also sue for additional damages) - If seller defaults: buyer may sue for specific performance OR recover deposit plus expenses

Specific Performance

Specific performance is a legal remedy that compels a party to actually perform the contract (not just pay damages). It's available in real estate contracts because each property is considered unique.

This is a frequently tested concept — real estate allows specific performance because land is not fungible (not interchangeable).

Option Contracts

An option contract gives one party the right (but not obligation) to purchase property at a set price within a set time.

The option fee (consideration for the option itself) is generally non-refundable if the buyer doesn't exercise the option
An option is unilateral — only the seller is obligated; the buyer has the right but not the duty to purchase
Options must be in writing under the Statute of Frauds

Right of First Refusal

Different from an option: gives a party the right to match any bona fide offer before the owner can accept it from a third party. The holder doesn't have the right to purchase at a set price — only the right to match.

Earnest Money / Deposits

Not legally required for a valid contract, but standard practice
Held in escrow by the broker
Sales associate must deliver to broker by next business day
Broker must place in escrow account within 3 business days of an accepted offer

Common Exam Scenarios

Q: Buyer and seller sign a contract, but buyer is 16 years old. The contract is: A: Voidable by the minor (buyer), not void. The minor can affirm or disaffirm. The adult seller cannot void it.

Q: A seller accepts a buyer's offer on Monday. Can the seller accept another offer Tuesday? A: No — once an offer is accepted, a binding contract exists. The seller cannot accept other offers without defaulting on the first contract.

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