Missouri Real Estate Contracts: Exam Study Guide

Missouri Real Estate Contracts: Exam Study Guide

Contracts are heavily tested on the Missouri real estate exam in both the national section and the state section. The national section tests general contract principles; the state section tests Missouri-specific contract requirements under Missouri Revised Statutes Chapter 339.

Essential Elements of a Valid Contract

For a real estate contract to be legally enforceable in Missouri, it must contain:

1. Mutual assent — A genuine offer and an unambiguous acceptance. A counteroffer rejects the original offer entirely and creates a new offer.
2. Consideration — Something of value exchanged by both parties. In a purchase contract, the buyer offers money; the seller offers the property.
3. Competent parties — Both parties must be at least 18 years old and of sound mind.
4. Legal purpose — The contract cannot be for an illegal objective.

Under the Statute of Frauds, real estate purchase contracts in Missouri must be in writing to be enforceable.

Listing Agreement Types

Exclusive Right to Sell: The listing broker earns a commission regardless of who produces the buyer — even if the seller finds the buyer themselves. This is the most common listing type in Missouri and provides the strongest protection for the broker.

Exclusive Agency: The broker earns a commission unless the seller sells the property themselves without the broker's assistance. If the seller finds the buyer independently, no commission is owed to the broker.

Open Listing: Multiple brokers may list the same property simultaneously. Only the broker who produces a ready, willing, and able buyer earns a commission. The seller may also sell on their own without owing any commission.

Net Listing: The seller sets a minimum net amount; the broker keeps everything above that amount. Legal in Missouri but considered ethically problematic. The MREC discourages net listings.

The Missouri Brokerage Relationship Act and Contracts

The Missouri Brokerage Relationship Act affects how contracts are negotiated and who has duties to whom:

• A seller's agent has a fiduciary duty to the seller during contract negotiations — including the duty to disclose any buyer information that could help the seller's position.
• A buyer's agent has a fiduciary duty to the buyer — including protecting the buyer's negotiating position and not disclosing the buyer's motivation or financial limits to the seller.
• A transaction broker assists both parties without fiduciary duty to either.

Missouri-specific exam point: A buyer agency agreement does NOT need to be in writing to be enforceable in Missouri. This is tested and is different from many other states.

Purchase Contract Elements

A standard Missouri purchase agreement includes:

• Legal description and address of the property
• Purchase price and earnest money amount
• Proposed closing date and possession date
• Financing terms and contingencies
• Inspection and appraisal contingencies
• Seller's representations and disclosure obligations

Contingencies and Their Effects

Financing contingency: If the buyer cannot secure financing with specified terms within the contingency period, the buyer may exit the contract and typically recover their earnest money.

Inspection contingency: The buyer has the right to inspect the property and, based on findings, negotiate repairs, price adjustments, or exit the contract within the contingency period.

Appraisal contingency: If the property appraises below the purchase price, the buyer may renegotiate or exit without penalty.

Missouri Seller's Disclosure

Missouri requires sellers of 1-4 unit residential properties to complete a Seller's Disclosure of Property Condition form. This form discloses:

• Known structural defects
• Known problems with systems (HVAC, plumbing, electrical, roof)
• Boundary disputes, easements, or encumbrances the seller is aware of
• Any known environmental issues

The disclosure is based on the seller's actual knowledge — it is not a warranty of condition.

Earnest Money and Trust Accounts

Earnest money is handled through the broker's trust account:

• Salespersons must deliver earnest money to the broker by the next business day
• Brokers deposit into trust accounts within the required timeframe
• Disputes over earnest money disbursement require mutual agreement or a court order

Contract Vocabulary for the Exam

• Executed: All parties have fully performed
• Executory: Performance is still pending (a signed purchase contract before closing is executory)
• Void: No legal effect from the start
• Voidable: Valid but one party can cancel (e.g., contract with a minor)
• Unenforceable: Once valid but cannot be enforced (e.g., oral contract for real property)

[CARealestate.com/states/missouri](https://carealestate.com/states/missouri) has Missouri-specific contract practice questions that mirror the PSI exam format. Use them alongside your prelicense coursework.