New Hampshire Real Estate Contracts Guide for the Exam

New Hampshire Real Estate Contracts Guide

Contract law is one of the largest topic areas on the real estate exam — both nationally and in New Hampshire. Expect at least 10 to 15 questions across both sections covering contract formation, types, contingencies, and remedies.

Elements of a Valid Contract

For a real estate contract to be legally enforceable, it must contain six elements:

1. Offer and Acceptance (Mutual Assent) — both parties agree to the same terms
2. Consideration — something of value exchanged (money, promise to act)
3. Competent Parties — both parties must be of legal age and mentally competent
4. Legal Purpose — the contract cannot require illegal acts
5. In Writing — real estate contracts must be in writing under the Statute of Frauds
6. Consent — free from fraud, misrepresentation, duress, or undue influence

If any element is missing, the contract may be void (never valid) or voidable (can be disaffirmed by one party).

Purchase and Sale Agreements in New Hampshire

The NH purchase and sale agreement is the primary contract in a real estate transaction. It typically includes:

• Identification of parties and property
• Purchase price and financing terms
• Earnest money deposit amount and holder
• Contingencies (financing, inspection, appraisal)
• Closing date and possession terms
• Included/excluded personal property (fixtures)
• Seller's disclosure acknowledgment

Unlike New Jersey (which has a mandatory attorney review period), New Hampshire does NOT have a mandatory attorney review period built into standard contracts. Parties may include an attorney review contingency if they choose.

Common Contingencies

Financing contingency: The buyer's obligation to purchase is conditioned on obtaining a mortgage loan at specified terms. If financing falls through, the buyer may cancel and recover the earnest money.

Inspection contingency: The buyer has the right to conduct a professional home inspection within a specified period. If defects are found, the buyer may request repairs, a price reduction, or cancel the contract.

Appraisal contingency: If the property appraises below the purchase price, the buyer may renegotiate or cancel.

Sale of existing home contingency: The purchase is contingent on the buyer selling their current property.

Earnest Money

Earnest money is a deposit made by the buyer to demonstrate good faith. In NH, the listing broker typically holds earnest money in a trust account. If the transaction closes, it is applied to the purchase price. If the buyer defaults, the seller may be entitled to retain the earnest money as liquidated damages.

Contract Remedies

• Rescission: Contract is cancelled and parties are restored to their original positions
• Specific performance: A court orders the breaching party to complete the transaction (common in real estate because each property is unique)
• Damages: Monetary compensation for the non-breaching party

Void vs. Voidable Contracts

• Void: Has no legal effect from the start (e.g., a contract for an illegal purpose)
• Voidable: Valid unless one party chooses to cancel it (e.g., a contract signed by a minor)

For NH exam prep and licensing details, visit [CARealestate.com/states/new-hampshire](https://carealestate.com/states/new-hampshire).