Virginia Real Estate Contracts Guide for the Exam

# Virginia Real Estate Contracts Guide for the Exam

Contract law is heavily tested on the national section of the Virginia PSI exam, and Virginia has state-specific contract requirements — particularly around property disclosure and HOA/condo documents — that appear on the state section.

Elements of a Valid Contract

All enforceable Virginia real estate contracts require:

1. Mutual assent: A definite offer and an unambiguous acceptance. A counteroffer terminates the original offer and creates a new offer.
2. Consideration: The purchase price from the buyer; the promise to convey title from the seller.
3. Capacity: Parties must be at least 18 years old and mentally competent.
4. Legal purpose: The contract's object must be lawful.
5. In writing: Virginia's Statute of Frauds requires real estate contracts to be written and signed to be enforceable.

Types of Real Estate Contracts

Purchase Agreement (Sales Contract): The main document in a residential sale. Specifies price, closing date, earnest money, contingencies, and personal property included or excluded.

Listing Agreement: Creates the brokerage-seller relationship. Must contain a definite expiration date. Virginia uses primarily exclusive right-to-sell agreements.

Option Contract: Gives the buyer the right (but not obligation) to purchase at a set price within a specified period. Unilateral — only the seller is bound during the option period.

Buyer Representation Agreement: A contract establishing the buyer agency relationship. Required to be in writing before the buyer's agent can receive compensation.

Virginia Residential Property Disclosure Act

Sellers of residential property must provide buyers with the Virginia Residential Property Disclosure Statement before ratification of the contract. Key points: - The form is prescribed by VREB - The disclosure is mandatory — sellers cannot opt out - The form advises buyers of defects the seller knows about - Failure to provide the disclosure may give the buyer a right to void the contract before closing

The Act is not a warranty — it does not guarantee the property is defect-free, only that the seller has disclosed what they know.

HOA and Condominium Disclosure Packets

Virginia has detailed requirements for properties in homeowners associations (governed by the Property Owners' Association Act) and condominiums (governed by the Condominium Act).

For HOA properties: The seller must provide the HOA disclosure packet, including the current declaration, bylaws, rules and regulations, and financial information.

For condominiums: The seller must provide a condo resale certificate along with the governing documents.

Timing: These documents must be provided before the contract is ratified. Buyers have a right of rescission within 3 days of receiving a complete packet.

Who obtains the documents: The seller is responsible for requesting the HOA packet from the association, which may charge a fee.

Virginia Grantor's Tax and Contracts

Virginia's grantor's tax of $0.25 per $100 of consideration is typically addressed in the closing disclosure. The purchase agreement may specify which party pays various closing costs, but the grantor's tax is a seller obligation by statute.

Contract Status Terms

• Executory: Obligations remain from at least one party (before closing)
• Executed: All obligations fulfilled (after closing)
• Void: Never valid — lacks a required element
• Voidable: Valid but rescindable by one party

Breach of Contract in Virginia

If the buyer defaults, the seller may retain earnest money (if the contract provides for liquidated damages) or sue for specific performance.

If the seller defaults, the buyer may recover earnest money and sue for specific performance — real property is unique and courts will compel sales when warranted.