The siren song of so called "creative" real estate techniques seems to lure folks into skipping the basics.

The fundamentals just don't seem as sexy as all that double-close, no money down hype. When you build a house you must start with the foundation of you want on a sound structure. The same is true of real estate investing.

In this short course we would like to cover one of the most important investing basics... contracts.

Many of the documents you deal with in real estate are contracts. Contracts are governed by strict laws.  Purchase agreements, options and lease agreements are all contracts. To be legally binding every contract must contain certain elements. We will go over those elements in this course.

Who can sign a contract?

Any person can be a party to a contract. You do not have to be a U.S. citizen or speak English. People entering into a contract must be legally competent. That means they cannot be mentally ill or intoxicated.  

Even a "minor" (anyone under 18 years old) can make contracts. However, anyone can refuse to make a contract with a minor because minors usually are not bound by contracts... so the contracts are not enforceable.

In other words... don't enter into contracts with minors. Have the contract signed by their legal guardian... and ask for proof of the legality of the guardianship. You cannot refuse to enter into a contract with someone because of race, color, sex, religion or national origin.

It is no longer necessary for you to physically place your signature on a piece of paper in order to enter into
a contract.

Instead, there are electronic ways to agree to buy insurance, sign a lease, arrange for utility service, take out a loan on-line, or execute real estate contracts.

This allows you to deal with people out of your area. Suppose someone from out of state inspects one of your
properties and wants to buy. They can physically sign the purchase contract on that visit. Later documents will be prepared in escrow that need to be signed by the buyer. They could be signed electronically if necessary. 

If you haven't already provided your signature electronically, chances are you will soon. The digital
signature era has arrived. Digital signature laws are in effect at both the state and federal level. The federal version is the Electronic Signatures In Global and National Commerce Act (E-SIGN).

E-SIGN is significant because it means that digital signatures will be valid for commercial transactions throughout the United States and for all international commercial transactions based on U.S. law.

Although E-SIGN does not mandate the use of digital signatures, it does mandate their validity. It specifically invalidates state laws requiring paper signatures, as well as state-level digital signature laws and court decisions which have conflicting
provisions.

What is a "digital signature"? E-SIGN defines it broadly: "An electronic sound, symbol, or process, attached to or logically
associated with a contract or other record and executed or adopted by a person with the intent to sign the record."

This definition means that a faxed signature on a contract is as good as an original. Don't worry about the details of a digital signature. If there is ever a need for one it will probably occur in escrow and the escrow officer will take care of it.

* This series was written by an investor and not an attorney. Nothing here should be considered legal advice. If you have a question about any contract ask an attorney BEFORE SIGNING!

Here's a source of contracts in Word format ready for customizing for each deal you do...

The Big Collection - 90 Real Estate Forms

Over 90 forms ready to customize in Microsoft Word format.
This is set up for you to use over and over again.

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