What is an Implied Contract in Real Estate Transactions?
I've seen many real estate deals where handshakes and actions spoke louder than written words. These situations often create implied contracts - those unspoken agreements that still carry legal weight. Let me break this down for you in a way that makes sense.
Implied Contract: An implied contract is an unwritten agreement that is formed through the actions and conduct of the parties involved, rather than through explicit verbal or written terms. The mutual understanding and obligations between parties are demonstrated by their behavior and circumstances, even though they haven't formally documented their agreement.
Types of Implied Contracts in Real Estate
Two main types of implied contracts pop up in real estate transactions. First, we have implied-in-fact contracts, which develop naturally from people's actions. Think about a property manager who regularly sends maintenance workers to fix issues in your rental property - that's an implied-in-fact contract at work.
The second type, implied-in-law contracts (also called quasi-contracts), are different. Courts create these to prevent someone from unfairly benefiting at another's expense. For example, if someone mistakenly improves the wrong property, a court might require the property owner to compensate them.
Common Situations Where Implied Contracts Arise
Property management creates plenty of opportunities for implied contracts. If your tenant calls about a leaking roof and you send someone to fix it without discussing payment terms, you've created an implied contract to pay for those services.
Tenant-landlord relationships often involve implied contracts too. Many month-to-month tenancies start this way, with tenants staying past their lease term and landlords accepting rent payments.
Real estate agents sometimes find themselves in implied contract situations. If an agent shows properties and provides market analysis without a signed agreement, their actions might create an implied contract for services.
Legal Aspects and Enforcement
For an implied contract to stand up legally, two key elements must exist:
Both parties must understand what they're agreeing to
Something valuable must be exchanged
Proving implied contracts requires evidence of actions taken by both parties. Save emails, text messages, and records of payments or services rendered - these help demonstrate the existence of an agreement.
The Statute of Frauds affects real estate contracts, requiring certain agreements to be in writing. However, courts sometimes recognize exceptions for implied contracts when one party has already performed their obligations.
Protecting Yourself in Real Estate Transactions
I always recommend getting everything in writing. Yes, implied contracts are real and enforceable, but written agreements make everything clearer. Keep records of:
Email communications
Text messages
Photos of work performed
Payment receipts
Common Misconceptions
Many people think all real estate agreements must be written down - that's not true. While written contracts are preferred, implied contracts can be just as binding.
Don't confuse verbal agreements with implied contracts. Verbal agreements involve spoken words, while implied contracts form through actions and behavior.
Related Real Estate Concepts
Express contracts spell everything out in writing or words. They're different from implied contracts, which form through actions rather than explicit agreements.
Agency relationships between real estate professionals and clients can form through implied contracts, though most brokerages now require written agreements.
Final Thoughts
Understanding implied contracts helps protect your interests in real estate transactions. While they're valid and enforceable, written agreements provide better protection and clarity.
Need guidance navigating real estate contracts? Bellhaven Real Estate offers expert representation and clear communication throughout your real estate transaction. Stop by our office to discuss your real estate needs with our experienced team.