Executed Contract

Definition of Executed Contract

An executed contract is a legal agreement in which all parties involved have fulfilled their contractual obligations. This signifies the completion of the agreed terms and conditions, making the contract legally binding and settling the responsibilities of each party to the contract.

In real estate, an executed contract typically indicates that the buyer and seller have signed the agreement, and the transaction has been closed. It follows that all the duties, such as payment, delivery of the deed, and transferring possession, have been completed.

Examples

Real Estate Purchase: Once the buyer pays the purchase price, and the seller delivers the deed, the real estate purchase contract becomes an executed contract.
Lease Agreement: A lease agreement that has been signed by both the landlord and the tenant, and where the tenant has moved in and started paying rent, is considered an executed contract.

Frequently Asked Questions (FAQs)

Q1: What’s the difference between an “executed contract” and an “executory contract”?

An executed contract is one where all parties have fulfilled their contractual obligations. In contrast, an executory contract is one where some or all primary obligations are still outstanding and need to be performed.

Q2: Can an executed contract be voided or canceled?

Yes, an executed contract can be voided or canceled if there are grounds such as mutual agreement, fraud, duress, or other legal reasons that justify the termination of the contract.

Q3: Does signing a contract make it executed?

Signing a contract does not necessarily make it executed; it usually means the contract is effective. The contract becomes executed when all parties have completed their obligations under the agreement.

Q4: Is closing a transaction always necessary to execute a real estate contract?

Yes, in real estate, closing a transaction typically involves the fulfillment of all contractual obligations, making the contract executed.

Q5: What documents are involved in an executed real estate contract?

Typical documents include the signed agreement, payment receipt, deed transfer documents, and other closing statements.

Executed Lease: A lease agreement which has been fully signed and adhered to by both the landlord and tenant.
Settlement Statement (HUD-1): A form that lists all the costs and credits to the buyer and seller in a real estate transaction.
Escrow: A neutral third-party service holding the funds or property until outlined transactional stipulations are met.
Closing Costs: Fees associated with the acquisition of property, payable at the end of a real estate transaction.
Contract Law: The body of law regulating legally binding agreements between parties.

Online Resources

American Bar Association: Offers articles and guides on various legal aspects concerning contracts and real estate.
LegalZoom: Provides access to various legal forms and resources related to contracts.
National Association of Realtors (NAR): Has extensive resources and articles on contracts specific to real estate transactions.

References

“The Basics of Contract Law,” American Bar Association.
“Executed Contract,” Legal Information Institute (Cornell Law School).
Richards, Bartlett. “Contract Law in Real Estate Transactions,” Journal of Real Estate Practice.

Suggested Books for Further Studies

“Real Estate Law (Real Estate Law (Seidel, George))” by Marianne Jennings
“Contract Law For Dummies” by Scott J. Burnham
“The Essentials of Contract Law” by Frank Doti

Real Estate Basics: Executed Contract Fundamentals Quiz

### What signifies an executed contract in real estate? - [ ] Only the signing by all parties - [ ] Only the transfer of money - [ ] Only the deed transfer - [x] Completion of all obligations like signing, payment, and deed transfer > **Explanation:** An executed contract in real estate signifies the completion of all obligations, including signing, transferring money, and the deed, ensuring both parties have fulfilled their commitments. ### Does an executed lease imply the tenant has moved in? - [x] Yes, it implies the tenant has moved in and started paying rent. - [ ] No, it only means both have signed the lease. - [ ] Only when the landlord receives the deposit. - [ ] When the lease is notarized. > **Explanation:** An executed lease means that the tenant has not only signed the agreement but has also moved in and commenced paying rent as stipulated. ### Can an executed contract be considered legally binding? - [x] Yes - [ ] No - [ ] Only under certain conditions - [ ] Only if notarized > **Explanation:** An executed contract is considered legally binding as it represents the completion and fulfillment of the contractual terms and conditions by all parties involved. ### What frequently accompanies the signing of a real estate sales contract? - [ ] Only an offer letter - [x] A deposit or earnest money - [ ] Nothing else - [ ] A promissory note > **Explanation:** Typically, a real estate sales contract signing is often accompanied by a deposit or earnest money that shows the buyer's good faith in proceeding with the transaction. ### In contract terminology, what term contrasts with "executed contract"? - [ ] Initial agreement - [x] Executory contract - [ ] Provisional contract - [ ] Binding agreement > **Explanation:** An "executory contract" contrasts with an "executed contract" as it refers to an agreement where obligations of the parties have yet to be fulfilled. ### Can an executed contract be modified after it is fully executed? - [ ] No, it can never be modified. - [x] Yes, but with mutual agreement from all parties. - [ ] Yes, but only by the original issuer - [ ] No, modifications invalidate the contract. > **Explanation:** An executed contract can be amended if both parties mutually agree to the changes; however, such modifications may require a formal addendum or new agreement. ### When does a real estate transaction typically close in an executed contract? - [ ] After the initial offer is made. - [ ] After financing is obtained. - [x] After all closing documents are signed, and funds are transferred. - [ ] After the property inspection. > **Explanation:** A real estate transaction typically closes (thus the contract is executed) after all closing documents are signed, and funds are appropriately transferred. ### What document often signifies the final step in executing a real estate contract? - [ ] The listing agreement - [x] The deed transfer - [ ] The property tax receipt - [ ] The agency disclosure form > **Explanation:** The deed transfer signifies the final step in executing a real estate contract, legally transferring ownership from the seller to the buyer. ### How can a real estate contract be declared executed? - [x] By all involved parties completing their specified obligations. - [ ] By having a witness sign the documents. - [ ] By making a verbal agreement. - [ ] By notarizing every page of the contract. > **Explanation:** A real estate contract is declared executed when all parties complete their respective obligations as outlined in the agreement. ### Why might an executed contract still face challenges in execution? - [ ] Due to incomplete legal terms - [ ] If inspected by an external authority - [ ] Incorrect filing of documents - [x] If not all parties' obligations were genuinely met > **Explanation:** An executed contract might face challenges if some parties' obligations weren't fully met or completed accurately, leading to potential disputes or delays.