Hawaii Pre-Licensing National Practice Exam

What is generally true about an enforceable real estate contract?

1. It must be in writing

2. It can be verbal if witnessed

3. It requires a notary public

4. Penalties only apply for written contracts

The correct answer is: It must be in writing

An enforceable real estate contract must be in writing to be legally binding according to the Statute of Frauds, which establishes that certain types of contracts, including those for the sale or transfer of real estate, must be documented in writing. This requirement helps ensure clarity and reduces the risk of misunderstandings regarding the terms of the agreement. While some contracts can be valid if agreed upon verbally, real estate transactions typically involve significant financial commitment and long-term implications, making them subject to stricter requirements. Thus, a verbal agreement may not hold up in court, especially if there's a dispute. The involvement of a notary public is not a mandatory requirement for all real estate contracts, although notarization can provide an additional layer of authenticity and verification for certain documents. Moreover, penalties regarding contract enforceability and obligations do not solely apply to written contracts; rather, they depend on the context and specifics of the agreement, whether verbal or written. In summary, the necessity for written documentation distinguishes real estate contracts and enhances their enforceability, aligning with legal standards and protecting the parties involved.