Bilateral Contract
A bilateral contract is a pretty straightforward term. No horseplay there. It’s a legal agreement between two individuals who both agree to do (or not to do) a specific act.
The truth is that, when you think of the standard contract, you think of a bilateral contract. It’s one of those instances where one part of the term is so usual, it gets dropped out of the term, so people omit the “bilateral” and just say contract. In it, each party has its set of obligations; even if it’s party A does a service, party B pays for it. Or, more simple than that: if party A is responsible for giving money and party B for transferring the title to party A.
However, there are rare unilateral contracts where one party is under the obligation of giving a compensation should the other party perform a specific task, but the other party is not obligated to perform that task. In other words, when one party failing to perform a task is not considered a breach of contract, it’s not a bilateral contract but a unilateral.
An example of a bilateral contract in real estate is a regular property sale. The home seller is obligated to give the house and put it under the buyer’s name if the home buyer pays for the amount specified on the bilateral contract. Now, in an exclusive agency listing, what the real estate agent does with a home seller is not a bilateral contract but an unilateral contract because it specifies that the homeowner must pay a commission to that agent if the real estate agent brings the best deal for him; however, he is not in breach of contract if he doesn’t bring the winning bid. Got it?
Sign a bilateral contract with “smart”: don’t go the For Sale By Owner (FSBO) route; find a real estate agent to go with you on this journey!
Popular Real Estate Terms
A forced sale or forced liquidation typically means an involuntary sale of valuables or property for financial reasons. If an unpredictable or uncontrollable event emerges, a seller must ...
Derogative term describing a high-pressure telemarketing office where sales personnel often use extremely exaggerated claims as well as intense sales practices to convince targets clients ...
Right of an individual to be offered something before it is offered to others. For example, a tenant whose apartment is going to be converted to a cooperative has the first right of ...
One who has committed a tort. A tort is a civil wrong that occurs as a result of a breach of legal duty owed to someone, e.g., negligence. A tort does not arise from a breach of contract. ...
A portion of a real estate company's assets financed with debt instead of equity. It involves interest an principal obligations. Financial leverage is beneficial to real estate investors ...
The largest financial intermediaries directly involved in the financing of real estate. Commercial banks act as lenders for a multitude of loans. While they occasionally provide financing ...
Sales commission charged to buy shares in a real estate mutual fund sold by a broker or salesperson. Typically, the fee ranges from about 1 percent to 8 percent of the initial investment. ...
maintenance procedures conducted to prevent later repairs and furthering a longer useful life. For example, many boilers and burners are cleaned and serviced each year before the winter ...
The amount of a periodic payment, whether monthly, quarterly, or annually, including interest and principal, required for a mortgage payment. ...
Have a question or comment?
We're here to help.