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Contracts and Transfers

The agreement to sell between a real estate buyer and seller is governed by the general principles of contract law. The Statute of Frauds requires real property contracts to be executed in writing.

In addition, in order to sell a piece of real estate, the title must be marketable—i.e., free and clear of all encumbrances, liens, clouds, litigation risks, and other title defects. To ensure that the title is marketable, the buyer can employ an attorney or a title insurance company to perform a title search. The searcher maps a chain of title by examining the recorded deeds concerning the property and determines if there are any encumbrances on the property, such as mortgages, unpaid real estate taxes, liens for municipal improvements, unpaid federal taxes, government claims, legal judgments, foreclosures, condemnations, covenants, or easements.

In order to pass title to the buyer, the seller must execute and deliver a deed with a proper description of the land. Many statutes require that the deed be officially recorded to establish ownership of the property and provide notice of its transfer to subsequent purchasers.