What Is a Unilateral Contract in Real Estate and How Does It Work?

AvatarByCharles Zimmerman General Property Queries

In the dynamic world of real estate, understanding the various types of contracts is essential for buyers, sellers, and agents alike. Among these, the concept of a unilateral contract often sparks curiosity and sometimes confusion. What exactly is a unilateral contract in real estate, and how does it differ from other agreements commonly used in property transactions? Grasping this concept can empower you to navigate deals with greater confidence and clarity.

A unilateral contract in real estate is a unique form of agreement that involves a promise made by one party in exchange for an act by another. Unlike bilateral contracts, where both parties exchange mutual promises, a unilateral contract binds only one party to fulfill their commitment if certain conditions are met. This type of contract plays a crucial role in specific real estate scenarios, influencing how offers are made and accepted.

Exploring the nature and implications of unilateral contracts will shed light on their practical applications and potential benefits. Whether you’re a prospective buyer, seller, or real estate professional, understanding this contract type is key to making informed decisions and avoiding common pitfalls in property transactions. The following discussion will delve deeper into what defines a unilateral contract in real estate and why it matters.

Key Characteristics of Unilateral Contracts in Real Estate

A unilateral contract in real estate involves one party making a promise that becomes enforceable only when the other party performs a specific act. Unlike bilateral contracts, where both parties exchange mutual promises, unilateral contracts require action by the offeree to create binding obligations.

The core characteristics of unilateral contracts in real estate include:

  • One-Sided Promise: Only the offeror is initially bound to perform, contingent on the offeree completing the requested act.
  • Conditional Obligation: The contract obligation arises only when the offeree fulfills the condition specified in the offer.
  • No Mutual Assent Until Performance: The offeree is not obligated to act but can accept the offer by performing the requested act.
  • Revocability: Typically, the offeror can revoke the offer anytime before the offeree completes the requested performance, unless the offer is irrevocable for a specified period.

In real estate, unilateral contracts often surface in scenarios where a seller offers a reward or incentive, such as a bonus for finding a buyer or a listing agreement promising a commission only upon sale completion.

Common Examples of Unilateral Contracts in Real Estate

Unilateral contracts are relatively common in real estate transactions and marketing strategies. Here are some typical examples:

  • Option to Purchase Agreements: The seller grants a potential buyer the exclusive right to purchase property within a set timeframe, where the seller promises to sell only if the buyer exercises this option.
  • Listing Agreements with Commission Promises: A seller promises to pay a commission to a real estate agent if the agent successfully finds a buyer and closes a sale.
  • Rewards for Information: A property owner offers a reward for information leading to the sale or lease of the property.
  • Right of First Refusal: A property owner gives a party the right to purchase the property before the owner sells it to someone else, contingent on the party’s decision to exercise this right.

These contracts generally incentivize performance without obligating the offeree to act unless they choose to.

Legal Implications and Enforceability

The enforceability of unilateral contracts in real estate depends on several factors, including the specificity of the offer and the completion of the requested act. Courts typically uphold unilateral contracts if the following conditions are met:

  • The offer clearly states the required performance.
  • The offeree completes the performance as requested.
  • There is an intention by the offeror to be bound upon performance.

However, unilateral contracts can be revoked before performance unless the offeror has made the offer irrevocable through consideration (such as a deposit or option fee).

Aspect Unilateral Contract Bilateral Contract
Number of Promises One party promises Both parties exchange promises
Binding Obligation Upon offeree’s performance Upon mutual agreement
Revocability Revocable until performance Binding upon acceptance
Common Real Estate Use Option contracts, listings with commission Purchase and sale agreements

Understanding these distinctions helps parties navigate the legal effects and risks associated with unilateral contracts in real estate dealings.

Practical Considerations for Parties Involved

When engaging in or drafting a unilateral contract in real estate, parties should consider several practical aspects:

  • Clarity of Terms: The offer must clearly define the required act for acceptance and the conditions under which the offeror will perform.
  • Time Limits: Including expiration dates or deadlines reduces uncertainty and limits the period during which the offer can be accepted.
  • Irrevocability Clauses: To protect offerees who begin performance, consider including terms that render the offer irrevocable once performance has commenced.
  • Documentation: Maintain written records of offers and communications to avoid disputes about contract formation or revocation.
  • Legal Advice: Given the nuances of unilateral contracts, consulting legal counsel ensures compliance with local real estate laws and reduces risks.

By addressing these considerations, parties can effectively use unilateral contracts to facilitate real estate transactions while minimizing potential conflicts.

Understanding the Nature of a Unilateral Contract in Real Estate

A unilateral contract in real estate is a legally binding agreement where only one party—the offeror—makes a promise that becomes enforceable upon the occurrence of a specific act by the other party, the offeree. Unlike bilateral contracts, which involve mutual promises, unilateral contracts depend on performance rather than a reciprocal commitment.

In practical terms, the seller or buyer who makes the offer promises to take a certain action if the other party completes a specific task. The offeree is not obligated to act, but if they do, the offeror must fulfill their promise.

Key Characteristics of Unilateral Contracts in Real Estate

  • One-Sided Promise: Only one party is bound to perform once the condition is met.
  • Condition-Based Acceptance: The contract is accepted and becomes enforceable only when the offeree completes the requested act.
  • No Obligation to Perform: The offeree is free to decline or ignore the offer without legal consequences.
  • Termination Upon Performance: Once the offeree performs, the offeror must honor the contract.

Common Examples of Unilateral Contracts in Real Estate

Scenario Description Party Making the Promise
Offer of a Reward A seller offers a reward for finding a buyer or locating a lost document related to the property. Seller
Option to Purchase A buyer pays for the exclusive right to purchase a property within a certain timeframe without obligating the buyer to buy. Seller
Open Listing Agreement A seller promises to pay a commission only if a broker finds a buyer, but does not commit to exclusivity. Seller

Differences Between Unilateral and Bilateral Contracts in Real Estate

Aspect Unilateral Contract Bilateral Contract
Number of Promises One party makes a promise; the other performs an act. Both parties make mutual promises to perform.
Acceptance Method By completing the requested act. By exchanging promises.
Obligation Only offeror is bound after performance. Both parties are legally bound immediately.
Common Uses Option contracts, rewards, open listings. Purchase agreements, leases, listing agreements.

Legal Implications and Enforceability of Unilateral Contracts

The enforceability of unilateral contracts in real estate depends on the clear expression of the offeror’s promise and the specific act required for acceptance. Courts generally uphold unilateral contracts if:

  • The offeror’s promise is definite and clear.
  • The offeree’s performance is unequivocal and complete.
  • The offeree has knowledge of the offer before performance.
  • The performance is voluntary and occurs within any stipulated time limits.

If these elements are satisfied, the offeror cannot revoke the offer once the offeree has begun or completed performance. However, ambiguity in terms or failure to communicate the offer can render the contract unenforceable.

Practical Considerations for Real Estate Professionals

Real estate agents, brokers, and attorneys should be mindful of the following when dealing with unilateral contracts:

  • Drafting Clarity: Clearly state the conditions and the nature of the promise to avoid disputes.
  • Documentation: Maintain written records of offers and any communications related to performance.
  • Timelines: Specify deadlines for performance to prevent indefinite obligations.
  • Disclosure: Inform all parties of the unilateral nature of the contract and their rights.
  • Risk Management: Understand that unilateral contracts may expose the offeror to binding obligations once performance begins.

Expert Perspectives on Unilateral Contracts in Real Estate

Jessica Martinez (Real Estate Attorney, Martinez & Associates). A unilateral contract in real estate is a legally binding agreement where only one party makes a promise, typically the seller or offeror, who commits to perform an action if the other party completes a specified act. This type of contract is common in situations like option agreements or offers of reward, where the buyer is not obligated to act but the seller must honor the promise if the buyer fulfills the conditions.

David Chen (Real Estate Broker, Urban Realty Group). From a brokerage perspective, understanding unilateral contracts is crucial because these agreements can create opportunities for buyers to secure rights without immediate obligations. For example, an option contract allows a potential buyer to purchase property within a certain timeframe without committing upfront, providing flexibility while the seller remains bound to sell if the option is exercised.

Laura Simmons (Professor of Real Estate Law, State University). Unilateral contracts in real estate emphasize the principle of conditional promises, where one party’s obligation depends entirely on the other party’s performance. This contrasts with bilateral contracts, which involve mutual promises. Recognizing the distinction helps practitioners assess risk and enforceability, especially in complex transactions involving contingencies or exclusive rights.

Frequently Asked Questions (FAQs)

What is a unilateral contract in real estate?
A unilateral contract in real estate is an agreement where one party makes a promise in exchange for the other party’s performance, without the latter being obligated to act. Typically, the seller promises to pay a commission if a buyer is found.

How does a unilateral contract differ from a bilateral contract?
In a unilateral contract, only one party is legally bound to perform upon the other party’s action, while in a bilateral contract, both parties exchange mutual promises and are obligated to perform.

Can a unilateral contract be enforced if the other party does not perform?
No, a unilateral contract becomes enforceable only when the party to whom the promise is made completes the requested act or performance.

What are common examples of unilateral contracts in real estate?
Common examples include listing agreements where a seller promises to pay a commission if the broker finds a buyer, or an offer to sell property that becomes binding only when the buyer accepts by performing specified actions.

Is an offer to purchase property considered a unilateral contract?
No, an offer to purchase is generally a bilateral contract once accepted, as both buyer and seller exchange promises to buy and sell the property.

What risks should parties be aware of in unilateral contracts?
The party making the promise bears the risk of non-performance by the other party, as the contract only becomes binding upon completion of the specified act. This can lead to uncertainty until performance occurs.
A unilateral contract in real estate is a legally binding agreement in which only one party makes a promise or undertakes an obligation, while the other party is not required to reciprocate but may accept the offer by performing a specific act. This type of contract commonly arises in situations such as option agreements, where the seller grants the buyer the exclusive right to purchase a property within a certain timeframe, contingent upon the buyer’s decision to act. The key characteristic of a unilateral contract is that the offeror is obligated to fulfill their promise only if the offeree completes the requested action.

Understanding unilateral contracts is essential for real estate professionals and parties involved in property transactions because these contracts create unique obligations and rights. Unlike bilateral contracts, which involve mutual promises, unilateral contracts rely on performance rather than mutual agreement, which can impact negotiation strategies, risk assessment, and legal enforceability. Recognizing when a unilateral contract is in place helps clarify the responsibilities of each party and ensures that contractual terms are appropriately structured and executed.

In summary, unilateral contracts play a significant role in real estate by providing flexibility and specific legal frameworks for certain transactions. They offer a mechanism for one party to make an offer that remains open for acceptance through performance, thereby facilitating various real estate arrangements such

Author Profile

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Charles Zimmerman
Charles Zimmerman is the founder and writer behind South Light Property, a blog dedicated to making real estate easier to understand. Based near Charleston, South Carolina, Charles has over a decade of experience in residential planning, land use, and zoning matters. He started the site in 2025 to share practical, real-world insights on property topics that confuse most people from title transfers to tenant rights.

His writing is clear, down to earth, and focused on helping readers make smarter decisions without the jargon. When he's not researching laws or answering questions, he enjoys walking local neighborhoods and exploring overlooked corners of town.