What is a Ratified Contract in Real Estate | An Expert Guide

What is a ratified contract in real estate? This is a question that many real estate enthusiasts ask nowadays. Thus, we have made this post to aid you. You will most likely require a ratified contract as a homebuyer to process and accept your mortgage loan application.

It’s an essential part of the process that may make or break your decision. To assist you in understanding what a ratified contract is and why you need one, we’ve covered all you need to know below. Come along!

What is a Ratified Contract in Real Estate?

What is a Ratified Contract in Real Estate

A ratified contract is a written agreement between a buyer and a legally binding seller. It often comprises the following:

The cost of the acquisition

Either entity must pay closing expenses at or before the close of the transaction. It also includes any specific circumstances that may apply, such as:


Before the end of the day, a few things need to be fixed. This includes contingencies (such as funding) that enable the contract to be terminated without penalty.

An expiration date

A pledge letter (or pre-approval) from your lender saying that they agree to advance money for closing on the acquisition of the property is usually included with the ratified contract.

It’s a critical stage in the mortgage loan application procedure throughout the house purchasing process. This is a good idea since it shields you and your lender from any unanticipated events or concerns with the property’s past taxes. It helps to protect you from potential difficulties by ensuring that all mandatory disclosures are made.

A ratified contract guarantees that both parties to the agreement have fulfilled their obligations. It also safeguards against any last-minute alterations or property-related difficulties. It also facilitates a seamless ride into homeownership throughout the application procedure for a mortgage loan.

What is a Ratified Contract in Real Estate: key phases?

A contract must follow three crucial phases to be termed “ratified”:

Acceptance of the buyer’s offer: This document contains the buyer’s offer to buy the residence in its entirety. It’s what they’ve agreed to purchase, at what price, and so on.

The seller made the counteroffer: You’ll need a counteroffer from the seller that includes any modifications or other information that didn’t get included in their first bid (like an option to buy furniture from the seller at a reduced price).

Both parties’ signatures are required: Both the buyer and the seller will approve this ratified contract in the end.

When buying a house, why do I need a ratified contract?

What is a Ratified Contract in Real Estate

A ratified contract is necessary for a variety of reasons. First, after everyone signs and all three processes are completed, your house purchase becomes legally binding.

To receive an FHA loan, you’ll also need a ratified contract. Your borrower will use it to complete their part of the loan application process (which can take up to 30 days). The agreement binds your financing conditions and safeguards the interests of all parties involved, allowing you to close on your house securely.

A ratified contract also makes communication between many parties easier by guaranteeing that everyone has a copy of the agreement at all times. The conditions of a purchase agreement are not legal in most states unless they are written down. A contract that has been confirmed is a guarantee. It is simple to show documentation of the agreement if anything goes wrong.

What is the Process for Ratifying a Contract?

There are a few things to keep in mind when ratifying a contract. Among them are the following:

  • Read the entire contract, including the terms and conditions, to make sure you understand everything.
  • Be definite that you will be confirming it in its totality; you cannot only ratify specific parts of a contract.
  • Make sure your acceptance of the contract is apparent. This can get accomplished either via an express or implied declaration. An express proclamation is a written and signed remark that you accept the contract terms. In contrast, an implicit declaration is one in which your acknowledgment of the contract is supplied through your actions.
  • When you ratify the contract, you will be obligated by law to uphold your end of the agreement. As such, you will have to proceed with what you expect about the deal’s provisions.
  • Be mindful that in ratifying a contract, it just becomes retrospectively effective from the date it gets signed, not the date on which it gets ratified.
  • If your business gets registered as a corporation, be aware that you may get required to present the contract to your shareholders for ratification.
  • Beware that the ratification of a contract is voluntary, and you cannot be forced into doing so.
  • Be aware that you do have the right to refuse to ratify a contract if you do not accept the terms and conditions that are spelled out.

Additional Things you need to Consider

Before meeting with your realtor, make sure you have all of your paperwork collected, such as proof of income, etc., to ensure that everything goes well. You’ll also need to know your credit’s present state, as well as any possible difficulties or worries that may occur.

When submitting a ratified contract, you should also be prepared to discuss your alternatives with a knowledgeable loan officer who can assist you in navigating the process and ensuring that everything is in line before closing on your house.

The buyer, seller, lender (if applicable), real estate agent (if applicable), and any other parties specified on the agreement, such as witnesses, must all sign a ratified contract. It becomes legitimate if both parties agree on the sale details, such as the price and the closing date; however, this varies by state.

Make what’s known as a counteroffer to the buyer.

While you would believe that this applies to the amount a prospective buyer is willing to pay, that is not the case. The closing date, for example, might be “placed on the table” as a reason to reject an offer or make a counteroffer.

If a counteroffer is made, the process begins again, with the prospective buyer having the same three alternatives as before. Some people who have purchased or sold houses may attest that this back-and-forth procedure can take longer.

This is on top of the many offers. This is in addition to counteroffers that will get made until the submission is approved or rejected. Some people believe that the contract is confirmed when an offer is accepted right away. This is in addition to when a counteroffer is received.

Others feel that the real estate transaction is not finalized until all contingencies have been eliminated. For example, following an inspection, the buyer may have stipulations about purchasing the house.

Frequently Asked Questions

What is a ratified contract in real estate?

Ratifying a contract is agreeing to the terms and conditions outlined in the document. After all, simply signing an agreement isn’t always enough.

If you go on vacation and authorize your employer to sign a contract on your behalf, you may get asked to ratify the agreement. By your words or actions, you are indicating that you accept the contract’s terms. Furthermore, if you get invited to ratify a contract, you always have the choice to refuse.

Where can I get a contract that has been ratified?

Whether you’re buying an existing property or new construction, your real estate agent or broker may present you either a ratified contract or a purchase agreement. It’s crucial to remember that the requirements for these papers may differ based on your state and local legislation, so double-check before continuing.

Who else should be involved in real estate contract ratification?

Other parties, in addition to you and the seller, need access to the ratified contract, including:

The firm that deals with titles: Before your property purchase is finalized, the title firm will require a copy of the ratified contract to complete any necessary endorsements and paperwork.

Your mortgage company: Most lenders want you to submit an offer alongside additional papers such as a down payment check and pay stubs, so your mortgage company must sign off on all portions of this document so they can issue you with a pre-approval letter.

Your broker or real estate agent: It’s also crucial that your agent access the information they need to do their due diligence.

The escrow service: At the end of the transaction, the escrow business will need access to the paperwork to set up your house inspections, relocation charges, and other obligations before closing day.

As a ratified contract buyer, what are my responsibilities?

After signing your approved contract with the seller, you mustn’t miss any payment dates. You’ll also need to stay above any other financial obligations under this agreement so that everything functions smoothly from start to finish.

When is it necessary to ratify a contract?

Ratification of a contract may be anticipated or needed in various business settings. However, one of the most typical scenarios is in real estate. However, there are conflicting viewpoints on when a contract is ratified in the real estate market.

Some claim it happened when all parties involved signed the contract paperwork, while others believe it occurs when all of the contract’s contingencies are eliminated. In the end, the wording utilized in your real estate contract may be the deciding factor.


If you desire to buy a home soon, having a ratified contract is an important step that you cannot overlook. At this point, the above tips on what is a ratified contract in real estate will aid you immensely.

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