What Is a Bilateral Contract in Real Estate? + PDF Template

A bilateral contract in real estate is an agreement where both parties make binding promises to each other. The buyer promises to pay, the seller promises to transfer the property, and either side can be held to its word.

Almost every real estate deal you sign works this way. That’s why it pays to know when the contract locks you in, how you can legally get out, and what happens if the other side walks.

Below you’ll find a free bilateral real estate contract template, then everything you need to use it without getting burned.

Download Our Free Bilateral Real Estate Contract Template

Our free template is a Lease Purchase Agreement. The owner promises to rent the home to a tenant-buyer and then sell it, and the tenant-buyer promises to rent the home and then buy it. Both sides are bound from the day they sign, which makes it a clean example of a bilateral real estate contract.

The template includes a lead-based paint disclosure for older homes and a Memorandum of Lease Purchase Agreement with notary blocks, so you can record the deal with the county.

This is a template, not legal advice. It gives you a solid starting point, but it doesn’t replace a lawyer, and it can’t account for every state’s rules. Have a real estate attorney in your state review it before anyone signs.

How to Use the Template

1. Name the parties. The owner is the seller. The tenant-buyer is the buyer.
2. Set the lease. Fill in the lease start date, who will live in the home, the monthly rent, and the due date.
3. Set the sale. Write in the purchase price and the closing date.
4. Collect two deposits. Enter the purchase deposit (credited toward the price) and the security deposit (handled under landlord-tenant law).
5. Decide on rent credit. Check whether any part of each on-time rent payment counts toward the price.
6. Split the repairs. Set the dollar amount the buyer covers on routine repairs.
7. Set the inspection period. Give the buyer a set number of days to inspect and cancel.
8. Disclose the mortgage. The seller checks whether a mortgage exists and whether the lender consented.
9. Complete the addenda. Fill in the lead paint disclosure for homes built before 1978, then sign the memorandum in front of a notary and record it.

What Is a Bilateral Contract in Real Estate?

A bilateral contract in real estate is a contract in which both parties exchange binding promises, so each side owes the other something. In a purchase agreement, the buyer promises to pay a set price, and the seller promises to transfer ownership in return.

Three traits define a bilateral real estate contract:

• Mutual promises. Each party’s consideration is a promise to the other.
• Binding at signing. The obligations start the moment both sides agree, not when someone performs.
• Either side can breach. If the buyer doesn’t close or the seller doesn’t deliver, the other side has a claim.

Real estate contracts are typically bilateral, and they should be in writing to be enforceable.

Bilateral vs. Unilateral Contract in Real Estate

In a bilateral contract, both sides promise. In a unilateral contract, only one side promises, and the other side accepts by acting.

A unilateral contract in real estate flips that setup, because only one side makes a promise and the other side accepts by acting.

You’ll see some exam-prep pages list option contracts as bilateral. They’re not, at least not at first. An option binds only the seller until the buyer exercises it, and only then does it become bilateral.

Examples of Bilateral Contracts in Real Estate

The most common bilateral contracts in real estate are purchase agreements, leases, lease purchase agreements, exclusive listing and buyer agreements, and assignment agreements. In each one, both sides owe the other something from the day they sign.

Purchase Agreements

The purchase agreement is the textbook example. A real estate purchase agreement template lays out both sides’ promises: the buyer’s price and deposit, and the seller’s duty to deliver clean title.

Leases

A lease is bilateral because the landlord promises possession and the tenant promises rent. When you buy a rental from absentee owners, you usually take over their existing leases, and those promises now bind you as the new landlord.

Lease Purchase Agreements

A lease purchase agreement combines a lease with a binding promise to buy. A lease purchase commits both sides to the sale, while a lease option binds only the seller and leaves the tenant free to walk (Wikipedia, n.d.).

That one-sided setup is what makes an option contract in real estate unilateral until the buyer exercises it. A lease purchase skips that stage entirely.

Check your state before you use one. Texas treats residential lease purchases and lease options longer than 180 days as executory contracts, with strict compliance rules (Guerra Days, 2026). Texas law exempts a deal only if the contract delivers the deed within 180 days of signing (Texas Property Code, 2026).

Illinois regulates any deal where the buyer pays the price in installments for at least one year while the seller keeps an interest in the property (Illinois General Assembly, n.d.). That law reaches sellers who sign more than three of these contracts in a 12-month period (Illinois General Assembly, n.d.).

Our template has the buyer pay the price at closing in one payment, not in installments, and it includes a clause that defers to these state rules. That still doesn’t make it compliant on its own. If you’re in Texas, Illinois, or another state with similar laws, an attorney needs to review the deal.

Lead paint rules also apply on both sides of a lease purchase. Sellers and landlords of most homes built before 1978 have to disclose known lead hazards and hand over the federal pamphlet, and buyers get 10 days to test for lead (EPA, 2024).

Listing and Buyer Agreements

An exclusive listing is bilateral: the agent promises to market the home, and the seller promises the commission. Agents turn seller leads for realtors into income only once the owner signs that listing, because it’s the promise that guarantees the commission.

Assignment Agreements

In wholesaling real estate, the assignment agreement is its own bilateral contract, separate from your purchase contract with the seller. You promise to assign your rights, and the end buyer promises to pay your fee and close.

When Does a Bilateral Contract Become Binding?

A bilateral contract becomes binding when the other party accepts the offer exactly as written, usually by signing it and delivering it back. Until then, either side can still walk.

The usual process is simple. The party making the offer prepares and signs the contract, and the other party accepts by signing it too (Wikipedia, n.d.).

Any change counts as a counteroffer. If a seller crosses out your closing date and writes in a new one, they haven’t accepted anything. They’ve rejected your offer and made a new one, and nothing binds either of you until you sign off on the change.

After both sides sign, every party should initial any alteration to the contract (Wikipedia, n.d.).

Converting seller leads into deals often comes down to this moment. I get the signed copy back the same day. A seller who sleeps on an unsigned contract wakes up with a cousin who knows a realtor.

Can You Back Out of a Bilateral Contract?

You can back out of a bilateral contract only through an exit the contract gives you, like a contingency, or if both sides agree to cancel. Walking away for any other reason is a breach.

A contingency is the legitimate exit. An inspection, financing, or appraisal contingency lets you cancel if a specific condition fails by a specific deadline, and you usually get your earnest money back.

Escape Clauses That Can Void Your Contract

Here’s where investors get into trouble. If you write an escape clause so broad that you can walk away for any reason at any time, you may not have a contract at all.

Courts call that an illusory promise. The California Supreme Court put it this way: if a promise leaves a party free to perform or withdraw at their own unrestricted pleasure, the promise provides no consideration (Mattei v. Hopper, 1958). No consideration means no enforceable contract.

The same court upheld a contract that depended on the buyer’s satisfaction, because the buyer still had to judge that satisfaction in good faith (Mattei v. Hopper, 1958). A later California case went the other way. It found that a buyer’s unconditional right to rescind at will left the agreement without mutuality, and the court refused to enforce it (Kowal v. Day, 1971).

These cases are decades old, but courts still cite them, and the rule hasn’t changed. A promise you can drop on a whim isn’t a promise.

That’s why I don’t use “subject to partner approval” with no deadline and no standard. It looks like protection. In court, it can look like you never committed to anything, and that cuts both ways: if the seller backs out, you may not be able to hold them to the deal either.

A dated inspection period does the same job safely. “Buyer may cancel for any reason within 10 days” gives you an exit with a clear limit. Better yet, work out what to offer a motivated seller before you sign, so you’re not leaning on a vague escape clause to fix your numbers later.

What Happens If Someone Breaches a Bilateral Real Estate Contract?

If someone breaches a bilateral real estate contract, the other side can usually sue for money, ask a court to force the sale, or keep or recover the earnest money, depending on what the contract says.

Specific performance is a court order that forces the breaching party to complete the sale. Courts treat each parcel of land as unique, so buyers can get it more easily, while a seller’s remedy is usually money (Greenacre Law, 2026).

Most contracts limit what a seller can collect. Many standard forms make the earnest money the seller’s only remedy if the buyer breaches (NC REALTORS, 2025). California goes further and caps that amount at 3% of the price on most owner-occupied homes with one to four units (White Harbor Law, 2026).

Distressed sellers sometimes try to back out when a relative offers to help or a second buyer calls. Specific performance is the reason a signed contract still matters when that happens.

Other Real Estate Contracts

Here are the other real estate contracts investors use most:

• Real estate purchase agreement template
• Option contract in real estate
• Unilateral contract in real estate
• Wholesale real estate contract
• For sale by owner real estate contract

Final Thoughts

A bilateral contract locks both of you in. That’s great when the seller needs to sell and a headache when they don’t.

Start with motivated seller leads who need to close, and the contract does what it’s supposed to do. You can browse verified motivated seller leads on the exchange and find owners in your market who are ready to sign.

References

1. California Court of Appeal, 1971. Kowal v. Day.
2. EPA, 2024. Lead-Based Paint Disclosure Rule Fact Sheet.
3. Greenacre Law, 2026. Remedies When a Purchase Agreement Fails.
4. Guerra Days, 2026. Lease-Options and Lease-Purchases in Texas.
5. Illinois General Assembly, n.d. Installment Sales Contract Act (765 ILCS 67).
6. NC REALTORS, 2025. Seller Remedies When a Buyer Breaches the Contract.
7. Supreme Court of California, 1958. Mattei v. Hopper.
8. Texas Property Code, 2026. Section 5.062: Applicability.
9. White Harbor Law, 2026. Breach of Real Estate Contract Remedies: Pursuing Specific Performance and Damages in California.
10. Wikipedia, n.d. Lease-Option.
11. Wikipedia, n.d. Real Estate Contract.