In a real estate transaction, what does "good faith" obligation refer to?

In a real estate transaction, the "good faith" obligation specifically refers to the expectation that parties will deal honestly and fairly during the negotiation and performance of the contract. This concept is foundational in contract law, as it promotes trust and encourages cooperation between the parties involved. When parties engage in negotiations with good faith, they are expected to act with honesty, sincerity, and integrity, which often helps prevent misunderstandings and disputes later on.

This obligation does not merely encompass the need for pleasant or positive negotiations, nor does it focus on the timeliness of signing contracts or the extent of financial disclosures. Instead, it emphasizes a moral duty to uphold fair dealing and transparency throughout the entire process, which is essential for maintaining a stable real estate market and ensuring that all parties feel secure and respected in their agreements.