Is it legal to have 2 contracts signed by 2 different clients on the same house?
We found a home and made an offer and had contracts drawn up and put $500 down. Before our contracts were drawn up two other offers came in. Our contracts have been signed but we were just told that another set of contracts were signed as well for the same house. The listing agent told our agent that they will go with our offer because we had paperwork drawn up first only if we can match the down payment price of the other offer. Its a 50k difference. The home is a short sale.
As a general matter, no--you can't have two contracts on one home at the same time, and also:
1) Whichever contract was signed first will take precedent; and
2) The seller cannot unilaterally alter or change the terms, such as by requiring a larger downpayment; instead, whatever was agreed to will control.
There are exceptions: for example, a contract could specify that the seller could take additional offers until the closing date. And worse, in New Jersey, a contract, even when signd is not really a "contract" yet, not for 3 days. That because during the 3 day attorney-review period, either party may get out of the contract for any reason, which effectivlely means that the contract is not binding yet, despite being signed. So if less than 3 days have passed since your contract was signed, the seller could reject your contract at will (such as if you don't meet a subsequent offer); and since the contracts are effectively not yet binding, the seller can have more than one signed contract--he just has to be careful to reject all but the one he'll accept prior to the expiration of their 3-day attorney review periods. So you can have a signed contract and lose out to a later, higher bid--that's what recently happened to my wife and I.
However, if you've made it past the attorney-review period, then you contract would be binding the same way contracts in all 49 other states are from the moment they are signed.