Legal Question in Real Estate Law in California

Yes in most cases. Some contracts must be in writing, such as for purchase/sale of real property.

Sure. But, legally binding means enforceable, which means you can PROVE all the necessary terms and provisions of the agreement. When the other guy says 'nuh uh', how do you intend to do so? Your word versus his means a tie, not a win. That's why experienced people put contracts in writing. If you didn't, you now get to spend money litigating your claims.

It depends on some other facts. You've posted this in the category for real estate, which makes me think of the statute of frauds.

With a few exceptions set forth in the statutes, yes! The exceptions tend to deal with extra-serious and formal matters such as transfers of real estate, marriage, guaranteeing loans, and the like.

Technically, we call them "oral" contracts, not "verbal."

Also, courts are prone to find ways to enforce incomplete, technically-defective or oral agreements when necessary to prevent a serious and obvious injustice. Sometimes, for example, there are fragmentary writings like telephone-pad notes that can be used to prove the existence of an agreement even though no formal document, signed by the parties, exists. Sometimes a court will find a "contract inferred in law" even when the parties did not have an actual agreement -- for example, when a doctor treated an unconcious stranger found lying in the street, the stranger was found liable for the doctor's customary fee even though he never had an agreement. The reasoning of the court was that the stranger would have agreed to pay for treatment if he'd been able to do so.

In most cases, however, all that is necessary for an enforceable contract is sufficient proof that the parties reached an oral understanding as to matters that would constitute an enforceable contract if it were placed in writing and signed by them. The real problem with oral contracts lies in the "sufficient proof." Having the contract in writing significantly eases the determination and enforcement of its terms.