Real Estate Course Chapter 11 Flashcards
Regarding the parties in a contract, novation is the substitution of a new party for the original one.
The statement is TRUE. The effect of novation is to discharge the original party from the obligation.
Valuable consideration is a promise that cannot be measured in terms of money, such as love and affection.
The statement is FALSE. Valuable consideration is money or a promise of something that can be measured in terms of money.
In the case of a contract, obligation, or liability based on a written instrument, the statute of limitations designates that the terms of a written contract may be enforced for a period of ten years.
FALSE. The statute of limitations designates that the terms of a written contract may be enforced for a period of five years.
Mutual assent refers to the making and acceptance of an offer.
The statement is TRUE. There must have been a meeting of the minds between parties, meaning they must reach an agreement on all terms in the contract.
Brokers and sales associates should NOT prepare deeds, mortgages, or promissory notes
TRUE
One exception to the Statute of Frauds concerns when an oral contract has been formed and the buyer has paid a part of the purchase price and then has either taken possession of the property or made some improvements to the property.
The statement is TRUE. There is one other exception to the Statute of Frauds: when both parties have fully performed as promised, in which case the resulting legal relationships are precisely the same as those that would have existed had the contract been in writing.
An implied contract is one in which some or all of the obligations or conditions of a contract are NOT stated expressly.
TRUE
When a wronged party in a breached contract sues for compensatory damages, it is to have the courts force the other party to perform as the contract specifically states.
The statement is FALSE. Specific performance is when an injured party sues to have the courts enforce the terms of a contract. A suit for compensatory damages is a suit that seeks money damages.
In an option contract the optionor has an exclusive right to buy the property within a specified period.
The statement is FALSE. In an option contract the optionee (NOT the optionor) has the exclusive right to buy the property within a specified period for a specified price and terms.
An option contract is a bilateral contract
False
A contract specifies the amount of money that must be paid if the buyer defaults. Which remedy for breach does this describe?
LIQUIDATED DAMAGES
What is the statute of limitations (in years) for parol contracts?
FOUR
What does Florida’s Homeowner Association Law require of sellers who own property subject to a mandatory homeowners’ association?
THE SELLER MUST PROVIDE THE BUYER WITH A DISCLOSURE SUMMARY REGARDING THE ASSOCIATION.
What is the purpose of the property tax disclosure?
CAUTION BUYERS THAT THEY CANNOT RELY ON THE SELLER’S PROPERTY TAX HISTORY AS AN INDICATION OF BUYER’SFUTURE PROPERTY TAX BILL
Which remedy for breach of contract requests the courts to force the other party to proceed as the contract states?
Specific Performance
What type of listing is given to a broker in which commission is promised to the listing broker, provided the owner does NOT find the buyer?
The answer is EXCLUSIVE-AGENCY LISTING. A seller gives an exclusive-agency listing to one broker who handles the transaction. The seller reserves the right to sell the property without paying a commission.
A buyer has breached a real estate sale contract. The seller wants to recover damages in excess of the earnest money deposit. Which remedy for breach should the seller use?
COMPENSATORY DAMAGES. The party bringing suit seeks an amount of money equal to the extent of loss suffered (compensatory damages).
Which party is the optionor in an option contract?
Property Owner
Which element is NOT required of a valid real estate contract?
ACKNOWLEDGMENT
Relevant to the Florida Energy Efficiency Rating Act, what must be done at close?
BUYERS MUST BE GIVEN AN INFORMATION BROCHURE NOTIFYING THE BUYER OF THE RIGHT TO CONDUCT AN ENERGY-EFFICIENCY RATING ON THE STRUCTURE.
Within what period of time must the seller be given a copy of a written listing agreement?
24 hours
Who must receive the lead-based paint disclosure?
TENANTS AND BUYERS OF ALL RESIDENTIAL PROPERTY BUILT PRIOR TO 1978.
Which information must NOT be included in a listing agreement?
Automatic renewable clause
The parties in a real estate sale contract are BEST described as the
VENDOR AND VENDEE
Which court case made clear that material defects that affect the value of residential property must be disclosed to prospective buyers?
JOHNSON V. DAVIS.
Which law specifies that contracts concerning real property must be in writing and signed by the parties bound to the agreement?
STATUTE OF FRAUDS
When all parties to a contract have completely performed all obligations and promises contained in the contract, what type of contract is it?
EXECUTED
An offer is terminated when any of the following happens:
WILD CARD W - withdrawal of offeror I - insanity L - Lapse of time D - Death
C_ Counteroffer
A - Aceptance
R - Rejection
D - Destruction of the property
What are the two types of consideration?
Valuable consideration - money
Good consideration - love or affection
What are the four essential elements of a valid contract?
COLC C - competent parties O - offer and acceptance (mutual assent) L - Legal purpose C - Consideration
What is a “void contract?”
It does not meet meet all of the required elements of a valid contract and therefore, has no legal effect
What is a “voidable contract?”
A voidable contract is a contract, but because of the manner or method in which it was brought about, one of the parties is permitted to avoid any contractual duties. A minor’s contract is voidable.
A contract is terminated when any of the following happens:
PMILBB P-performance M-mutual recission I-Impossibility of performance L-Lapse of time B-Bankruptcy B-breech
What is an “open listing?”
Seller can use many brokers. Only pays those who bring him a client who buys the property. (My FSBO arrangement).
What is an exclusive-agency listing?
Typical real estate deal
What is a “net-listing?”
An exclusive-agency listing can also be a net-listing. Seller agrees to sell a property for a stated amount (seller’s net). The broker retains the proceeds above this amount as commission.
