Ch. 12 Real Estate Contracts

Question 1

Addendum

Answer 1

any provision added to an existing contract that may change or be an addition to the content of the original/the addendum mentions the original contact and must be signed by all parties

Question 2

Amendment

Answer 2

change or modification to the existing content of a contract/must be separately initialed or signed by all parties

Question 3

Assignment

Answer 3

refers to a transfer of rights or duties under a contract

Question 4

Bilateral Contract

Answer 4

both parties promise to do something; one promise is given in exchange for another

Question 5

Breach of Contract

Answer 5

a violation of any of the terms or conditions of a contract

Question 6

Consideration

Answer 6

A contract must be based on consideration, something of legal value offered by one party and accepted by another as an inducement to perform or to refrain from performing some act

Question 7

Contingencies

Answer 7

Conditions that must be satisfied before a sales contract is fully enforceable (create a voidable contract)

Question 8

Contract

Answer 8

a voluntary agreement or promise between legally competent parties, supported by legal consideration, to perform (or refrain from performing) some legal act

Question 9

Counteroffer

Answer 9

any change by the seller to the terms proposed by the buyer

Question 10

Disclosure

Answer 10

Relevant information or facts that are known or should have been known/the act of revealing something

Question 11

Earnest Money

Answer 11

money deposit is evidence of the buyers intentions to carry out the terms of the contract in good faith

Question 12

Enforceable Contract

Answer 12

meets all the elements of a valid contract, including compliance w/any applicable statute of frauds or other law that requires it to be in writing and signed by the parties

Question 13

Executed Contract

Answer 13

One in which all parties have fulfilled their promises; the contract has been performed

Question 14

Executory Contract

Answer 14

when one or both parties still have an act to perform/ A sales contract is executory contract from the time it is signed until closing;ownership has not yet changed hands, and the seller has not received the sales price. At closing , when the contract terms have been met, the sales contract is executed

Question 15

Express Contract

Answer 15

the parties state the terms and show their intentions in words either oral or written

Question 16

Implied Contract

Answer 16

the agreement of the parties is demonstrated by their actions and conduct

Question 17

Land Contract

Answer 17

also called a contract for deed, contract of sale, a bond for title, installment contract, land sales contract, or articles of agreement for warranty deed, –under a typical land contract, the owner/seller retains legal title–seller is not obligated to execute and deliver a deed until the terms of the contract have been met

Question 18

Liquidated Damages

Answer 18

damages whose amount the parties designate during the formation of a contract for the injured party to collect as compensation upon a specific breach

Question 19

Novation

Answer 19

substitutes a new contract or party for the original

Question 20

Offer and Acceptance

Answer 20

The sales contract sets our the offer by the buyer that is accepted by the seller

Question 21

Option

Answer 21

contract by which an optionor (owner) gives an optionee (prospective buyer) the right to buy or lease the owners property at a fixed price within a certain period of time

Question 22

Owner financing

Answer 22

the seller provides credit for all or part of the funds that will allow the buyer to move forward with the transaction

Question 23

Purchase Money Mortgage

Answer 23

buyer receives equitable title to the property (once contract is executed) but places a security interest on it in favor of the seller

Question 24

Rescission

Answer 24

returns the parties to their original positions before the contract

Question 25

Statute of Frauds

Answer 25

Requiring certain contracts, such as real estate sales or lease agreements, to be in writing and signed to avoid fraud on the court by perjury and subornation of perjury, documents must be signed and dated

Question 26

Suit for Specific Performance

Answer 26

an action for damages, ordering one party to complete the performance promised in a contract

Question 27

“Time is of the Essence”

Answer 27

each of the elements of the contract must be performed within a specified time

Question 28

Unenforceable contract

Answer 28

may appear on the surface to be valid; however, neither party can sue the other to force performance
An oral agreement for the sale of a parcel of real estate would be unenforceable

Question 29

Unilateral contract

Answer 29

a one-sided agreement/one party makes a promise in order to entice a second party to do something

Question 30

Valid contract

Answer 30

meets all the essential elements that make it legally sufficient, or enforceable, and is binding in a court of law

Question 31

Void contract

Answer 31

has no legal force or effect because it lacks some or all of the essential elements of a contract

Question 32

Voidable contract

Answer 32

appears on the surface to be valid, but may be rescinded or disaffirmed by one or both parties based on some legal principle

Question 33

Equitable Title

Answer 33

the beneficial interest of a person whom equity regards as the real owner but the legal right (legal title) vest with another/insurable interest in the property

Question 34

Legal Title

Answer 34

perfected ownership interest that is enforceable by law