***Ch 14. Real estate contracts*** Flashcards
A contract in which both parties enter into mutual promises
- cannot sue for breaking a promise of a gift
- sale and purchase contract
Bilateral Contract
Having the mental and age capacity to enter into a contract
Competent
An agreement between two or more competent parties, supported by consideration, to do, or not to do, a certain legal act
Contract
Listing agreement whereby the seller may find a buyer without owing a commission, although the seller agrees not to list the property with any additional brokers
Exclusive Agency Listing
Listing agreement whereby the broker earns a commission no matter who procures the buyer
Exclusive Right of Sale
A specific dollar amount of damages to be paid by a breaching party as specified in the contract
Liquidated Damages
An agreement and understanding between the parties concerning the intent of their contractual terms
Meeting of the Minds
A listing agreement whereby the broker keeps any funds over a definite net amount to be received by the seller
*legal in florida
Net Listing
Substitution of a contract and a party for another contract and another party
*seller agrees to only sue the second buyer if they ever go to court
Novation
Listing agreement whereby the seller promises to pay a broker a commission if that broker procures a buyer. The seller may sell the property itself without owing a commission, and the seller may enter an open listing with several different brokers simultaneously.
Open Listing
unilateral agreement, must be in writing, one party agrees not to sell the property to anyone else even though the opposite party is under no obligation to purchase the property
Option Contract
Body of law that states that certain types of contracts must be in writing to be enforceable
Statute of Frauds
Establishes time limits for filing litigation
Statute of Limitations
contract is one that has not met the requirements of the statute of frauds or has gone beyond the legal time limit provided by the statute of limitations.
Unenforceable contract
A contract whereby only one party undertakes a promise or obligation
*option contract
Unilateral Contract
When a contract satisfies all legal requirements
*does not have to be in writing
Valid
A contract the law will not recognize under any circumstances
Void
Contract involving a minor or other incompetent party wherein the incompetent part has a choice to enforce or rescind the contract
Voidable
What are the 3 types of contracts real estate licensees are permitted to prepare?
Sale and purchase
Listing Agreement
Option Contract
The contract between a buyer and a seller of real property
*has to be in writing to be valid
Sale and purchase
An employment agreement between a broker and a seller (principal) to perform a real estate service
Listing Agreement
A contract in which a potential seller gives an OPTION to a potential buyer granting the right to purchase property upon terms and conditions stated in the option
Option Contract
Examples of types of contracts that must be in writing in order to be enforceable are
Sale and Purchase Contracts
Option Contracts
Leases for more than one year
What are the exceptions where statue of frauds does not apply
Partial performance doctrine
Full performance doctrine
In a Sale and Purchase Contract, if the Buyer has paid part of the purchase price to the Seller, and has either (1) taken possession of the premises, or (2) commenced repairs or improvements
Partial performance doctrine
in a Sale and Purchase Contract, if the parties go to closing, the purchase price is paid and title is conveyed to the Buyer,then the Statute of Frauds does not apply and cannot be raised as a defense after the sale.
full performance doctrine
What is the oral and written time periods for statue of limitations
oral 4 yrs
written 5yrs
what are the 4 essential elements to a contract
Contractual capacity of the parties (competency)
Offer and Acceptance
(meeting of the minds)
Legality of Object
Consideration
a beneficial interest in real estate that implies legal title at a later date
(under contract but doesn’t own yet)
Equitable title
exists when a party owns real estate
Actual title
exists when all of the details are understood by the parties, whether oral or in writing
expressed contract
exists when some of the terms and conditions are not stated but rather are inferred by the nature of the transaction or the conduct of the parties
implied contract
Anytime there is something remaining to be done under a contract, its status is considered to be
executory
one in which all the terms and conditions agreed upon have been completed
executed contract
7 ways to terminate and offer
Acceptance Withdrawal Rejection Counteroffer Lapse of time Destruction of subject Death or Insanity
4 ways to terminate a contract
Performance
Mutual Rescission
Destruction of subject
Breach
After a breach of contract If a party does not want money damages, they have the option to seek what through judicial proceedings
Specific Performance
transferring legal rights under a contract
*this does not receive the person that transferred of any responsibility in the contract
Assignment of contract
The contract between a seller of real property and the broker
*can be oral or written
Listing Agreement
a copy of the listing contract (if written) must be furnished to the principal within how many hours after the written agreement is obtained.
24 hrs
A licensee is considered to be the what of the sale when they have set into motion events that were ultimately responsible for the formation of a contract.
Procuring cause
Federal law requires a disclosure about lead based paint if the subject property was built before what year
1978
Failure to timely provide the homeowner’s association disclosure will give the buyer a how many business days right of rescission that will begin once the disclosure is provided.
3 BUSINESS days
in an optional contract in order for there to be a binding contractual agreement, the Optionee is required to give what, which is considered to be more than a promise, and is often in the form of money.
valuable consideration
A seller can sell property in what condition. But, if the seller is aware of any material defects, those defects must be disclosed.
As is
Sellers of real estate are required to disclose all known property defects that are not openly visible to potential buyers as soon as possible because of what court case?
Johnson v. Davis
the seller was found guilty of concealing defects and the Court rescinded the sales contract
