CH 3 Preparing to Contract Flashcards
What is the first phase in the real estate transaction process?
Pre-Contract Phase
What activities are involved in the Pre-Contract Phase?
- Gathering information
- Negotiation
- Enter into Letters of Intent
What is the second phase in the real estate transaction process?
Contract Execution
What is involved in the Contract Execution phase?
- Inspections
- Zoning
- Title report
- Deposit
What occurs under equitable conversion at the moment of contract execution?
Title splits, with legal title remaining in the seller and equitable title in the buyer
Who bears the risk of loss in a real estate contract due to equitable conversion?
Can be specified in the contract; typically the seller or buyer can bear the risk
It can also stay with the seller until delivery, acceptance, and recording of the deed.
What should be stated in a risk of loss provision?
state who will do the repairs, if any, or explicitly say that the one who bears the risk will pay the money and how the amount to be paid will be determined later
What is the third phase in the real estate transaction process?
Closing
What activities are involved in the Closing process?
Sign Documents
Exchange $ for real estate (usually with a deed or conveyance document)
Escrow the closing
What is the Doctrine of Merger? What should be included?
Everything that came before closing is merged into the document. All rights, warranties, and obligations from the executory contract are no longer operative.
What should be included in a contract to protect against the Doctrine of Merger? (regarding reps/warranties/promises/etc)
A clause stating that all promises, obligations, covenants, representations, warranties, etc. shall survive as if set forth in the deed word for word
What are the three types of deeds?
- General Warranty Deed
- Special Warranty Deed
- Quitclaim Deed
What does a General Warranty Deed provide?
A full guarantee of title to the real estate. It is the most expansive of the warranties.
“I will defend any claims against the property’s title since its existence” is an example of a ___________ __________ ____________.
General Warranty Deed
What does a Special Warranty Deed guarantee?
Warrants only against claims during the grantor’s period of ownership
What is a Quitclaim Deed?
Only conveys the interest the grantor has, with no protections or warranties
What is the general rule regarding contract assignments?
Contracts are assignable unless stated otherwise in the contract.
Who should sign the assignment document?
Buyer, Seller, and Assigneee
What must contracts for the sale of real property or a lease of more than one year satisfy according to the Statute of Frauds? (what does it require)
- Writing
- Essential terms (parties, purchase price, property description)
- Signed by the party to be charged
Under the statute of frauds, what would suffice for a description of price?
A formula will suffice, but it needs a clear roadmap (must not be confusing or dumb)
What are two defenses to Statute of Frauds?
Partial performance or detrimental reliance
What does the Parol Evidence generally do?
Provides evidence of agreements outside the parties’ written contract (like an oral statement)
The parol evidence rule generally prohibits ________ _________. When there is a ______ ________.
Parol Evidence; Final Contract
When may Parol Evidence be used?
If ambiguous contract terms are present, parol evidence may be used.
