Chapter 11 Flashcards
Nearly every business transaction is based on an __________.
Agreement
A ________ defines the parties legal relationship and spells out each others rights and duties
Contract
Underlying every contract is the __________. In a real estate contract the seller _________ to convey title to the real estate and the buyer _________ to pay the purchase price
Promise, promise, promise
Contract promises are ________ by law, provided they meet certain requirements
Enforceable
The drafting of legal documents and legal instruments for others is considered to be a practice of _______.
Law
True or false? Unless they are an attorney, real estate brokers and associates are not allowed to prepare deeds, mortgages, promissory notes, or most other legal documents.
True
A broker or associate in real estate who prepares a mortgage, deed, promissory note, or most other legal instruments may have license revocation and may be charged with a __ degree felony
3rd
True or false? real estate licensees may fill in the blank on residential lease instruments that do not exceed 1 year, provided licensees use forms pre-approved by the Supreme Court.
True
Real estate lincenses may assist buyers and sellers with the completion of what 4 types of contracts? What are they?
Listing agreement- employment contract between a broker and a seller
Buyer brokerage agreement- employment contract between a buyer and a broker
Sale and purchase contract- contract between a buyer and seller
Option contract- an agreement between an owner (optioner) and a party interested (optionee) to keep open an offer to buy or lease real property.
What is the advantage of standardized contracts
Greatly reduces liability.
What are the 4 essential elements of a contract
Contractual capacity of all parties (competent parties)
Offer and acceptants (mutual assent)
Legality of object (legal purpose)
Consideration
A person who is legally insane, intoxicated, suffering from dementia or legally a minor may only have __________ contractual capacity.
Limited
A complete and mutual understanding must exist to produce a ___________ _____ _____ _________.
Meeting of the minds
The agreement of a contract must be for a ________ ___________.
Legal purpose
Legally, consideration is the __________ that each party makes to the other to make the contract enforceable
Obligation
True or false? A good faith deposit in a real estate transaction is the consideration.
False
Explain the 2 types of consideration
Valuable consideration- the money or promise of something that can be converted to money.
Good consideration- a promise of something that can not be valued by money, such as love and defection. Ex. A father gifting property to a child.
Define enforceable contract
A contract that the courts will recogni
Contracts covered by Florida statue of fraud include
Purchase and sale contract
Option contract
Deeds and mortgage instruments
Listing/lease agreement longer than 1 year
Buyer representation agreements for a term longer than 1 year
What are the Statute of limitations written, oral, and partly written partly oral contracts.
The statute of limitations for a written contract is 5 years, an oral contract is 4 years. For partly written portions of a contract it is 5 years and the oral portion is 4 years.
True or false? Real estate purchase contracts must be in writing and signed by all parties bound to the agreement to be enforceable in court.
True
True or false? Real estate purchase contracts are required to be witnessed or notarized.
False, neither is required.
What are the 5 elements of a real estate contract
Competent parties
Offer and acceptance
Legal purpose
In writing
Consideration
True or false? The court will recognize an oral real estate sale contract if it contains all the other elements and the buyer has paid part of the purchase price or has made improvements to the property
True
Define a valid, void, voidable, enforceable and unenforceable contract
Valid- contains all required essential
Void- no contract, lacks one or more essential
Voidable- able to be made void or valid by one of the parties
Enforceable- the courts will enforce
Unenforceable- the courts will not enforce
Define a formal and informal contracts
Formal- in writing, depends on a particular form
Informal- oral.
Define a bilateral and unilateral contract.
Bilateral- obligates both parties to the terms of a contract, both parties promise to do something
Unilateral- obligates only one party to a contract, one party promises to perform an obligation without any promise from another party
Define express and implied contracts
An express contract is an actual agreement between parties, the terms of which are declared orally or in writing, at the time entering into the contract.
An implied contract are not spoken or written, but implied by the actions of the parties
Define executory and executed contracts
Executory contracts is an agreement between 2 parties that involves promises that will be completed at a later date.
Executed contracts exist when both parties have completed their obligations to their entirety.
What are the two meanings of an executed contract
That both parties have signed a contract, that both parties have completed all tasks.
A purchase contract form with only the buyers information is not a contract but only the buyers offer until when?
Both parties have reached an agreement on price, terms, and conditions
What is the offerer and offeree
Offeror makes an offer
Offeree receives the offer
When an offeree receives an offer and submits a counter offer, the two parties have now ________ _________ making the offeree the offeror and the offeror the offeree
Changed hats
Define meeting of the minds
When one party accepts the offer of the other party and communicates such acceptance
What are the ways an offer is terminated
W- withdraw by offeror
I- insanity
L- laps of time
D- death
C- counter offer
A- acceptance
R- rejection
D- destruction of the property
Communication of the acceptance of an offer creates a _________
Contract
What are the reasons a contract would be terminated and define the meanings.
Performance- when both parties complete their obligations
Mutual recession- both parties agree to terminate the contract and their obligations
Impossibility of performance- the tasks in the contract are beyond one or more parties control
Lapse of time- too much time has gone by for the contract to be valid, ex a contract that has stood past the statute of limitations
Breach- when either party fails to fulfill all their obligations
List the four legal remedies for a breach in a contract and define them
Specific performance- one party sues another party for specific performance where the court forces the other party to abide by the terms of the contract
Liquidated damages- frequently parties will stipulate an amount of money in the contract (earnest money deposit) to be paid in the case of default on a contract.
Rescission- to cancel or annul a contract
Compensatory damages- a lawsuit usually for an amount of money. This amount is the actual amount of the monetary loss to a party, also called unliquidated damages.
Assignment refers to the __________ of someone’s rights and duties under a contract to another person
Transfer
The person who assigns legal rights to a contract is called the __________ and the person to whom the legal rights of the contract are transferred to is called the __________
Assignor, assignee
True or false? An assignor escapes obligations to perform the terms and conditions of a contract.
False, unless given a release from the other party to the original contract
Define a novation agreement
An agreement used to substitute an original party to a contracts obligation to a new party. Relieves original party’s obligation
Damages specified in the contract are __________ damages
Liquidated
Define a listing contract
An employment agreement between an owner of property and a real estate broker for the broker to find a buyer or tenant for the property owner
True or false? A listing agreement for less than one year must be in writing
False, a listing agreement shorter than 1 year may be written, oral, or implied.
Listing agreements longer than 1 year must be in ________ to be enforceable by the statute of fraud
Writing
Is is easier to prove the terms and conditions of a _________ contract rather than __________ contract
Written, oral
Real estate listings belong to the __________
Broker
Chapter 475 FS requires listing agreements contain what information
Definite expiration date
Description of property
Listing price and terms
Brokers compensation (fee/commission)
Signatures of all owners of record
True or false? A listing agreement may require a notification to cancel after the expiration date has passed
False, Florida law prohibits such provisions
A copy of the listing contract must be given to the owner within ____ hours of being executed
24
The DBPR MAY ISSUE A _____ dollar fine for including a self renewal clause in a listing or failure to timely deliver a copy of the listing to the owner
200
The telephone consumer protection act prohibits cold calls between the hours of?
8am and 9pm
Explain open listings, exclusive-agency listing, and exclusive right of sales listing and the type of contract they are
An open listing- one or more brokers. reserves the owners right to sell the property and list it with any number of brokers. First broker to have a buyer willing, ready, and able to purchase at the listings terms gets commission. Unilateral contract, only seller promises to pay commission if broker sells. Broker makes no obligation.
Exclusive agency- one broker. Seller reserves right to sell without paying commission unless broker or an employee of the broker introduces buyer to the property. Bilateral contract because both parties must perform.
Exclusive right of sale listing- one broker. Gives broker most protection.
Even if the owner sells property, the broker is entitled to a commission. Both parties are obligated so this is a bilateral contract.
Explain net listings
All listings can be stipulated as a net listing. The seller stipulates a minimum sale amount called the sellers net. The broker retains the net proceeds in excess of the minimum amount as commission.
Multiple listing service defined and it’s features
Clause created in an exclusive agency listing and an exclusive right of sale listing. Allows broker to convey listing to a multiple listing service. An Mls Serves as a clearing house for listings obtained by a REALTOR member brokers and shared with other MLS members. Any member of MLS regardless of broker can show their buyers the listings of other mls members and receive commission for those purchased by their buyer.
Buyers brokerage agreement typically includes
Parties to, and terms of the condition.
Beginning and ending date
Brokers and buys obligations
Retainer and compensation
Protection period
Early termination and dispute resolution
Authorized brokerage relationship
Brokerage compensation is either a commission or brokerage fee computed as either
A percentage of the total sale price, a flat fee, or an hourly rate. All negotiable.
True or false? If A listing agreement requires a broker to find a ready, willing, and able buyer. A licensee who has performed this action is entitled to a service fee, REGARDLESS of weather or not a deal is finalizedunless required to EFFECT THE SALE.
True
What does “effect a sale” mean on a listing agreement
A signature must be received by a ready, willing, and able buyer for a broker to receive commission
True or false? A sales associate must only receive commission from their employing broker, and not directly from a buyer, seller, or other broker
True.
To be paid a commission, a broker must
Hold an active real estate license at the time of closing,
be employed by seller/ buyer
Be the procuring cause.
What does it mean to be a procuring cause.
You have started the chain of events resulting in a sale
True or false? Option contracts must be signed and in writing
True
Explain option contracts. What type of contract is this, and what does it turn into if an optionee notified the optionor in writing they are deciding to move forward.
An agreement between an owner and potential buyer to keep open an offer to sell or lease property for a specified period of time. A unilateral contract, because only the optionor is obligated to sell if the optionee decides to purchase the property. it turns into a sale contract if the optionee decides to purchase the property
True or false. In an option contract, the optionee pays a fee (valuable cknsideration) for the right to purchase the property for a specified amount in a specified amount of time. If an optionee decides not to purchase the house, the consideration is returned to the optionee
False, the fee is retained by the optionor (owner)
An option contract must clearly specify?
The length of time the option is valid, names of contracting parties, sale price, complete legal description and the terms of the fees paid.
True or false? unless prohibited in the terms of the agreement, an option contract is assignable (transferable)
True
True or false? Real estate licensees may draw option contracts, however since their is no case law that addresses licensees and option contracts, a licensee may recommend a seller or buyer have an attorney draw up an option contract
True
Licensees who are interested in obtaining an option on a property as a true optionee must first ___________ themselves of their role as a licensee and must inform property owners that they are not functioning as a real estate agent
Divest
A sale contract must be in _________ and _________ and contain all the terms and provisions required to be a valid contract
Writing, signed
The parties to a sale contract are the _________ or buyer and the _________ or seller
Vendee, vendor
A real estate sale contract is a __________ form of contract
Bilateral
True or false? Although the statute of fraud dictates a sale contract be in writing, the courts have required that oral contracts be honored in some instances
True
Information spelled out in a sale contract must include the fallowing
Names of vendor and vendee (or legal rep.)
Legal description or street address of the property
Consideration
Purchase price
Financing/ cash terms
Type of deed the seller will deliver
Title evidence to be provided
Terms of expenses and proration to be paid
Personal property to be included
Date, time, and place of closing
When possession of the property will occur
Explain earnest money deposit
A binder deposit of valuable consideration given by the big to show serious intent to buy the property under contract
True or false? A licensee may be guilty of fraud if they are aware of any title problems and do not inform the buyer
True
Explain equitable title
Equitable title is the beneficial interest a buyer receives in the property upon executing the property and before closing.
True or false? When a house is co-owned by a married couple or the house is the homestead and only one spouses name is on the title, both spouses signature is required on the sales contract
True
True or false? A broker has the power to sign for a buyer and seller as well as bind the buyer or seller to a contract
False, unless power is specifically granted.
Explain power of attorney, General power of attorney, special power of attorney,
Power of attorney- written legal document declaring someone an attorney in fact
General power of attorney- granted power to act generally on all matters for the principle
Special power of attorney- limited to one specific area or one specific act
True or false? if given written permission, an attorney in fact may sign contracts for the principle
True
True or false? When someone is granted power of attorney for acts related to title to real property, this instrument must be witnessed, acknowledged, and recorded in the public records.
True
Sellers of residential real estate must _________ material defects concerning the property
Disclose
True or false? Real estate licensees are responsible for disclosing of material defects of real property being sold
True
__________ __ ___________ set legal precedence concerning material defects, making sellers accountable to truthfully disclose the condition of the property. _________ __ ________ __________ ___ __ _____________ made licensees accountable.
Johnson vs Davis, Rainer vs Wise Realty Co. of Tallahassee
The “as is” provision to ________ the sellers obligation to make repairs on non working features or damages
Removes
True or false? Personal medical information such as a resident who had HIV or AIDS must be disclosed to anyone who asks for purchase information regarding real property.
False
True or false? The fact a homicide, suicide, or death occurred in a house is not a material fact and must be disclosed
False, it is not a material fact and must NOT be disclosed
True or false? radon disclosure statement on real estate sale and lease contracts is required. However the disclosure consists only of what radon is, not a testing before the sale or lease of property.
True
When purchasing or renting pre- 1978 housing, the residential Lead based paint hazard reduction act requires that
Sellers and landlords to notify buyers and sellers of known led based paint in residential property built pre-1978.
Sale contract and lease contain a disclosure about lead based paint.
An EPA pamphlet regarding the dangers of lead based paint be given to buyers before the sale or leasing of pre-1978 built homes.
Sellers allow homebuyers at their own expense a 10 day period during which to conduct at their own expense an inspection for the presence of lead based paint.
True or false? It is the responsibility of the licensee to make sure the seller is complying with all lead based paint laws and making sure a potential buyer is aware of the dangers of lead based paint
True
The Florida Building energy efficiency rating act does what? Who does it apply to? What does it require of buyers? What does the brochure contain
It provides for a statewide uniform system for rating the energy efficiency of a new or existing building. It applies to all public, commercial, and residential buildings. Requires buyers, at the time of or before signing a sale contract, receive a brochure with information informing the buyer of the option for an energy efficiency rating. It contains a notice for residential buyers that the rating may qualify the purchaser for an energy efficient mortgage from a lending institution.
Define a homeowners association. what is voting membership made up of? and what is membership a mandatory condition of?
Florida corporation responsible for theOperation of the community or mobile home subdivision, voting membership is made up of parcel owners. It is a mandatory condition of parcel ownership.
Homeowners association may impose ___________ on the property that, if unpaid, may become a Lien on the property
Assessment
Florida statute ___ requires that sellers of a mandatory homeowners association, provide buyers with a disclosure summary regarding the association, the existence of _______ _________ and any assessment that the association imposed
720, restrictive covenants
Homeowners association disclosure must be supplied by the ____________ or the __________ __________
Developer, current owner
True or false? in addition to providing the homeowners association disclosure, a sale contract must state that the buyer should sign before receiving and reading the homeowners association disclosure
False, it should state that the buyer should NOT sign before reading the disclosure.
True or false? If the disclosure summary is not provided to the buyer before executing the sale and purchase contract, the contract is voidable.
True
To ______ a sale and purchase contract, the buyer must give the seller(s) agent written notice of the buyers intention to cancel the contract within ___ calendar days of the receipt of the disclosure summary or before closing, whichever occurs first.
Void, 3
True or false? The right to void a contract can be waved by the buyer
False
Homeowners associations must be registered with the _____
DBPR
Prospective buyers of a residential property must be given a ________ _________ concerning ad valorem taxes before or at the time of execution of the sale. The purpose this is to caution prospective buyers that they cannot rely on the amount of the sellers property taxes as an indication of the taxes purchasers will be required to pay in the year fallowing purchase of property. It may be added to the contract of sale or the wording may be inserted in the contract
Disclosure summary
The reference to the tax disclosure summary must include, in prominent language, a statement that?
The purchaser must not execute the contract without first reading the disclosure summary
True or false? A seller who has been cited for a building code violation and will have a pending enforcement proceeding must disclose, in writing to the buyer, that the property has been cited for building code violations and that the buyer will be responsible for the violation after closing.
True
True or false? a seller must clear any building code violations before executing sale
False
When a building code citation is pending, a seller must forward to the code enforcement agency the _______ and ________ of new owner as well as a disclosure summary within ___ days to the new owner
Name, address, 5
Explain a community development district and it’s functions. whose benefit?
An independent special district created, pursuant to Florida law, to serve the long term, specific needs of its community such as constructing, operating and maintaining infrastructure and services for the benefit of the resident.
True or false? Initial contract for a sale of a parcel of real property, and initial Contracts for residential units within the community development district (CDD) required by law to include a disclosure to purchasers, and must be written larger than the rest of the contract.
True
True or false? Licensees may enthusiastically describe the value or potential a property as long as they do not exaggerate, misrepresent or conceal by making statements they know to be untrue.
True
Explain misrepresentation
The misstatement of fact or concealment (omission) of a factual matter. This can lead to fraud.
The 4 elements for a case of fraud regarding misrepresentation are
Licensees made a misstatement or failed to disclose a material fact.
Licensee either knew or should have known the statement was inaccurate or that the undisclosed information need disclosed.
Patty that the statement was made too relied on the misrepresented information
Party to whom the statement was made relied on the misstatement
Party to whom the statement was made was damaged as a result
In regards to deceptive practices, It is fraudulent dealing by trick, scheme, or device for a licensee to
Knowingly sell property covered by a mortgage that also covers other property sold unless the property sold can be released from the mortgage anytime before foreclosure sale of an amount less than that remaining due from purchaser after the sale.
Convince someone to buy a property with a promise that the licensee or owner will than buy or resell the property unless their is proof the repurchase agreement has been approved by any agency of the state of Florida or their is evidence that the repurchase has been accomplished as promised.
Offer lotteries and schemes of sale where it is represented that the purchaser will receive a property in an order determined by chance, Where the price will depend on chance or the amount of sales made or the buyer may or may not receive any property at all.
Invite the public to solve puzzles on the pretense of a drawing to receive property free, at a normal price, or at a cost.
If a broker invites trust and than betrays that trust, and than betrays that trust, the broker is guilty of ________ ___ _________.
Breach of trust
