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Sales Associate Pre-Licensing > Chapter 11: Real Estate Contracts > Flashcards

Chapter 11: Real Estate Contracts Flashcards

1
Q

Essentials of a Valid Contract

What are the 4 essential of a valid contract?

A
  1. Lawful subject (must be lawful)
  2. Offer and acceptance (meeting of the minds/agreement/mutual understanding of terms)
  3. Consideration (valuable or good consideration/future money)
  4. Competent parties
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2
Q

Creation of a Contract

When is a contract created?

A

When an offer is accepted and acceptance is communicated

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3
Q

Statutes of Fraud

When and where was the statutes of fraud enacted?

A

1677 in England

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4
Q

Statutes of Fraud

Why was the statutes of fraud enacted?

A

To provide protection against fraud in sale of real property

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5
Q

Statutes of Fraud

What is required of a contract according to the statutes of fraud?

A

Requires a contract for the transfer of a right/interest in land to be in writing in order to be enforceable

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6
Q

Statute of Limitations

What does the statute of limitations provide for?

A

Time limits during which parties are allowed to bring legal action to enforce their rights under contract

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7
Q

Statute of Limitations

What are the time periods (statute of limitations) allowed for oral and written contracts

A

ORAL = 4 years

WRITTEN = 5 years

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8
Q

Classification of Contracts: Express vs. Implied

When is a contract considered to be an express contract?

A

When all terms/conditions are specified and agreed to (oral or written)

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9
Q

Classification of Contracts: Express vs. Implied

When is a contract considered to be an implied contract?

A

When some or all terms/conditions can be assumed by the nature of the agreement or words/actions of the parties (oral or written)

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10
Q

Classification of Contracts: Bilateral vs. Unilateral

When is a contract considered a bilateral contract?

A

Both parties agree to be bound to performance of terms and condition specified (a promise for a promise)

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11
Q

Classification of Contracts: Bilateral vs. Unilateral

When is a contract considered a unilateral contract?

A

Only one party expressly agrees to perform an act (promise given in exchange for an act)

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12
Q

Classification of Contracts: Executory vs. Executed

When is a contract considered to be executory?

A

If any term or condition remains to be performed

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13
Q

Classification of Contracts: Executory vs. Executed

When is a contract considered to be executed?

A

When all parties have fully performed

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14
Q

Classification of Contracts: Formal vs. Informal (Parol)

When is a contract considered to be formal?

A

When it’s written, contains all elements of a valid contract, and may be recorded in public record

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15
Q

Classification of Contracts: Formal vs. Informal (Parol)

When is a contract considered to be informal?

A

When it’s oral or a partially written contract that may or may not contain all elements of a valid contract and is not recorded in public record

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16
Q

Classification of Contracts: Void vs Voidable

When is a contract considered void?

A

When it’s inherently unenforceable; cannot be performed under the law

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17
Q

Classification of Contracts: Void vs Voidable

When is a contract considered voidable?

A

An enforceable valid agreement; however, one or both parties can cancel or revoke the contract at any time

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18
Q

Classification of Contracts: Void vs Voidable

What are some reasons that can make a contract voidable?

A

Failure to disclose material fact

A mistake, misrepresentation, or fraud

Coercion, undue influence, duress

Lack of capacity (intoxication or other impairment)

Breach of contract

A minor enter into contract w/ an adult

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19
Q

Contract Negotiation: Offer and Counteroffer

The party who make an offer is called the _________.

A

Offeror

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20
Q

Contract Negotiation: Offer and Counteroffer

The party who receives the offer is the ___________.

A

Offeree

21
Q

Contract Negotiation: Offer and Counteroffer

If the offeree changes any of the term of the original offer it becomes a ____________.

A

Counteroffer

22
Q

Contract Negotiation: Termination of Offers

How may an offer be terminated?

A

Acceptance (accepted offer becomes a contract)

Withdrawal (can withdraw offer at any time up to acceptance of offer is communicated)

Rejection or counteroffer (offeree rejects offer or offers counteroffer)

Lapse of time (end of specified time to accept)

Death or insanity

Destruction of property (by fire/natural disaster)

23
Q

Contract Termination

What are the 6 ways a contract can be terminated?

A

Breach (failure to meet obligations/perform as agreed)

Revocation

Renunciation (mutual consent to terminate agreement)

Lapse of time

Abandonment (party walks away from contract and does nothing toward performance/completion

Performance (both parties perform as agreed, fulfills required obligations)

24
Q

Legal Remedies for Breach of Contract

What 3 legal remedies exists to allow an injured party to suit to enforce rights created by an agreement/contract?

A

Suit for cancellation

Suit for specific performance

Suit for damages

25
Q

Legal Remedies for Breach of Contract

In this remedy, the party not in breach can sue to cancel the contract and ask the court to put the parties to their original positions

A

Suit for concellation

26
Q

Legal Remedies for Breach of Contract

In this remedy, the party not in breach asks the court to make the the other party perform as agreed in the contract; usually available in connection with sale of real estate

A

Suit for specific performance

27
Q

Legal Remedies for Breach of Contract

In this remedy, the party not in breach can sue for damages; it is a request to court to be financially compensated

A

Suit for damages

28
Q

Types of Damages

What are the 2 types of damages?

A

Liquidated and unliquidated

29
Q

Types of Damages

What are the characteristics of liquidated damages?

A

Penalty to be imposed in the event of a breach is specified and agreed in contract; usually involves seller keeping the deposit if buyer defaults

30
Q

Types of Damages

What are the characteristics of unliquidated damages?

A

Penalty not specified and agreed in contract but are determined by the courts

31
Q

Assignments of Contract

The sale, transfer, or subjugation of rights in a contract is called an _____________.

A

Assignment

32
Q

Assignments of Contract

True or False

An assignment of a contract is a NOT a legal remedy for a breach of contract.

A

True

33
Q

As Is Contracts

Sellers of residential property in Florida are required to disclose any material defects (any fact that could have significant/reasonable impact on property value). Does the use of an “as is” provision relieve the seller of this responsibility?

A

No (Johnson v. Davis: Supreme Court of Florida)

34
Q

As Is Contracts

What does an “as is” provision relieve the seller of having to do?

A

It relieves the seller from having to make any repair discovered during the inspection process

35
Q

Disclosures Required in Sales Contracts

List required disclosures in sales contracts

A

Known material facts affecting value

Lead-based paint

Radon

Energy-efficiency rating

Property tax

Foreign Investment in Real Property Act (FIRPTA)

36
Q

Listing Contracts

What is a listing contract?

A

An employment agreement between broker and owner of real estate

37
Q

Written Listing Contracts

What elements must a written listing contract contain?

A

Definite termination date

Legal description

Price and terms

Broker’s fee or commission

Signature of property owner(s)

38
Q

Types of Listing Contracts

List the 5 types of listing contracts

A

Open listing

Exclusive agency listing

Exclusive right of sale listing

Commercial listing

Net listing

39
Q

Types of Listing Contracts

Which listing contract is most favorable listing for the sales agent/broker?

A

Exclusive right of sale

40
Q

Types of Listing Contracts

Which listing contract is a unilateral contract where the property owner promises to pay commission if broker finds a buyer

A

Open listing

41
Q

Types of Listing Contracts

True or False

An owner can give an open listing to any number of brokers for the sale of same property

A

True

42
Q

Types of Listing Contracts

Which listing contract is bilateral in nature in which the property owner promises to list the property with only 1 broker and further promises to pay the commission if the broker successfully sells the property

A

Exclusive agency

43
Q

Types of Listing Contracts

Which listing is bilateral in nature in which the property owner promises to pay a commission regardless of who sells the property

A

Exclusive right of sale listing

44
Q

Types of Listing Contracts

True or False

Any type of listing contract may be structured as a net listing

A

True

45
Q

Types of Listing Contracts

What are the characteristics of a net listing?

A

Property owner agrees to accept stipulated amount and no less called the seller’s net;

Broker keeps all money over seller’s net as a commission

46
Q

Option Contracts

What is an option contract?

A

A right to buy a property during specified time period at specified price

47
Q

Types of Listing Contracts

True or False

An option contract is an obligation to buy a property; it is a right that must be exercised.

A

False

An option contract is NOT an obligation to buy a property; it is a right that MAY OR MAY NOT be exercised.

48
Q

Contract for Deed (Installment Sale Contract)

A _________ ___ _____is an agreement between a property owner and potential buyer in which the owner agrees to deliver a deed to the purchaser after certain conditions have been met.

A

contract for deed

Sales Associate Pre-Licensing (17 decks)

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