Chapter 11: Real Estate Contracts Flashcards
Exist when the party states the terms and show their intentions in words. This maybe oral or written
Express contract
Certain types of contracts must be in writing to be enforceable in a court of law
Statute of fraud
The agreement of the parties is demonstrated by their acts and conduct
Implied contract
Both parties promise to do something; one promises given in exchange for another. An example is a real estate sales contract
Bilateral contract
A one sided agreement
Unilateral contract
A contract in which all parties have for filled their promises: the contract has been performed
Executed contract
Exist when one or both parties still have an act to perform a sales contract is an example
Executory contract
What are the five elements of a contract
Offer and acceptance
Consideration
Legally competent parties
Consent
Legal purpose
What must be in writing. The wording of the contract must express all the agreed on terms and must be clearly understood by the parties
Offer and acceptance
A new offer; it voids the original offer
Counter offer
Something of legal value offered by one party and excepted by another as an inducement to perform or to refrain from performing some act
Consideration
Has all legal elements and is fully enforceable what kind of contract is this?
Valid contract
A contract that lacks all or one legal elements
Void contract
A contract that has all legal elements and maybe rescinded or disaffirm
A voidable contract
A contract that has all legal elements and is enforceable only between the parties
Unenforceable contract
A transfer of rights or duties under a contract
Assignment
Substitution of the new contract for an existing contract
Novation
A violation of any of the terms or conditions of the contract without legal excuse
Breach of contract
How soon is a licensee give each person signing or initialing the contract and original “true copy” within the time of signing
24 hours
Legal title transfers only on delivery and acceptance of the deed. After both buyer and seller have executed sales contract, the buyer requires an interest in the land
Equitable title
What specifically states that the seller Bears any loss that occurs before the title passes or the buyer takes possession
Uniform vendor and purchaser risk act
Additional conditions that must be satisfied before a sales contract is fully enforceable
Contingencies
A change to an existing contract
Amendment
Any provision added to an existing contract without altering the content of the original this must be signed by both parties
Addendum
Contract by which an option or gives an optionee the right to buy or lease the owners property at a fixed price within a certain time period. The optionee pays a fee for this option right. This is only enforceable by the optionee
An option contract
Contract for deed
Land contract
Articles of agreement for warranty deed
Installment contract
The seller retains legal title under what typical contract
Land contract
A voluntary agreement or promise between legally competent parties, supported by legal consideration, to perform some legal act
Contract
A void contract is one that?
Not legally enforceable
The legal proceeding or legal action brought by either the buyer or seller under a purchase contract to enforce the terms of the contract is known as?
A suit for specific performance
The essential elements of a contract include all of the following..
Offer and acceptance
Competent parties
Consideration
If upon the receipt of an offer to purchase his property under certain conditions the seller makes a counteroffer the prospective buyer is?
Relieved of his original offer
The amount of earnest money deposit is determined by?
An agreement between the parties
A buyer defaulted some time ago on a written contract to purchase a sellers real estate. Can the seller sue for damages?
Yes, if the seller is not prohibited from doing so by the statue of limitations
A written real estate contract is assumed to be the complete agreement of the parties because of the?
Parol evidence rule
What gives the best evidence of the buyers intention to carry out the terms of the real estate purchase contract?
The earnest money
The term rescind means to?
Cancel
What is essential to the formation of a contract?
Offer
Acceptance
Consideration
An option?
Keeps an offer open for a specified time
When a prospective buyer makes a written purchase that the seller accepts then the?
Buyer receives equitable title to the property
A buyer Agrees to purchase the sellers house for $230,000 and deposit $6900 in earnest money with the sellers broker. However the seller is unable to clear the title to the property and the buyer demands the return of the earnest money as provided in the purchase contract. The sellers broker should?
Return the entire amount to the buyer
A bilateral contract is one in which?
The promise of one party is given in exchange for the promise of the other party
A buyer makes an earnest money deposit of $1500 on a $15,000 property and then withdraw the offer before the seller can accept it. The brokers responsible for disposing of the earnest money by?
Returning the $1,500 to the buyer
A broker rights to present a purchase offer to the seller, an elderly invalid, and finds her ex-husband also present. In the presence of the broker, the ex-husband persistently urges the seller to accept the offer, even though it is much lower than the price she has been asking for her home. If the seller accepts the offer, she may later claim that?
She was under undue duress from her former husband, and therefore, the contract is void
The law that requires real estate contracts to be in writing to be enforceable is the?
Statue of frauds
If it owner take the property off the market for a definite period of time in exchange for some consideration, but the owner grants the right to purchase the property with in that period for a stated price, this is called?
Option
What would best describe earnest money?
The money put up by the buyer at the time the offer is made
Money that serves to compensate a seller in the event a buyer defaults is know as?
Liquidated damages
To assign a contract for the sale of real estate means to?
Transfer ones rights under the contract
When the seller and the buyer sign a valid purchase contract?
The buyer received equitable title
What is essential to a real estate contract?
Offer and acceptance
Two sales people working from the same broker obtained to offers on a property listed with their firm. The first offer was obtained early in the day. A second offer for a higher purchase price was obtained later in the afternoon. The broker presented the first offer to the seller that evening. The broker did not inform the seller about the second offer so that the seller can make a decision about the first offer. What is true?
The broker has no authority to withhold any offers from the seller
A broker has an exclusive right to sell listing on a building. The owner is out of town when the broker gets an offer from the buyer to purchase the building providing the seller agrees to take a purchase money mortgage. The buyer must have a commitment from the seller before the seller is scheduled to return to the city. Under the circumstances?
Broker must obtain the signature of the seller to effect a contract
A broker took a listing in later discovered that the client was legally incompetent and has been living in a mental institution for many years. The listing is now?
Of no value to the broker because it is now void
On Monday the seller offers to sell a vacant lot to the buyer for $112,000. On Tuesday, the buyer counter offers to buy for $110,500. On Friday the buyer withdraws the counter offer and accept the original offer of $112,000. Under these conditions?
There is no valid agreement because the buyers counter offer was a rejection of the sellers offer and, once it was rejected, it cannot be accepted later
In an option to purchase real estate, the optionee?
Has no obligation to purchase the property
The broker receives an earnest money deposit with a written offer to purchase that includes a 10 day acceptance clause. On the fifth day, before the offer is accepted, the buyer notifies the broker that she is withdrawing the offer and demands the return of the earnest money deposit. In this situation?
The buyer has the right to revoke the offer at any time until it is accepted and recover the earnest money
At the time a buyer was negotiating the purchase of a lot on which to build a new home, the seller represented that the soil was firm enough to support the construction of the building. In fact, the seller knew that any new construction would very likely sink up to 15 feet below the surface. This contract is?
Voidable by the buyer because of fraud
After the buyer and seller has signed a sales contract, the seller has a change of heart and defaults. The buyer sues the seller. Is this a legal action?
Yes, the buyer can sue for specific performance
The concept that requires that an injured party bring an action within a specific period of time after the injury is?
The statute of limitations
What is correct regarding the acceptance of an offer?
An offer can be rescinded at any time prior to acceptance
A contract agreed to under duress is?
Voidable
A real estate sales contract becomes valid or in effect when it has been signed by?
The buyer and the seller
What would not terminate an offer?
An offer from a third party
If a broker deposits the buyers earnest money in a trust account, at what time is the seller entitled to receive it?
At the time of settlement
The party to whom an offer is being made ( the offeree) has the right to
Reject the offer
What best describes a contract that is voidable?
The contract may be declared void
Who would have equitable title to property?
The buyer in a sale contract and the vendee in a land contract
What is the status of an option contract that has been exercised?
Bilateral contract
