Chapter 11: Real Estate Contracts

Question 1

the transfer in writing of interest in a contract, mortgage, the lease, or other instrument

Answer 1

assignment

Question 2

an agreement entered into by two or more legally competent parties that is binding on all parties

Answer 2

bilateral contract

Question 3

violation of any terms or conditions in a contract without legal excuse; for example, failure to make a payment when it is due

Answer 3

breach of contract

Question 4

those recognized by law as being able to contract with others; usually of legal age and sound mind

Answer 4

competent parties

Question 5

1. that received by the grantor in exchange for a deed 2. something of value that induces a person to enter into a contract, may be valuable (money) or good (love and affection)

Answer 5

consideration

Question 6

certain happening without which a contract will not be valid

Answer 6

contingency

Question 7

an agreement entered into b y two or more legally competent parties by the terms of which one or more of the parties for a consideration, undertakes to do or refrain from doing some legal act or acts

Answer 7

contract

Question 8

a new offer made as a reply to an offer received

Answer 8

counteroffer

Question 9

money deposited by a buyer that is applied to the purchase price if the sale is closed

Answer 9

earnest money

Question 10

the interest held by a vendee under a land contract or an installment contract; the equitable right to obtain absolute ownership to property when legal title is held in another’s name

Answer 10

equitable title

Question 11

protection for seller with a contract is subject to the sale of buyers present home

Answer 11

escape clause

Question 12

1. a contract in which all parties have fulfilled their promises and thus performed the contract 2. a signed contract

Answer 12

executed contract

Question 13

a contract under which something remains to be done by one or more of the parties

Answer 13

executory contract

Question 14

an oral or written contract in which the parties state the contracts terms and express their intentions in words

Answer 14

express contract

Question 15

a contract under which the agreement of the parties is demonstrated by their acts and conduct

Answer 15

implied contract

Question 16

agreement under which buyer pays in installments and waits for deed

Answer 16

land contract

Question 17

sum agreed upon to serve as compensation if one party defaults

Answer 17

liquidated damages

Question 18

substitution of a new contract for an existing one

Answer 18

novation

Question 19

two essential components of a valid contract; a ‘meeting of the minds’ when all parties agree to exact terms

Answer 19

offer and acceptance

Question 20

an agreement to keep open for a set period an offer to sell or purchase property

Answer 20

option

Question 21

agreement that the written contract overrides spoken promises

Answer 21

parol evidence rule

Question 22

return to status quo

Answer 22

rescission

Question 23

court action asking that the parties complete the transaction as contracted

Answer 23

specific performance

Question 24

the part of state law requiring certain instruments such as deed, real estate sales contracts, and certain leases to be in writing for them to be legally enforceable

Answer 24

statute of frauds

Question 25

the law pertaining to the period of time within which certain actions can be brought into court

Answer 25

statute of limitations

Question 26

a phrase in a contract that requires the performance of a certain act within a stated period of time

Answer 26

time is of the essence

Question 27

a contract that seems on the surface to be valid, yet neither party can sue the other to force performance of it

Answer 27

unenforceable contract

Question 28

an agreement that is binding on only one of the parties

Answer 28

unilateral contract

Question 29

a contract that complies with all the essentials of a contract and is binding and enforceable on all parties to it

Answer 29

valid contract

Question 30

a contract that seems to be valid on the surface buy may be rejected or dis-affirmed by one of the parties

Answer 30

voidable contract

Question 31

a contract that has no legal force or effect because it does not meet the essential elements of a contract

Answer 31

void contract