Chapter 12 Flashcards
What are 3 rights in a lease?
Possession, Quiet Enjoyment, Exclusion
What is the only legal way to evict a tenant?
Court Order
What are 2 illegal ways tenants are evicted?
1- Constructive (most common - LL makes apt uninhabitable by turning off services, etc)
2- Actual (LL takes stuff and puts it outside)
What is not necessary in a contract? a- capacity b- competence c- agreement d- written format
D- Written format
What is the statute of frauds?
Written NYS law declaring that in RE, some things MUST be written:
- Deeds
- RE Sales Contract
What must be written according to Statute of Frauds
- Deed, RE Sales Contract
What are 2 contracts creations and their differences?
- Expressed: can be spoken or written
- Implied: always spoken (if written, becomes expressed. technically valid but not preferred)
What is the option to buy/lease?
A basic contract where renters have the option to buy.
$2k rent. tenant pays $4k & $2k goes into Escrow (separate account). After 2 years, escrow has grown and tenant has option to buy but LL has to sell no matter what, making it a unilateral agreement
What is the difference between executory and executed contract statuses?
executory= working on it executed= completed
What is the difference between valid and void contract valdities?
valid= all force of law void= no force of law
A landlord discovers the tenant is only 17 years old. What is his lease status?
Voidable by the tenant.
Unenforceable by the land lord.
Tenant can void lease but doesn’t have to. LL cannot force the contract; if the tenant doesn’t pay the lease, he’s a minor.
What are the essential elements of a contract?
- sound (competent) parties
- legal (lawful and possible objective)
- payment (consideration)
- description
- meeting of the minds (mutual agreement)
- written format & signatures
What do the following compose?:
- competent (sound parties)
- lawful and possible objective (legal)
- consideration (payment)
- description
- mutual agreement (meeting of the minds)
- written format & signatures
The essential elements of a contract
What are the 5 primary RE contracts?
- listing agreement
- buyer agency agreement
- sales or purchase contract
- lease
- option to buy or lease
What are the following?:
- listing agreement
- buyer agency agreement
- sales or purchase contract
- lease
- option to buy or lease
the 5 primary RE contracts
What are the 2 contract creations
express , implied
What are 2 contract promises
unilateral & bilateral
what are 2 contract statuses
executory & executed
what are 4 contract validities
valid, void, voidable and enforceable
What is the difference between unilateral and bilateral contract promises
unilateral= one party makes a binding promise to each other bilateral= each party makes a promise to each other
What is the difference between voidable and unenforceable
voidable= one party can end an agreement without liability because of lack of legal capacity or other factor such as fraud or duress
unenforceable= a contract that may have been valid between the parties but that a court would refuse to enforce
When is a broker’s commission earned?
When a ready, willing, and able buyer is produced
OR
There is a meeting of the minds
(Closing is when you pick up the check)
What is the law which requires seller to put aside commission so that if they decide to alter fee, account goes to judge?
Commission Escrow Act
must be in contract
What is the Commission Escrow Act?
the law which requires seller to put aside commission so that if they decide to alter fee, account goes to judge
What is contingency?
If a condition is not met, the parties can back out of the deal
What is it called when a condition isn’t met, the parties can back out of the deal?
contingency
What is the most common contingency?
mortgage (if a client can’t get a a mortgage, they can back out)
What is the home inspection contingency?
If home inspector doesn’t like the RE, buyers can back out
What is the home sale contingency?
if buyer can’t sell previous home, they can back out
What contract clause let’s a seller continue to show the RE if the buyer has a contingency?
Escape clause
What are liquidated damages & an example?
Amount of money specified in a contract to be awarded in the event the agreement is breached
(where it says in the contract what happens if someone breaks the lease)
If you break the lease, you owe 2 months rent (which can lead to assignment & novation)
What is “assignment” in regards to a lease?
When you sign the duration of the lease over to someone (change the name on the lease)- not a sublease
Who is responsible for rent in a sublease?
Primary tenant
(Landlord–> tenant
tenant –> subtenant)
What are liquidated damages in a sale?
The contract deposit
What is novation?
the substitution of a new contract for an earlier contract, cancelling the original, and may also involve the substation of a new party for an original party
What is the best way to discharge a contract and the definition?
Full performance: when all parties to a contract have fulfilled their contractual obligation, contract is completed, and thus released.
What is the earnest money deposit?
An inducement to have the buyer’s offer accepted & a means of showing the seller that the buyer is serious and able to follow through with the financing necessary to buy the property
What is the as is clause?
a provision in a purchase agreement stating the buyer accepts the property in its present conditions
What are riders?
ammendements to contracts
What are options of a sales-related contract?
Contracts that give one party the right to do something, without obligating him to do so (option to buy)
What is the right of first refusal?
A right to have the first chance to buy or lease a property if the owner decides to sell or lease it
What are installment sales contracts?
Agreements for which the buyer makes payments to the seller in exchange for the right to occupy and use the property, but no deed or title is transferred until all, or a specified portion of, payments have been made
(buyer doesn’t get the deed until RE is fully paid for)
