Chapter 14 Contracts for the Sale of Real Estate Vocab

Question 1

Contract for Sale:

Answer 1

A real estate sale contract is a binding and enforceable agreement wherein a buyer agrees to buy an identified parcel of real estate, and a seller agrees to sell it under certain terms and conditions. It is the document that is at the center of the transaction.
Other names for the sale contract are agreement of sale, contract for purchase, contract of purchase and sale, and earnest money contract.

Question 2

Vendor:

Answer 2

A seller in a real estate contract.

Question 3

Vendee:

Answer 3

A buyer in a real estate contract.

Question 4

Escrow:

Answer 4

An impound account used for the safekeeping of a buyer’s earnest money deposit; accompanied by specific instructions to the escrow agent for holding and disbursing the funds.

Question 5

Contingencies:

Answer 5

A condition that must be satisfied for a contract to be binding and enforceable.

Question 6

Default:

Answer 6

Failure to perform. Buyer default: If a buyer fails to perform under the terms of a sale contract, the breach entitles the seller to legal recourse for damages.
Seller default: If a seller defaults, the buyer may sue for specific performance, damages, or cancellation.

Question 7

Option-to-Buy Contract:

Answer 7

An option-to-buy is an enforceable contract in which a potential seller, the optionor, grants a potential buyer, the optionee, the right to purchase a property before a stated time for a stated price and terms. In exchange for the right of option, the optionee pays the optionor valuable consideration.

Question 8

Equitable Interest:

Answer 8

The optionee enjoys an equitable interest in the property because the option creates the right to obtain legal title. However, the option does not in itself convey an interest in real property, only a right to do something governed by contract law.

Question 9

Contract for Deed:

Answer 9

A financial contract where a seller retains legal title to a property and gives the buyer equitable title and possession over a period of time. During the contract period, the seller finances all or part of the purchase price. If the buyer makes timely payments and abides by all contract provisions, the seller conveys legal title at the end of the contract period.