Chapter 14: Contracts for the Sale of Real Estate Flashcards
Several buyers are competing for the last available home in a desirable new subdivision. One buyer calls the owner-developer directly on the phone and offers $10,000 over and above the listing price. The developer accepts the offer. At this point,…
The parties have completed a verbal, executory contract
An owner completes a contract to sell her property. Before closing, the seller runs into financial trouble and assigns the contract to her principal creditor. The buyer cries foul, fearing the property will be lost. Which of the following is true?
The assignor has completed a legal action
During the executory. Of a sale contract, the buyer requires an equitable title interest in the property. This means that…
The buyer can potentially force the seller to transfer ownership
The purpose of an escrow account is too…
Entrust deposit monies to an impartial fiduciary
A sale contract contains an open-ended financing contingency: if the buyer cannot obtain financing, the deal is off. Six months later, the buyer still cannot secure financing. Which of the following is true?
The seller may cancel the contract since it can be ruled invalid
In the event of a buyer’s default, a provision for liquidated damages in a sale contract enables a seller to…
Claim the deposit has relief for the buyer’s failure to perform
Which of the following best characterizes a conventional sale contract?
Voluntary, bilateral, and executory
A due-on-sale clause in a sale contract puts parties on notice that…
Third-party loans surviving closing may be accelerated by the lender
A sale contract may specifically deal with tax withholding responsibility if the seller is a foreigner. What is this responsibility?
The buyer must withhold 15% of the purchase price at closing for the sellers capital gain tax payment
An important legal characteristic of an option to buy agreement is that…
The optionor must perform if the optionee takes the option, but the optionee is under no obligation to do so
A tenant has an option to purchase agreement with the landlord that expires on June 30. On July 1, the tenant frantically called the landlord to exercise the option, offering the apology she was busy with a death in the family. Which of the following is true?
The option is expired, and the tenant has no rightful claim to money paid for the option
A tenant exercises an option to buy a condominium. The landlord agrees, raises the agreed price by $3000, claiming financial distress. The landlord does, however, offer the tenant two months of free rent before closing and offset. Which of the following is true?
The tenant can force the sale at the original terms
Which of the following is true regarding the legal nature of option contracts?
They give the optionee an equitable interest in the property
An important distinction between a contract for deed and a contract for sale is…
The seller retains legal title in a contract for deed transaction until fully executed
While a property is under a contract for deed, the seller, or vendor, mortgages her equity in the property, and has a separate judgment lien placed on the property. Faced with financial loss, the vendor signs the contract to another party, then leaves town. What can the vendee do in this case?
Comply with the contract and take a legal title when its terms are fulfilled
