Chapter 5 Contracts Flashcards
What is the Option 26 Notice?
Decision made by NJ Supreme Court that allows RE licensees to prepare certain contracts and leases
A contract is…
An agreement between 2 people on earning consideration for preforming certain acts
What is a valid contract?
When it meets all the essential elements that a contract needs
How many essential elements are there to a VALID contract?
6
Legal Signatures (essential elements of a contract)
written contracts must be signed by ALL principals of the agreement to be legal in NJ
Legal Capacity (essential elements of a contract)
signatories must be of legal age, mentally competent, and not under any duress
Legality of Object (essential elements of a contract)
must be for a legal purpose to be enforceable
Consent (essential elements of a contract)
signatories must enter on their own free will
What is the Time of the Essence Clause?
every date shown in the contract must be honored unless parties agree to change them
What is the Inspections clause?
gives specific time limits and conditions which the various property inspections must be conducted
What is the Mortgage Commitment Clause?
gives the date that the buyer must provide the seller with a full mortgage commitment or either side of the transaction can cancel the contract
What is the Lead-Based Paint Disclosure
must be signed by the buyer and the seller and their agents . this is used for properties built prior to 1978
An express contract is…
when the term and conditions of the agent, given by the principal are CLEARLY stated and understood (can be written or oral)
An implied contract is…
when a principle does nothing to stop someone from acting as their agent
What is a bilateral contract?
Both/all parties are obligated to preform
What is a unilateral contract?
Only 1 party is obligated to preform
Megan’s Law is…
licensees are not allowed to disclose to their clients if there sex offenders in the area … agents should direct their clients to the state police website
What is a Land Contract?
a complex transaction where the seller provides financing to the buyer
Underground Storage Tanks can…
pose a significant hazard to a property ;
licensees should enquire from sellers if they are aware of any buried fuel tanks, and if they are…you must disclose that to the buyer
Seller’s Property Disclosure
(NOT required but it is HIGHLY recommended)
this document should be completed by the seller with NO help from you as the agent
The Right of First Refusal/Home Sale Contingency Clause is…
the buyer must sell their current home to purchase another property
Consideration (essential elements of a contract)
a contract must include something of value
Fixtures are…
personal property that was attached to the land/property
Mutual Assent (essential elements of a contract)
both/all parties must agree to all terms and conditions of the contract
Off Site-Conditions Clause is…
disclosure clause that gives buyers the right to investigate if there are hazardous waste sites nearby
What is a Void Contract?
Missing 1 or more of the essential elements of a contract
NJ Statue of Frauds states…
all contacts for longer than 3 years must be in writing
What is the Parol Evidence Rule?
If there is an argument over what was stated orally or written… the written evidence will take precedence
Chattel is…
another word for personal property
What is the term used to describe buyer’s monthly mortgage payment?
PITI Principle Interest Taxes Insurance
What is an executed contract?
fully completed; all terms have been preformed
What is the executory contract?
contract has been signed but not yet fully preformed
What is the unenforceable contract?
contract may appear valid but is impossible to complete
ex…a house burning down a few days before settlement
What is the enforceable contract?
one which has been property drawn up and signed which legally binds all parties to preform their duties
What is a voidable contract?
appears to be valid but 1 party can cancel at any time if they so choose
