Chapter 8 Flashcards
The weakest type of deed for a buyer
Quitclaim Deed
A form of conveyance in which any interest the grantor possesses in the property described in the deed is conveyed to the grantee without warranty of title.
What kind of deed does this?
Quitclaim Deed
A deed containing, or having implied by law, some but not all of the usual covenants of title; esp., a deed in which the grantor warrants that he or she (1) has not previously conveyed the estate being granted, (2) has not encumbered the property except as noted in the deed, and (3) will convey to the grantee any title to the property acquired after the date of the deed
Grant Deed
When this type of deed is used, the grantor does not expressly warrant the title as being free and clear of all encumbrances and does not even warrant that he or she is the owner of the property.
Grant Deed
This deed makes no claims or warrants to the quality of the title. It is used frequently in situations such as tax sales
Quitclaim Deed
Example:
A property is claimed by a county or town for non-payment of taxes. The municipality advertises and sells off the property for whatever it can get. They make no investigation of the title and make no guarantees. It is strictly caveat emptor (Latin for “buyer beware”)!
This is an example of what kind of deed?
Quitclaim
A deed that conveys real estate from a seller to a buyer but does not guarantee clear title; used by court officials and fiduciaries to convey property they hold by force of law, but to which they do not hold title
Bargain and Sale Deed
This deed is the next step up the ladder from a quitclaim deed
Bargain and Sale Deed
An example of this deed might be a sheriff’s deed, which is given to the purchaser of a property at a court-ordered sale.
Bargain and Sale Deed
This deed does not guarantee that there is a clear title, but at least the seller (grantor) implies that they do hold title to the property.
Bargain and Sale Deed
Most of these deeds do not have covenants or warranties; however in some states a seller is allowed to add covenants to this type of deed.
Bargain and Sale Deed
A deed that conveys title to a property purchased at a tax sale; may or may not convey absolute title, free of all prior claims and liens, depending on state law.
Tax Deed
This deed is essentially a bargain and sale deed, but is used specifically for tax sales where properties have been taken over for non-payment of real estate taxes.
Tax Deed
A deed that conveys to the grantee title to the property free and clear of all encumbrances, except those specifically set forth in the document.
Warranty Deed
This is the best and most powerful type of deed.
Warranty Deed
The grantor warrants or guarantees that the title being conveyed is free and clear of all encumbrances in what type of deed?
Warranty Deed
If, at a later date, a cloud on the title appears or someone else makes a claim against the title, the grantor must make it right.
What type of deed is this?
Warranty Deed
A legal instrument similar to a mortgage document, except that three parties are involved in securing the debt: the borrower, a lender, and a trustee who holds property title when the deed of trust is executed and delivered. The trustee transfers title to the lender if the borrower defaults and to the borrower if the note is repaid.
Deed of Trust
This is similar to a mortgage and is the method used in some states to encumber properties in lieu of recording a mortgage. Title is vested in a third party, the trustee, until the mortgage lien is satisfied.
Deed of Trust
This is an alternative document that is a security instrument for a lender. In some states, lenders prefer this deed because, in the event of mortgage default, the trustee is able to sell the property without going through a lengthy and expensive foreclosure process.
Deed of Trust
Passing of title to real property back to the original owner; e.g., in a deed of trust arrangement, upon liquidation of the debt the property is reconveyed from a third-party trustee to the trustor (borrower).
Reconveyance
If a deed of trust is recorded and then the loan is paid off, the __________ document passes title back to the borrower.
Reconveyance
True or false? Deeds do not have to be recorded to be valid.
True
A legally binding agreement between two or more persons that represents their promise to do or not to do a particular thing. In many jurisdictions statutes of frauds, or their equivalent, may render a real property contract voidable if it does not consist of a signed, written agreement
Contract
an agreement with specific terms between two or more persons or entities in which there is a promise to do something.
Contract
An agreement to do or not to do something. Must involve at least two people.
Contract
a firm agreement to perform an act, refrain from acting or make a payment or delivery.
Promise
__________ are promises that the law will enforce. The law recognizes the promise as a duty and provides remedies if a promise is broken.
Contracts
Every state has a ____________ that requires certain documents to be in writing.
Statute of Frauds
A manifestation of willingness to enter into a bargain, which creates in the offeree the power of acceptance.
Offer
a specific proposal to enter into an agreement with another.
Offer
A manifestation of willingness to be bound by the terms of an offer made in a manner invited or required by the offer.
Acceptance
_________ may occur as an express act or an implied act.
Acceptance
the existence of the contract and its terms are stated in words or the writings of the parties in what kind of contract?
Express Contract
The existence of the contract and its terms are inferred or implied from the conduct of the parties. The contract is created by the actions of the parties who perform the terms of the contract.
Implied Contract
A _________ contract is one in which both parties have made promises to each other.
Bilateral
Does a deed have to be recorded in order to be valid?
No
Which is the best type of deed for the buyer?
warranty deed
grant deed
bargain and sale deed
tax deed
Warranty Deed
In a real estate transaction, who is the grantee?
seller
buyer
agent
lender
Buyer
Which type of deed is similar to a mortgage document?
grant deed
bargain and sale deed
trust deed
warranty deed
Trust Deed
From the buyer’s standpoint, what is the weakest type of deed?
warranty deed
quitclaim deed
bargain and sale deed
deed of trust
Quitclaim
In a trust deed state, title to a property is vested in the __________ until the mortgage lien is satisfied.
mortgagor
grantee
grantor
trustee
Trustee
Which is the best type of deed for the buyer?
warranty deed
grant deed
bargain and sale deed
tax deed
Warranty Deed
An ______ contract is one that has been fully performed. The promises have been fulfilled according to the terms of the contract, and there is nothing left to be done.
Executed
An example of this type of contract would be a real offer to purchase after all contingencies have been met and the closing has occurred. File it away!
Executed Contract
An _______ contract is one that is not been fully performed or completed. Something is still left to be done.
Executory
A good example of a ______ contract is a listing contract. A real estate agent tries to sell the property during the term of the contract. A mortgage would also be considered an ________ contract until it is finally paid off or satisfied.
Executory
A _______ contract is one that is binding and enforceable on all parties. It contains all the valid elements of a contract and is still in force.
valid
A ______ contract is one that has no legal force or effect even though it contains the elements of a valid contract.
Void
A ________ contract is one that results from the failure of the parties to meet some legal requirement.
Voidable
An _________ contract is one that appears to be valid but would not be enforceable in court. For example, if one party tries to enforce an otherwise valid contract after the statute of limitations has expired, that contract would be ________
Unenforcable
Competent parties Mutual agreement Consideration Lawful objective In writing and signed
These are all…
Elements of a contract
in general, able to act in the circumstances, including the ability to perform a job or occupation, or to reason or make decisions.
Competent Parties
the mental ability to understand the general effect of a transaction or document.
Competency
For a contract to become binding, the parties must enter into it voluntarily and with a full understanding of the terms. They are coming to a…?
Mutual Agreement
Lack of mutual agreement could be evidenced by such things as:
Fraud Misrepresentation Mutual Mistake Undue Influence Duress
Feebleness on one side, overpowering strength on the other
Duress
An agreement must be based on good and valuable __________; something of value. This could be:
Money
Property
A promise of performance or a promise to pay
Forbearance: a promise to refrain from doing something
Consideration
any act or forebearance which is of benefit to the promisor or detriment to the promisee.
Consideration
The _________ rule states that written contracts take precedence over oral agreements.
Parol Evidence RUle
Contracts can be terminated or discharged by:
Agreement of the parties
Performance of the contract
Impossibility of performance
Operation of law
to give up a right as releasing one from his/her obligation to perform under a contract, or to relinquish a right to an interest in real property. 2) v. to give freedom, as letting out of prison. 3) n. the writing that grants a release
Release
the act of transferring an interest in property or some right (such as contract benefits) to another. It is used commonly by lawyers, accountants, business people, title companies and others dealing with property.
Assignment
agreement of parties to a contract to substitute a new contract for the old one.
Novation
a phrase often used in contracts which in effect says: the specified time and dates in this agreement are vital and thus mandatory, and ‘we mean it.’ Therefore any delay - reasonable or not, slight or not - will be grounds for canceling the agreement.
Time of the essence clause
The application of law may change the rights and liabilities of the parties, without their consent. Contracts can be terminated by _________ under:
Bankruptcy
Statute of limitations
Alteration of contract
Operation of Law
A ________ contract is binding and enforceable on all parties.
unenforceable
valid
void
voidable
Valid
Contracts for the sale of real estate must be __________ in order to be enforceable.
signed by at least one party
voidable
with a minor
in writing
In writing
The general rule of contracting with minors is that a contract with a minor is
illegal and unenforceable
voidable at the minor’s option
null and void
valid and fully enforceable in most states
Voidable at the minor’s option
Which of these is NOT necessary in creating a valid contract that would be binding and enforceable on all parties?
competent parties
reasonable price
lawful objective
consideration
Reasonable Price
Failing to perform any term of a contract, written or oral, without a legitimate legal excuse. This may include not completing a job, not paying in full or on time, failure to deliver all the goods, substituting inferior or significantly different goods, not providing a bond when required, being late without excuse, or any act which shows the party will not complete the work
Breach of Contract
the cancellation of a contract by mutual agreement of the parties.
Rescission
the correction or change of an existing document by court order upon petition of one of the parties to the document.
Reformation
writ (order) issued by a court ordering someone to do something or prohibiting some act after a court hearing.
Injunction
the right of a party to a contract to demand that the defendant (the party who it is claimed breached the contract) be ordered in the judgment to perform the contract.
Specific Performance
damages recovered in payment for actual injury or economic loss, which does not include punitive damages
Compensatory damages
damages claimed and/or awarded in a lawsuit which were caused as a direct foreseeable result of wrongdoing.
Consequential Damages
An amount of money agreed upon by both parties to a contract which one will pay to the other upon breaching (breaking or backing out of) the agreement or if a lawsuit arises due to the breach
Liquidated Damages
damages awarded in a lawsuit as a punishment and example to others for malicious, evil or particularly fraudulent acts.
Punitive damages
something of value given by a buyer to a seller to bind a bargain.
Earnest money
What needs to be in a contract?
Sale Price Date of Sale Sale Concessions (making repairs, paying closing costs) Owner of Record Legal Description Personal Property included in sale price
A contract in which the rights to use and occupy land, space, or structures are transferred by the owner to another for a specified period of time in return for a specified rent.
Lease
a lease with a specified level of rent that continues throughout the lease term.
Flat Rental Lease
A lease in which the landlord receives stipulated rent and is obligated to pay all of the property’s operating and fixed expenses; also called full-service lease
Gross Lease
A lease in which the landlord passes on all expenses to the tenant.
Net Lease
A lease that provides for specified changes in rent at one or more points during the lease term, e.g., step-up and step-down leases, or leases with a set percentage adjustment.
Graduate Rental Lease
A lease, usually for a long term, that provides for periodic rent adjustments based on the change in an economic index
Index Lease
A lease that provides for periodic rent adjustments based on the market rental rate of the space.
Revaluation Lease
A lease that allows for the lessor to seek reimbursement of operating expenses after specific criteria have been met
Escalator Lease
A lease in which the rent or some portion of the rent represents a specified percentage of the volume of business, productivity, or use achieved by the tenant.
Percentage Lease
The percentage rent paid over and above the guaranteed minimum rent or base rent; calculated as a percentage of sales in excess of a specified breakpoint sales volume.
Overage Rent
In most appraisals for residential mortgage lending transactions, personal property items are
- included in the real property appraisal
- valued in a separate appraisal report
- not included in the real property appraisal
- required to be removed from the premises before the appraiser arrives
Not included in the real property Appraisal
What type of lease requires the landlord to pay all of the property’s operating and fixed expenses?
gross lease
net lease
net-net-net lease
step-up lease
Gross Lease
True or false? Punitive damages are commonly awarded in breach of contract cases.
False
A seller enters into an agreement to sell his property, but later changes his mind and decides not to complete the sale. The buyer sues the seller and a judge orders the seller to complete the sale. This is an example of
rescission
novation
mutual assent
specific performance
Specific Performance
A seller enters into an agreement to sell his property, but later changes his mind and decides not to complete the sale. The buyer sues the seller and a judge orders the seller to complete the sale. This is an example of
rescission
novation
mutual assent
specific performance
Specific Performance
Breach of contract is also known as
novation
default
assumption
statutory fraud
default
A deed that conveys real property from a seller to a buyer but does not guarantee clear title; used by court officials and fiduciaries to convey property they hold by force of law, but to which they do not hold title is the definition of a ____________deed.
bargain and sale
warranty
trust
quitclaim
bargain and sale
“The correction or change of an existing document by court order upon petition of one of the parties to the document” is the definition of
rescission
reformation
injunction
novation
reformation
If a seller defaults in a real estate contract, the buyer may take all of these actions EXCEPT
rescind the contract and recover the earnest money deposit
file a suit calling for specific performance, to force the seller to sell the property
sue the seller for compensatory damages
sue the seller for punitive damages
sue the seller for punitive damages
The mental ability to understand the general effect of a transaction or document” is the definition of
ethics
stability
competency
adulthood
competency
“A manifestation of willingness to enter into a bargain, which creates in the offeree the power of acceptance” is the definition of a(n)
promise
acceptance
offer
willfulness
offer
Every ____________ has a statute of frauds.
municipality
county
state
taxing jurisdiction
state
“A lease in which the landlord receives stipulated rent and is obligated to pay all of the property’s operating and fixed expenses” is a _____________ lease.
net
gross
index
net net
Gross
The seller of a property is called the
grantor
grantee
legatee
landlord
grantor
“The act of transferring an interest in property or some right (such as contract benefits) to another” is the definition of
assignment
novation
codicil
acceptance
assignment
A reconveyance may be employed if there is a
grant deed
deed of trust
sheriff’s deed
quitclaim deed
deed of trust
“A form of conveyance in which any interest the grantor possesses in the property described in the deed is conveyed to the grantee without warranty of title” is the definition of a ________________ deed.
trust
quitclaim
sheriff’s
warranty
Quitclaim
“The cancellation of a contract by mutual agreement of the parties” is the definition of
breach of contract
revision
novation
rescission
Recission
The amount stated in a deed is called the
rescission
fee
consideration
tender
consideration
