Contracts Flashcards
Contract
An agreement between two or more parties who, in a “meeting of the minds,” have pledged to perform or refrain from performing some act.
Valid Contract
A contract which meets the legal requirements for validity
Void Contract
An agreement that does not meet the tests for validity
Voidable
A contract which initially appears to be valid but is subject to cancellation by a party to the contract who is believed to have acted under some kind of disability
Express Contract
One in which all terms of the agreement have been clearly stated and agreed to by all parties, whether verbally or in writing
Implied Contract
An unstated or unintentional agreement that may be considered to exist when the actions of any of the parties suggest the existence of an agreement.
Bilateral Contract
One in which both parties promise to perform their respective parts of an agreement in exchange for performance by the other party
Unilateral Contract
A contract in which only one party promises to do something if the other party does something
Executed Contract
One that has been fully performed and fulfilled (signed by all parties)
Executory Contract
One in which performance has yet to be completed
Statute of Frauds
requires that certain contracts must be in writing to be enforceable
Infeasibility
when a valid contract can be canceled if it is not possible to perform
Statute of Limitations
restricts the time period for bringing a lawsuit against the other party
Liquidated Damages
compensation due to a damaged party in the event of a breach in contract
Listing Agreement
A contract between a seller and a broker
Buyer Representation Agreement
An agreement btwn a prospective buyer and an agent
Sales Contracts
a legal contract for the purchase of property
What does ‘Parties, Consideration, and Property’ mean in regard to real estate?
acquiring property in return for a purchase price
*Essentially paying the seller in exchange for ownership of the property
What does the seller typically pay in Closing Costs?
title insurance and property-related costs
What does the buyer typically pay for in Closing Costs?
financing-related costs
Define ‘Merger of Agreements’ in real estate:
when both parties state that there are no other agreements between them aside from those expressed in the contract
what is ‘Time is of the Essence’ in a contract:
that dates and deadlines can be amended only if both parties give written approval
What is “Contract for Deed” also known as?
A Land contract
Contract for Deed
a bilateral agreement wherein a buyer will acquire possession of the land immediately and pay the purchase price in installments over a period of time and the seller will retain legal title until all payments are made.
Lease
A contract by which one party conveys property to another for a specified time
An option-to-buy is an example of what type of contract?
Unilateral contract
What is a contingency?
A contingency is a condition that must be met before the contract is enforceable
What is the most common contingency?
Financing
What does the escrow clause in a sales contract do?
releases the escrow agent from certain liabilities regarding the custody and disbursement of Earnest Money
In what paragraph would you find the buyer’s right to an inspection?
Property condition
What is the term in the sales contract that allows division of some expenses between buyer and seller?
Prorations
In a contract for deed situation, what must a person do to convert his/her interest in the property into a legal title?
- Pay seller full amount due on the contract for deed
or - Deliver a promissory note equal to the balance due that contains the same due date, interest rate, and late fees as the contract
What two primary purposes does a contract for deed serve for a seller?
- facilitates a sale that might otherwise be impossible
- may give the seller certain tax benefits
If the seller fails to deliver the deed at closing, the seller would be what?
In Default
