Contracts Flashcards
What is a Contract?
Legal binding and enforceable agreement to do or not to do a specific thing.
What is express?
Oral or written
What is implied?
Created by actions, not in writing
What is statute of frauds?
Requires contracts transfer in real estate interest to be expressed written agreements.
The law does not apply to leases of 12months or less
What makes a valid contract?
Containing all essential elements, is binding on both parties and is enforceable by the courts.
A voidable contract appears to be valid, but one party may disaffirm because the party is a minor or was subject to duress, fraud, or misrepresentation
What are the parties of a contract?
One receiving offer= offeree (ee’s receive)
One giving offer = offeror (or’s give)
Lease
Tenant= Lessee
landlord= lessor
Option
Buyer= optionee
Seller= optionor
Purchase Agreement
Buyer= Vendee
Seller= Vendor
Contract/Contract for Deed
Buyer= vendee
Seller= vendor
Mortgage
Lender= mortgagee
Buyer= mortgagor
Deed of Trust
Lender= beneficiary
Buyer= trustor
Third party= trustee
Deed
Buyer= grantee
Seller= grantor
What is Unilateral?
Promise is exchanged for performance. (no commitment)
What is bilateral?
Promise is exchange for promise. (committed)
What’s is Executed?
Duties are completed by both parties.
What is executory?
One or both parties need to complete part of the contract.
What is an assignment?
Transfers obligation, but not liability (sublease)
What is a novation?
A new contract replacing an old one; transfers, obligations, and liability.
What is legal possibility/impossibility of performance?
A duty required by the contract can’t be legally performed.
What happens after death or incapacity?
Contract is terminated only if one is left to perform.
What is amendment?
Changes or modifications to a contract must be in writing and signed by all parties
What is an addenda?
Additional material attached to or made part of initial agreement– offer.
What are the essential elements of a valid contract?
1.Competent parties/contractual capacity
2. Mutual agreement/offer and acceptance
3. Lawful objective/ legal purpose
4. Consideration/money
5. In writing and signed
What is the purpose of statute of frauds?
To prevent problems with oral real estate contracts.
What is statute of limitations?
The length of time parties will be given to file a claim or lawsuit.
What are the types of real estate contracts?
Purchase agreement
Offer to purchase
Contract of sale
Option
Lease purchase
When does an offer becomes valid?
When a acceptance is communicated.
What is the most typical contingency is for?
Financing
Earnest money is not consideration and is not required to create a valid purchase agreement
How many contracts does a lease purchase have?
To a purchase agreement and a lease
Portion of lease payments can be applied to down payment
What are the remedies for breach of contract/default?
1.Mutual recession
2. Remedies for default specific performance is the only option pre the contract for the buyer if the seller decides to terminate. sue for actual damages.
