Contracts Flashcards
Contract
voluntary agreement between 2 or more parties calling for them to perform certain acts or not to perform certain acts.
examples of contracts
Listing Agreements, Buyer Representation Agreements, Offer to purchase, Purchase and Sale Contracts, Rental Agreements and Property Management Agreements.
Statute of Frauds
Contracts that require a writing
examples of statutes of fraud
- Contracts for the sale of land
- Contracts for surety
- Contracts for the sale of goods $500 or more
- Contracts signed by an executor
- Contracts in contemplation of marriage
- Comtracts with the impossibility of being completed within 1 year.
Offer to Purchase
legal binding contract (McCarthy vs. Tobin). It is the buyer’s proposal to the seller.
Voiding an Offer Contract
If the seller does not respond to the offer before the expiration date. If the seller counters the buyer’s offer with his or her own the contract becomes void.
Earnest Money
deposit money, escrow money, good faith money. They will make a down payment once the purchase and Sale is signed.
Time is of the essence
clause in a contract that requires exact and punctual performance. It is agreed that the parties will abide by the dates in the contract.
Mortgage/Financing Contingency
Clause that calls for the buyer to have an opportunity to secure financing by a particular deadline. Protects the buyer’s deposit.
Inspection Contingency
Provides the buyer an opportunity to inspect the property for insects, lead paint, radon, and overall condition of the property.
Property Sale Contingency
calls for the contract to be subject to the purchaser being able to sell their existing property
Escape Clause
allows the seller an opportunity to continue to market the property until the buyer’s conditions have been met
Amendments
change to an existing content of a contract
Purchase and Sale Agreement
Legal contract that finalizes the agreement. Lawyers construct these and work out all the details.
Equitable Title
When the P+S Agreement is signed, the buyer receives equitable title to the property.
Legal Title
Once the deed is delivered, the buyer receives legal title.
4 Essentials of a valid contract
offer/acceptance
Consideration
Legality of agreement
Reality of Consent
Offer/Acceptance
Meeting of the minds. Buyer agrees to purchase with certain conditions, seller agrees to conditions.
Consideration (Bargain for Legal Detriment)
Consideration is something provided to one party in return for something given by another party.
2 types of Consideration
Valuable consideration: Money, Product, Services
Good Consideration: Love + Affection
Legality of Agreement
The contract cannot call for any party to perform illegal actions.
Reality of Consent
The contract is free from duress, fraud, and error, and the parties entered the agreement under their own free will.
Misrepresentation
misrepresentation of a property can be described as an innocent misstatement about the material fact regarding the condition of the property. Not intentional but could have consequences.