Contracts Flashcards
Contract
an agreement to do or not do a certain act or service
Express Contract
is a contract that is expressed with words, EITHER oral or written and is preferred for the following:
Listings Purchase agreements Leases
Implied Contract
is created when an agreement is made by acts and conduct (implication) rather than words.
•“Contract that is not written or spoken”
•Legal Substitute for a contract
Unilateral Contract
made when one party makes a promise for an actof another
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Promise for an Act
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Example: Repairs Request -Sellers agrees to fix buyers requested repairs in return the seller wants the buyer to remove their Inspection Contingency.
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Example: Rent to own-Pay rent on time but owner promises to give first opportunity to buy that home.
Bilateral Contract
is made when one party makes a promise in exchange for the promiseof another party.
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Promise for a Promise
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Example: Buyer promises to pay $xxx,xxxin exchange for the title (ownership) of the property
Valid
contract is binding and enforceable.
Fully signed, complete, initialed, and dated.
Void
no contract exists, therefore no rights are enforceable.
Voidable
can be affirmed or rejected at the option of a party.
Repairs Request form. Seller can reject request.
Unenforceable
valid contract that for some reason cannot be enforced in court.
Missing initials or missing ending date can cause a contract to be “unenforceable”
Negotiation Period
Creation of a contract. Buyer and Seller discuss possibility of a contract. If there is mutual interest, an offer, or perhaps several offers are made.
Time that a contract is technically valid. Purchase agreements are default for 3 days.
Performance
The contract is in “mid-stream” and is an EXECUTORY CONTRACT in which the provisions have yet to be completely performed.
Offer is accepted by all parties then they open escrow. While the buyer is working to obtain the financing, the contract is now VALID and known as a EXECUTORY CONTRACT
Completion
Occurs after a contract has been completed and extends until the Statute of Limitations runs out. (2yrs)
Execute
is to sign a contract.
Execution
is the act of performing or carrying out the contract.
Executed Contract
is one that has either been discharged or performed.
Executory Contract
both sides are working on performance but not yet performed.
Elements of a contract
- capacity
- mutual consent
- legality
- consideration
- writing sometimes involved(statue of frauds)
Capacity
Refers to all persons legally permitted to sign a contract. Everyone is capable EXCEPT:
1. Minors–anyone under the age of 18 years (except emancipated minors).
2. Incompetents–person judged to be of unsound mind.
3.Convicts –persons serving terms of imprisonment.
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may convey property with the approval of the California Adult Authority.
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civil rights are lost during the course of the jail term.
Listing Agreements
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A contract to employ a broker to do a certain thing for the owner/seller such as list/sell their home. Agent is the representative of the broker.
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All real estate listings must be in writing in order to collect a commission.
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Document explains commission, termination date, Internet presence, sign posting, etc.….
Open Listing (Unilateral, Non-Exclusive Contract)
• Merely an authorization to sell a property. • May be given to any number of brokers. • Owner may find own buyer and pay no commission. • Usually no time limit. • Fewbrokers use this type of listing.
Exclusive Agency Listing
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Broker gets commission if they sell it themselves or through the MLS
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Owner may still find buyer and pay no commission.
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Definite termination date required by law.
Listing
Exclusive Right To Sell Listing
Only the listing broker has the right to sell.
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Preferred by most brokers-most common. (Required by Nationwide Real Estate Executives)
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Broker entitled to a commission if property sold within listing period even if owner finds own buyer.
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Eliminates all procuring cause disagreements.
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Definite termination date required by law.
Buyer Representation Agreement
An agreement to hire an agent to be the exclusive buyer agent.
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Buyer agency is always in every buyer’s best interest. This is why buyers should never call the listing agent off of the for sale sign.
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Today the playing field is equal because both buyer and seller can have their own agent to protect their best interest.
