Contracts

Question 1

Contract for Deed

Answer 1

Seller financing with title retention to protect the seller - title is not transferred to the buyer until the full price is paid. Also called land contract, installment contract and real estate contract.

Question 2

Voidable contract

Answer 2

In the eyes of the law, one party is at a disadvantage and can void the agreement - a minor, someone who signed while drunk or high, someone who signed under duress

Question 3

Default

Answer 3

Non-performance of a duty under a contract

Question 4

Bilateral contract

Answer 4

An exchange of promises binding both parties

Question 5

Partial performance

Answer 5

An injured party is willing to settle for partial performance of a contract upon default by the other party

Question 6

Unilateral contract

Answer 6

A contract where only one party made a promise, only one party can be sued

Question 7

Executory contract

Answer 7

Contract that has been signed by the parties but not yet carried out; sales contract before closing, or contract for deed

Question 8

Express contract

Answer 8

Written or spoken

Question 9

Assignment

Answer 9

Substitution of a new party into an existing agreement; can be used to shield the identity of a buyer who wishes to be anonymous

Question 10

Consideration

Answer 10

Something of value given by the party to a contract; the buyers promise to pay in exchange for the sellers promise to deliver a deed

Question 11

Valid contract

Answer 11

An agreement that meets all the legal requirements of a contract

Question 12

Fully executed contract

Answer 12

A contract that is signed and carried out; sales contract at closing

Question 13

Effective date of contract

Answer 13

The date on which the last party signed

Question 14

Implied contract

Answer 14

By actions or evidence, but not written or spoken

Question 15

Suit for specific performance

Answer 15

A lawsuit to hold the defaulting party to his duties under a contract

Question 16

Void contract

Answer 16

Invalid contract. One of the key elements is missing. No contract at all.

Question 17

Earnest money

Answer 17

A buyers evidence of good faith, submitted with an offer to purchase

Question 18

Lease purchase agreement

Answer 18

Lease with an option to buy. A tenant has occupancy now and the right to purchase at a specified future date and price

Question 19

Real estate contract

Answer 19

A written promise to pay, by the buyer, and a written promise to deliver a deed, by the seller

Question 20

Mutual recission

Answer 20

The parties to a contract agree to cancel the contract

Question 21

Addendum

Answer 21

Additional material or supplemental information added to an agreement

Question 22

Time is of the essence

Answer 22

A clause in a contract that allows each party to hold the other to strict performance on the date specified

Question 23

Counteroffer

Answer 23

A rejection of an offer and the presentation of a new offer.

Question 24

Offer and acceptance

Answer 24

Meeting of the minds or mutual agreement. All parties concerned understand and agree to all the terms of the contract

Question 25

Liquidated damages

Answer 25

Damages specified in a contract that will be awarded in the event of a default

Question 26

Option fee

Answer 26

An amount paid to secure an option contract- paid up front, directly to the seller, and never refundable

Question 27

Right of first refusal

Answer 27

Clause in a lease allowing a tenant the right to match or better any offer before the property will be sold to another party

Question 28

Unenforceable contract

Answer 28

Oral contract, will not be enforced by the courts. Violates statute of frauds

Question 29

Breach of contract

Answer 29

When one of the parties is in default

Question 30

Contingency

Answer 30

A condition in a contract that has not yet been met - financing, inspections, etc.

Question 31

COLIC

Answer 31

Requirements of a valid and enforceable real estate contract - competent parties, offer and acceptance, legal purpose, in writing, consideration

Question 32

Novation

Answer 32

The substitution of a new contract for an existing one. Original agreement is terminated

Question 33

Statute of frauds

Answer 33

Law requiring all real estate contracts to be in writing to be enforceable

Question 34

Amendment

Answer 34

Modification to an existing agreement is made and signed

Question 35

Money damages

Answer 35

Compensation awarded to an injured party as a result of a lawsuit against the defaulting party in a contract

Question 36

Option contract

Answer 36

A unilateral contract where one party has the option to buy property at a preset price within a negotiated time period

Question 37

Competent parties

Answer 37

Sane, sober, consenting adults 18 or older

Question 38

Offer

Answer 38

A properly completed form with a price less than, equal to, or more than the sellers asking price and signed by the buyer