Contracts Flashcards
Contract for Deed
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.
Voidable contract
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
Default
Non-performance of a duty under a contract
Bilateral contract
An exchange of promises binding both parties
Partial performance
An injured party is willing to settle for partial performance of a contract upon default by the other party
Unilateral contract
A contract where only one party made a promise, only one party can be sued
Executory contract
Contract that has been signed by the parties but not yet carried out; sales contract before closing, or contract for deed
Express contract
Written or spoken
Assignment
Substitution of a new party into an existing agreement; can be used to shield the identity of a buyer who wishes to be anonymous
Consideration
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
Valid contract
An agreement that meets all the legal requirements of a contract
Fully executed contract
A contract that is signed and carried out; sales contract at closing
Effective date of contract
The date on which the last party signed
Implied contract
By actions or evidence, but not written or spoken
Suit for specific performance
A lawsuit to hold the defaulting party to his duties under a contract
Void contract
Invalid contract. One of the key elements is missing. No contract at all.
Earnest money
A buyers evidence of good faith, submitted with an offer to purchase
Lease purchase agreement
Lease with an option to buy. A tenant has occupancy now and the right to purchase at a specified future date and price
Real estate contract
A written promise to pay, by the buyer, and a written promise to deliver a deed, by the seller
Mutual recission
The parties to a contract agree to cancel the contract
Addendum
Additional material or supplemental information added to an agreement
Time is of the essence
A clause in a contract that allows each party to hold the other to strict performance on the date specified
Counteroffer
A rejection of an offer and the presentation of a new offer.
Offer and acceptance
Meeting of the minds or mutual agreement. All parties concerned understand and agree to all the terms of the contract
Liquidated damages
Damages specified in a contract that will be awarded in the event of a default
Option fee
An amount paid to secure an option contract- paid up front, directly to the seller, and never refundable
Right of first refusal
Clause in a lease allowing a tenant the right to match or better any offer before the property will be sold to another party
Unenforceable contract
Oral contract, will not be enforced by the courts. Violates statute of frauds
Breach of contract
When one of the parties is in default
Contingency
A condition in a contract that has not yet been met - financing, inspections, etc.
COLIC
Requirements of a valid and enforceable real estate contract - competent parties, offer and acceptance, legal purpose, in writing, consideration
Novation
The substitution of a new contract for an existing one. Original agreement is terminated
Statute of frauds
Law requiring all real estate contracts to be in writing to be enforceable
Amendment
Modification to an existing agreement is made and signed
Money damages
Compensation awarded to an injured party as a result of a lawsuit against the defaulting party in a contract
Option contract
A unilateral contract where one party has the option to buy property at a preset price within a negotiated time period
Competent parties
Sane, sober, consenting adults 18 or older
Offer
A properly completed form with a price less than, equal to, or more than the sellers asking price and signed by the buyer
