Contracts And Escrow Flashcards
Mutual consent
Also called mutual assent or a meeting of the minds means that the parties agree
Consideration
Anything of value in this required for every valid contract consideration does not have to be money it could be a promise work for an act for parents or a benefit conferred the consideration cannot be illegal or services already performed
Valuable consideration
Anything of value is required for a valid contract consideration does not have to be in when he could be a promise for work to benefit
Good consideration
Love and affection auto is not valuable consideration consideration fulfills the requirements of consideration in a contract
Competent parties
A person must be 18 years of age to enter into contract and that is married has been my emancipated or were in the Armed Forces
Lawful object
The fourth essential element of a valid contract and the contract must be legal in formation the consideration must be legal
BiLateral contract
A contract is a promise for a promise will wear these are bound by the contract to perform I will sell your house if you will pay me a commission
Unilateral contract
The contract in which a promise is exchange for performance only one party is obligated to perform under the contract and example would be any student who brings in another student receives 25 from the school
Valid contract
One that is binding and enforceable in a court of law
Executors contract
A contract in which something remains to be done it is incomplete
Executed contract
A contract that is completed performance by the parties has taken place
Unenforceable contract
Not that is valid but cannot even enforced an oral real estate contract may be valid but as it is not writting it is unenforceable
Express contract
A contract made in writting
Implied grant
A contract that is created by the actions of the parties involved not in writting
Waiver
A unilateral act which gives up a right In a contract
Novation
The substitution of s new obligation for an existing one with the intent to extinguish the original contract it may consist of substitution of one of more parties all parties must agree
Fraud usually
Makes a contract voidable which the injured party has the right to void or rescind the contract
Actual fraud
When you act to deceive the other party and to persuade that other party to enter into a contract
Constructive fraud
Is an act that was done without fraudulent intent but still gains an advantage for the party at fault the injured party relied on the misrepresentation of the party at fault
Breach of contract
Rescind the contract unilaterally accept partial performance sue for money damages accept liquidated money damages sue for specific performance mutually rescind the contract
Suing for specific performance
Is a court action taken by an innocent party to force the party who has breached contract to carry out the contract according to be precise terms price and conditions on which parties agreed on
Liquidated damages
Clause in the contract that provide the amount of damages in the event that in the parties to the contract does not perform it must e signed by both parties to be exercise
If buyer of a residence back out of a contract the liquidated damage clause limits the amount of damages to
3% of the sales price or the amount of the deposit which ever is less remainder returned to buyer promptly
The statute of limitations
Requires an injured party to take action within a specific period of time otherwise he or she is barred from seeking relief in a court of law
Statue of limitations of oral contracts
2 years
Statute of limitations of encroachments or inverse condemnation
3 years
Statue of limitation on written agreement
4 years
Statue of limitations on judgment liens
Ten years
The statute of fraud is a law that requires
Certain type of contracts to be in writting in order for the, to be enforceable in court of law
Contracts must be in writting
Lease of a year or more
A will
Loan
Employments with buyer or seller must contain termination date
Contract between broker and sales agent
Contract of sales of personal property valued in excess of 500
Contracts involving limited partnership
Contracts that do not have to in writting
A lease less than year
General partnership
Agreements between brokers to split commissions
Listing contract to negotiate loan
Personal property listings/business opportunity listings
Commonly used when buying
Option (written agreement)
A written agreement in which the owner of the property optionor agrees to sell the property to a prospective buyer optionee for a certain price within a certain period of time this is a contract to keep an offer open
Real estate contract also known as a a deposit recipt
This contract is more Han a receipt for money because when accepted it becomes a binding contract whereby the buyer agrees to buy and seller agrees to sell under terms stated
Information about deposit receipts
A broker can’t extend the time limits set forth in the deposit recipt or of escrow copy of the deposit recipt must be given to each party who signs it at the time it is signed contingency clause allows contract to be rescinded if some stated event fails to happen “offer subject to” or “offer contingent on”tender is an offer to sell a buyer should notify the seller of his disapproval in writting his investigation on earthquakes hazards reveals unacceptable risk
Escrow
A neutral third party called an escrow agent who acts as a trusted stakeholder for all parties to the transaction
If no specified in th escrow instructions it is to take place within
Reasonable time possession of the property is given to the buyer at the close of escrow unless another day specified
If buyer wants to move in before escrow
He should obtain written permission from seller
All sales transactions
Should be reported to the Internal Revenue Service by escrow company
Closing statements
Close of escrow both the buyer and seller receive a written statement as to the disposition of all money statements are set up in the same manner with debuts on the left and credits to the right the debit and credit columns must balance
Prorations
Certain items are usually prorated to the close of escrow these include taxes insurance interest and rent
Insurance transfers the risk of loss from the insured policy owner yo the insurance company in exchange
Of insureds payment of a premium
Chain of title
The history of conveyances and encumbrances on aproperty from the time of the original patent (first time the property was sold) attorneys and tittle insurance employees search the chain of tittle
Clta
California land title association provides protection against matters of record impersonation forgery lack of capacity of a party in the transaction defective delivery of a record grant deed banks won’t accept only refinance
Alta
America land title association is a policy developed for lenders which includes onsite inspection and survey borrower pays protects against unrecorded liens unrecorded easements facts that a correct survey will reveal right if parties in possession mining claims and water rights encroachments
Termite reports Re required when
Financing f.h.a or va loan
Contract
Illegally and forcible agreement between two or more parties to do or not certain thing
