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Real Estate > Law of Contracts > Flashcards

Law of Contracts Flashcards

1
Q

Government Rights in Land

A
  • Police Power
  • Eminent Domain
  • Taxation
  • Escheat
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2
Q

Police Power

A

right to regulate and control how land is used

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3
Q

Eminent Domain

A

right to take private land for public use

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4
Q

Escheat

A

transferring real estate to the state when a person dies without will or heirs

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5
Q

Fixed- Rate Mortgage

A
  • Rate does not change
  • Amortized loan
  • Payment applied to interest first
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6
Q

Adjustable-Rate Mortgage

A

rate changes

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7
Q

Advantages of ARM Loans

A
  • Lower interest rate
  • Higher loans
  • Falling rates
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8
Q

Disadvantages of ARM Loans

A
  • Early refinancing
  • Unpredictable home mortgage payments
  • Long-term cost
  • Confusion
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9
Q

Blanket Mortgage

A

covers more than one property

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10
Q

Package Mortgage

A

Includes real and personal property

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11
Q

Budget Mortgage

A

Payment includes PITI, principal, interest, taxes, insurance

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12
Q

Balloon Note

A
  • Partially amortized final payment is much larger
  • Lower interest rate
  • High cost of refinancing
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13
Q

Collateral- Dependent Loans (Hard Money Loans)

A

Funds secured by value of parcel

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14
Q

Wraparound Mortgage

A
  • Low interest rate

- Seller financing, new loan takes secondary lien original not repaid

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15
Q

Open-End Mortgage

A
  • Additional borrowing on same note
  • Home Equity Line of Credit
  • Minimum withdrawal is $4,000
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16
Q

Participation Loan

A
  • 2+ lenders own a share
  • Share appreciation mortgage
  • Lender collected PI and shares when sold
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17
Q

Reverse Annuity Mortgage

A
  • At least 62 years old

- Due upon sale or death

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18
Q

Sub-Prime Loans

A
  • Risk-based pricing
  • Borrowers rated A-F
  • Interest is based on rating
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19
Q

Right of First Refusal

A

A tenant has the right to match or better any offer the landlord may receive on the property before the property is sold to someone else.

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20
Q

Chain of Title

A

history of all previous owners

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21
Q

Abstract of Title

A

complete history of title

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22
Q

Attorney’s Opinion of Title

A

opinion regarding state and transferability of title

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23
Q

Cloud on the Title

A

claim or encumbrance on title

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24
Q

Patent

A

original conveyance of land from government

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25
Q

Title Commitment

A

statement of condition of title from title company

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26
Q

Title Insurance Policy

A

title company agrees to compensate for losses due to defects in title

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27
Q

Real Estate Settlement Procedures Act (RESPA)

A
  • Consumer Financial Protection Bureau (CFPB) Regulation X
  • Ensures consumers are provided with information regarding mortgage settlement and protected from unnecessarily high settlement charges
  • Prohibits undisclosed referral fees and kickbacks
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28
Q

Mortgage Insurance Premium

A
  • Part of FHA loan
  • Covers claims when borrower defaults on loan
  • Pays up-front and annual premium
  • Can be added to loan even if it exceeds appraised value
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29
Q

Private Mortgage Insurance

A
  • Allows lenders to increase LTV
  • Required when LTV exceeds 80% in conventional loans
  • Insures difference between down payment and 80% LTV
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30
Q

Five elements of a valid and enforceable contract

A

COLIC

  • Competent Parties
  • Offer and Acceptance
  • Legal Purpose
  • In Writing
  • Consideration
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31
Q

Contract

A

Agreement between two or more parties to do or refrain from doing something

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32
Q

Special Warranty Deed

A

promises to defend title only against claims during their ownership

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33
Q

Bargain and Sale Deed

A

no guarantees or warranties. Implies ownership

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34
Q

Quitclaim Deed

A

no guarantees, warranties or covenants. Does not claim to own property

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35
Q

Gift Deed

A

consideration is love and affection

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36
Q

Guardian’s Deed

A

minor’s interest is conveyed

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37
Q

Sheriff/Trustee’s Deed

A

foreclosure

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38
Q

Correction Deed

A

corrects error in previous deed

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39
Q

Tax Deed

A

property sold by government at a tax sale

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40
Q

Intestate Succession

A

person dies with no will

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41
Q

Probate

A

judicial proceeding to confirm validity of will

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42
Q

Formal Will

A

prepared by attorney

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43
Q

Holographic Will

A

handwritten

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44
Q

Nuncupative Will

A

oral or deathbed will, only valid for personal property

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45
Q

Codicil

A

addition to existing will

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46
Q

Types of Leasehold Estates

A
  • Estate for years
  • Periodic Tenancy
  • Tenancy at Sufferance
  • Tenancy at Will
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47
Q

Estate for Years

A

set term. Survives death and sale

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48
Q

Periodic Tenancy

A

renews automatically. Survives death and sale

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49
Q

Tenancy at Sufferance

A

tenant occupies against owner’s wishes

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50
Q

Tenancy at Will

A

tenant occupies with permission for uncertain time

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51
Q

Gross Lease

A
  • landlord pays charges. taxes, insurance, repairs

- tenant only pays rent

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52
Q

Net Lease

A
  • tenant pays rent plus expenses
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53
Q

Double net lease

A

Tenant pays rent, property taxes and property insurance

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54
Q

Triple Net Lease

A

tenant pays rent and all fixed and variable expenses

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55
Q

Single Net Lease

A

tenant pays rent and property taxes

56
Q

Percentage Rent

A
  • rent is based of gross receipts of tenant’s business
57
Q

Easement

A

Gives one right to use or pass through another’s property

58
Q

Easement in Gross

A

Belongs to person or corporation and not land

59
Q

Easement Appurtenant

A

Right to benefit from piece of land

60
Q

Creation of Easements

A
  • Grant
  • Reservation
  • Implied grant
  • Prescription- continuous use without permission
  • Necessity
  • Condemnation
61
Q

Termination of Easements

A
  • Merger
  • Release
  • Abandonment
  • Death
62
Q

Subrogation

A

Title insurance policy that allows title company to reduce compensation from claim by amount seller is paying

63
Q

Contingency

A

Provision in contract requiring specific act for contract to be binding

64
Q

Presentation of offers

A
  • All offers must be presented

- Imputed notice- offered presumed to be delivered when given to agent

65
Q

Acceptance

A 
-No changes to offer, as is
Intent
-Manner of acceptance
-Timeliness of acceptance
-If acceptance is unconditional
66
Q

Remedies for Buyer Default

A
  • Liquidated Damages- earnest money
  • Monetary Damages- decided by court
  • Specific Performance- force to complete contract
67
Q

Remedies for Seller Default

A
  • Refund of Earnest Money
  • Monetary Damages- decided by court
  • Specific Performance- force to complete contract
68
Q

Physical Characteristics of Land

A
  • Indestructibility
  • Immobility
  • Nonhomogeneity
69
Q

Economic Characteristics of Land

A
  • Scarcity- supply and demand
  • Modification- value affected by man made changes
  • Fixity- land pays for itself
  • Situs- location from economic viewpoint
70
Q

Paragraph 11- Special Provisions

A

Terms can be addressed that are not covered in contract or addenda

71
Q

Statute of Frauds

A

All contracts for longer than one year must be in writing

72
Q

Texas Veterans Land Board

A
  • Veteran’s loan is sold to TVLB

- Rate is up to 1% lower

73
Q

TREC Temporary Lease Agreements

A

When buyer or seller occupies for less than 90 days from closing

74
Q

Option Contracts

A

Seller gives buyer right to purchase for a period for some form of consideration

75
Q

Prorated Items at Closing

A

Property taxes and HOA fees

76
Q

Common Law

A
  • Based on local custom and common sense
  • Developed in England
  • Uses previous decisions
77
Q

Statutory Law

A

based on laws and regulations

78
Q

Bill of Sale

A

personal property being transferred with real property

79
Q

Cooperatives

A
  • Do not own specific unit

- Buy shares and receive proprietary leases

80
Q

Executory Contracts

A

Contract is binding on parties but some duties have not been performed yet

81
Q

Earnest Money

A
  • Shows buyer is serious about intent to purchase
  • Placed into escrow when contract signed
  • If not delivered on time, seller can terminate
82
Q

Buffer Zone

A

area of land separating one land use from another

83
Q

Setback

A

amount of space required from lot line to building line

84
Q

Variance

A

permission to violate rules

85
Q

Addendum

A

attachment to contract that adds or further describes duties

86
Q

Amendment

A

changes to contract

87
Q

Encumbrance

A

claim, lien char or liability attached to and binding real property

88
Q

Lien

A

right given by law to certain creditors to have debts paid out of property of a defaulting debtor

89
Q

Equal Credit Opportunity Act (ECOA)

A
  • 1974
  • All consumers given equal chance for credit
  • Prohibits discrimination on protected classes, and for receiving public assistance
  • Does not prevent obtaining information
90
Q

Truth in Lending Act (TILA)

A

Disclosure of key terms in lending arrangement and all costs

91
Q

Regulation Z

A

Advertisement must disclose key terms

92
Q

Community Reinvestment Act (CRA)

A

prohibits redlining and ensures banks serve needs of community in which they do business

93
Q

Dodd-Frank Wall Street Reform and Consumer Protection Act

A
  • Established Consumer Financial Protection Bureau
  • Promote financial stability by improving accountability and transparency
  • Ending bailouts
94
Q

Seller’s Disclosure Notice

A

Seller discloses all facts and defects concerning property

95
Q

Offer Requirements

A
  • Communicated to specific offeree
  • Intended to be serious offer
  • Definite and certain enough to be accepted
96
Q

Counteroffer

A
  • Party changes offer in some way

- Reject initial offer and make new offer

97
Q

Rejection with Invitation to Resubmit

A

Reject offer and makes suggestions to what would be acceptable

98
Q

Ownership in Severalty

A

Ownership by one person or entity

99
Q

Co-Ownership

A

Ownership by 2+ people or entities

100
Q

Tenancy in Common

A

Ownership by 2+ in undivided interests

101
Q

Joint Tenancy

A
  • Right of survivorship
  • 4 Unities
  • Time- acquire at same time
  • Title- from same source
  • Interest- equal shares
  • Possession- shared equally
102
Q

Community Property

A

Property acquired during marriage is owned equally

103
Q

Separate Property

A

Property owned by married person that is not community property

104
Q

Tenancy by Entirety

A

Joint tenancy between two married individuals

105
Q

Syndicate

A

Two or more join to create and operate investment

106
Q

The Secure and Fair Enforcement for Mortgage Licensing Act (SAFE Act)

A
  • Enhance consumer protection and reduce fraud by establishing minimum standards for licensing and registration of loan originators
  • Must be registered with Nationwide Mortgage Licensing System and Registry
107
Q

Sole Proprietorship

A

Venture owned by one individual

108
Q

Partnership

A
  • Must have one or more general partners

- Can be created with written or oral agreement

109
Q

Joint Venture

A

Individuals join for project them dissolve upon completion

110
Q

Corporate Ownership

A
  • Filed with Office of Secretary of State
  • 3 components
  • Shareholders
  • Board of directors
  • Corporate officers
111
Q

S Corporation

A

Under 100 shareholders

112
Q

Sublet

A

Transfer of some or all of tenants rights to another party with liability remaining on lessee

113
Q

Assignment

A

Rights and liabilities of tenant transfer to another

114
Q

Option to Buy

A

Allows tenant to buy at preset price and terms for given period

115
Q

Mutual Rescission

A

Lease termination by agreement of both parties

116
Q

Essential Elements of Option Agreement

A
  • Term
  • Price
  • Conditions
117
Q

Contract for Deed

A
  • Title transfers at closing

- No lender used, seller financing

118
Q

Lease-Purchase Agreement

A
  • Tenant agrees to purchase the property at some agreed-to time and terms
  • Binding on both parties
  • Payments applied to down payment or sale price
119
Q

Residential Financing Options

A
  • Third Party
  • Assumption of existing mortgage, FHA, VA
  • Seller Financing
120
Q

Causes for contract termination

A
  • Non-performance
  • Performance is illegal
  • Destruction of Property
  • Mutual Rescission
121
Q

Escalation Clause

A

Anything above a certain amount of taxes and utilities is charged to tenant

122
Q

Fair Housing Advertisement Protected Categories

A
  • Use of Racial and Ethnic Terms
  • Religious Preference
  • Gender Preference
  • Handicapped Persons
  • Familial Status
123
Q

Title Contingency

A

Title must be marketable and examined

124
Q

Financing Contingency

A

Must be able to obtain financing approval

125
Q

Sale of Other Property Contingency

A

Sale is contingent on buyer selling existing property

126
Q

Appraisal Contingency

A

Property must appraise for sales price

127
Q

Inspection Contingency

A

Subject to satisfactory inspection

128
Q

Mandatory Disclosures

A
  • Lead-based paint if home built before 1978
  • Environmental hazards
  • Radon
129
Q

Potential Hazardous Materials

A
  • Radon
  • Asbestos
  • Urea Formaldehyde Foam Insulation
  • Lead
  • Landfills- water testing
  • Underground Storage Fuel Tanks- water testing
  • Farming Herbicides and Pesticides- water testing
  • Electromagnetic Fields
130
Q

Consideration in a valid contract

A

Something given in exchange for a promise

131
Q

Paragraph 21 of the 1-4 Family Sales Contract

A
  • Notices

- Must enter client’s contact information

132
Q

DTPA Coverage Categories

A
  • Producing cause of
  • Deceptive act
  • Breach of warranty
  • Unconscionable course of action
  • Act in violation of Texas Insurance Code
133
Q

Mortgage

A

Contract between lender and borrower

134
Q

Deed of Trust

A

Contract between borrower, lender, and trustee

135
Q

Promissory Note

A

Borrower’s unconditional promise to repay

136
Q

Escrow

A
  • Bank account to pay expenses
  • Escrow agent is fiduciary
  • Administered by lender
137
Q

Trust

A
  • Hold funds until completion

- Benefit beneficiary, trustee

Real Estate (6 decks)

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