Level 11 - Sales Contracts & Related Procedures

Question 1

contingency

Answer 1

a provision within a contract that makes performance conditional upon the occurrence of a stated event.

Question 2

earnest money

Answer 2

funds paid to confirm or commit to a contract

Question 3

defined term

Answer 3

a term in a contract that has had a specific meaning defined within the text of the contract itself; defined terms will be capitalized in the contract.

Question 4

good and workmanlike manner

Answer 4

work that has been completed to the standard of the industry

Question 5

subject to

Answer 5

when a buyer takes title with the agreement that the property will be subject to certain future responsibilities that could cause a lien

Question 6

time is of the essence

Answer 6

communicates to parties of a contract that they must perform their contractural duties by a specific date and time in order to avoid a breach of contract.

Question 7

contract for deed

Answer 7

a sales contract in which the buyer pays the seller for the property in multiple installments for a predetermined length of time, and the seller holds the title until the property has been fully paid for; aka installment sales contract or land contract.

Question 8

equitable title

Answer 8

the interest in a property held by a buyer in a contract for deed; includes the right of possession and the right to have legal title conveyed once the terms of the agreement have been met

Question 9

legal title

Answer 9

the interest in a property held by a seller in a contract for deed; conveys ownership of the property

Question 10

option to purchase

Answer 10

a unilateral contract that gives the optionee a window of opportunity during which they can exercise an exclusive right to buy a property; an option fee is paid for this right.

Question 11

optionee

Answer 11

the potential buyer in an option to purchase contract

Question 12

optionor

Answer 12

the potential seller in an option to purchase contract

Question 13

right of first opportunity to purchase

Answer 13

a person with this right must be offered the opportunity to purchase a property for a certain, set price before it is offered to the general public; it’s only activated if the property owner decides to sell, and is often granted to commercial tenants

Question 14

right of first refusal

Answer 14

the right to match a bona fide offer and purchase a property ahead of other buyers; often granted to tenants if their landlord ever decides to sell in the future.

Question 15

vendee

Answer 15

the buyer in a contract for deed

Question 16

vendor

Answer 16

the seller in a contract for deed