Part 7 Flashcards
Contracts, Leases, and Deeds
- Consent
- Offer and acceptance
- Legally competent parties
- Legal consideration
- Legal purpose
These are an overview of what?
The five elements of a valid contract.
Parties to a valid contract must enter the agreement voluntarily to satisfy the element of
consent.
1 of 5 elements of a valid contract
These are the two essential elements of a bilateral contract, which constitutes the **“meeting of the minds” **or mutual assent.
Offer and acceptance.
1 of 5 elements of a valid contract
The parties entering the contract must be of legal age and have enough mental capacity to know the potential consequences of their actions.
Legally competent parties.
1 of 5 elements of a valid contract
This is something of legal value used as an inducement to perform (or refrain as the case may be).
consideration
1 of 5 elements of a valid contract
If the contract involves something unlawful, it is not a valid contract. Such a contract could still be honored by the parties involved, but it is unenforceable in the courts. To be valid, a contract must be for a ___________ __________.
legal purpose.
1 of 5 elements of a valid contract
A legally binding agreement between two or more persons that represents their promise to do or not to do a particular thing.
Contract.
A written document signed by a buyer and a seller who agree to the transfer of ownership of real property; also called agreement of sale or earnest money contract.
Sales contract.
_________ _________ has no legal effect and cannot be enforced in a court of law. This may be due to the absence of one or more specific contract elements.
Void contract
_________ _________ is technically valid but gives one or more parties the power to legally void the agreement and thus cancel performance.
Voidable contract
Jensen has a sales contract on a property, but it does not state the legal description and it’s not signed by the seller. The contract is
void.
A good faith deposit made by a purchaser as the consideration component of a binding contract. In real property transactions, this deposit is frequently applied to the buyer’s down payment.
Earnest money
1 of 2 functions of a sales contract
When real property is purchased in an agreement between two parties, what best identifies the purpose of a sales contract that is written?
It serves as a receipt for the earnest money paid, and it provides written evidence of the agreement the parties are bound to honor.
A legal contract, typically purchased for a stated consideration, that permits but does not require the holder of the __________ __________ (known as the __________) to buy, sell, or lease real estate for a stipulated period of time in accordance with specified terms; a unilateral right to exercise a privilege.
option contract
A typical option contract to purchase real property binds which of the following?
only the seller
A contract in which a purchaser of real estate agrees to pay a small portion of the purchase price when the contract is signed and additional sums, at intervals and in amounts specified in the contract, until the total purchase price is paid and the seller delivers the deed; used primarily to protect the seller’s interest in the unpaid balance because default can be exercised more quickly than it could be under a mortgage; also called land contract or **installment (sale) contract **.
Contract for deed
A contract where the seller acts in the role of a lender is called a(n)
land contract.
(also known as a contract for deed)
_______ _______ _______ A lease in which the landlord receives stipulated rent and is obligated to pay all of the property’s operating and fixed expenses. When a landlord pays most, but not all, of the operating expenses, this may be referred to as a modified gross lease.
Gross rental lease
_______ _______ _______ A lease in which the landlord passes on all expenses to the tenant.
Net rental lease
In a gross rental lease, expenses are paid
by the owner of the property.
In a leased property, the landlord has a ___________ interest.
leased fee interest
A leasehold interest is
the tenant’s possessory interest created by a lease.
Business Office Supply (BOS) rents a warehouse from an out-of-state landlord on a five-year lease. In the second year of the rental agreement, BOS found a warehouse that was more accommodating for their growing operation. They moved to the new warehouse and subleased the old warehouse space to an auto parts supplier. What best identifies the lease between Business Office Supply and the auto parts supplier?
Sandwich
This is a lease in which an intermediate leaseholder (BOS in this case) is the tenant of one party and the landlord of another.
A municipality has a unilateral contract with a landowner on a property that the city leases. The agreement continues until a time when the municipality may decide to purchase the property. What is another name for this type of contract?
Option contract.
The combination of all elements that constitute proof of ownership. This defines what?
Title
A _________ is a written, legal instrument that conveys an estate or interest in real property to someone else, assuming it is executed and delivered.
deed
The involuntary transfer process by which a party takes possession and use of another’s land over a period of years is known as
adverse possession.
- General warranty deed
- Special warranty deed
- Bargain and sale deed
- Quitclaim deed
These are an overview of what?
The four types of deeds by which real property can be legally conveyed.
A covenant of warranty inserted in a deed that binds the grantor and heirs to defend the title conveyed to the grantee and his or her heirs against the lawful claims of all persons.
General warranty deed.
1 of 4 types of deeds by which real property can be legally conveyed
a legal document that transfers real estate ownership from one person to another. The seller, or grantor, guarantees that the property title is free of defects or problems during their ownership, but they don’t guarantee the title’s condition before they took possession. The grantor also isn’t responsible for any damages or encumbrances that occurred during their ownership
Special warranty deed.
1 of 4 types of deeds by which real property can be legally conveyed
A deed that conveys real estate from a seller to a buyer but does not guarantee clear title; used by court officials and fiduciaries to convey property they hold by force of law, but to which they do not hold title. It is also used in foreclosure and tax sales. Title insurance is recommended.
1 of 4 types of deeds by which real property can be legally conveyed
Bargain and sale deed.
1 of 4 types of deeds by which real property can be legally conveyed
A form of conveyance in which any interest the grantor possesses in the property described in the deed is conveyed to the grantee without warranty of title. This deed offers the least protection to the buyer. It is often used to clear a defect in the title when someone is thought to have an interest or right in a particular property.
Quitclaim deed.
1 of 4 types of deeds by which real property can be legally conveyed
Which of the following types of deed would most likely be used in a tax forfeiture sale?
bargain and sale deed
Lucille is elderly and lives next door to Greg and his family. Greg installed a fenced-in area with a play set for his children in his backyard. But due to the terrain, the ideal placement required installing one side of the fence 10 feet inside of Lucille’s property line. Lucille is upset by Greg’s actions even though she doesn’t use that portion of her property. What issue should Lucille consider regarding her property rights?
Greg may eventually use adverse possession to acquire the fenced-in area.
A granting clause contains specific words of conveyance as found in what type of legal instrument?
a deed
A title dispute arose between two families regarding a property that was located between each family’s lands. What best describes what is being disputed by the two families?
who has ownership rights to the real estate in in the disputed land
What is generally true about a percentage lease?
It may be classified as either a gross lease or a net lease.
What would be considered a potential disadvantage for the seller in a land contract?
They do not collect the full sale price upon closing.
