Real Estate Contracts Flashcards
a voluntary agreement based on the consent of the parties to the agreement.
Valid contract
(having obligations on both sides)
Bilateral contract
a promise by one side that can be accepted by performance of the other side
unilateral contract
(all parties have fulfilled their promises)
Executed contract
(one or both parties still have an act to perform).
Executory contract
may be rescinded or disaffirmed by one or both parties
voidable
one of the essential elements is missing. If a mistake, misrepresentation, fraud, undue influence, or duress occurs, there is no mutual consent or meeting of the minds, which means that an essential element of the contract is missing and the contract is void.
void
when an existing contract or legal obligation is replaced with a new one of equal or proximate value.
Novation
written agreements most often used in residential real estate transactions by real estate professionals
client representation agreements, sales contracts, options, escrow agreements, property management agreements, leases, owner financing agreements,
A real estate sales contract is usually accompanied by an
earnest money deposit
contract for deed, bond for title, installment contract, land sales contract, or articles of agreement for warranty deed
land contract
the buyer receives title to the property immediately but places a security interest on the property in favor of the seller.
purchase money mortgage
A transfer of rights or duties under a contract is
an assignment
A contract is said to be bilateral if
both parties to the contract exchange binding promises.
In the period after an offer to purchase real estate is accepted and the sale is closed, the buyer acquires an interest in the property that is called
equitable title.
A deposit provided when making an offer to purchase real estate is known as
earnest money.
may become the seller’s if the buyer defaults.
earnest money
the dissolution of a contract with the return of all funds or things of value to both sides.
Mutual Rescission
A seller accepted money from a buyer in exchange for the buyer’s unrestricted right to cancel the purchase transaction (option to terminate) within 10 days of the executed date of the sales contract. This agreement is
Unilateral contract
If a seller allows a buyer to back out of a contract, returns the earnest money, and both are back to the positions they held before the contract, the contract has been
rescinded
The earnest money a seller may be entitled to retain after the buyer breaches is called
Liquidated damages
Mutual agreement to the terms of a real estate contract is indicated by
signatures
Which of the following describes an executed contract?
All obligations under the agreement have been performed
Mutual agreement to the terms of a real estate contract is indicated by
offer and acceptance.
A promise for a promise is one way to describe
bilateral contract
Earnest money checks should be deposited
when an accepted offer becomes a contract.
In states that have adopted it, the Uniform Vendor and Purchaser Risk Act will come into play if
damage occurs to the property between the time a contract is entered into and the buyer takes possession.
A buyer and a seller sign a contract to purchase. The seller backs out, and the buyer sues for specific performance. What is the buyer seeking in this lawsuit?
Transfer of the property
The buyer and the seller are negotiating an offer. During the final stages of negotiations, the buyer crosses out part of paragraph 19 that states the seller has the right to continue to show the property and receive, negotiate, and accept back up offers and the seller agrees. What are the implications?
The change should be initialed in the margin by the buyer before presentation to the seller.
An option to purchase binds which parties?
seller only
In a preprinted sales contract, several words were crossed out or inserted by the parties. To eliminate future controversy as to whether the changes were made before or after the contract was signed, the usual procedure is to
have both parties initial or sign in the margin near each change.
Creating a new contract to discharge the old obligation is called
novation
What is minimum consideration in a valid contract?
Anything the parties agree is good and valuable
The period during which the parties to a contract may begin legal action to enforce their rights is determined by a state’s
Statute of limitations
Words of conveyance are required in
deeds
essential elements of a contract
lawful objective.
mutual agreement.
consideration.
Whose signature is necessary for a signed offer to purchase real estate to become a contract?
buyer and seller
When a seller deliberately deceives a buyer about the condition of real property, their contract of sale would be considered
voidable
During the period after a real estate sales contract is signed, but before title actually passes, the status of the contract is
executory
The listing broker and the seller know that the foundation of the seller’s house is unsafe. If they do not inform the buyer of this condition, the contract to purchase the property would be
voidable by the buyer
never legally enforceable
void contract
