Real Estate Contracts Flashcards
Contract
a voluntary agreement or promise between legally competent parties, supported by legal consideration, to perform (or refrain from performing) some legal act
Lawful Consideration
must be supported by something of value that induces a party to enter into the contract
Express Contract
parties state the terms and show their intentions in words, either oral or written
Implied Contract
the agreement of the parties is demonstrated by their acts and conduct
Statute of Frauds
the requirement of certain contracts to be in writing which makes them enforceable by law
Bilateral Contract
both parties promise to do something, one promise is given in exchange for another
Unilateral Contract
a one sided agreement where one party makes a promise in order to entice a second party to do something; usually accepted by the performance of the party to whom the offer is made
Executed Contract
one in which all parties have fulfilled their promises
Executory Contract
when one or both parties still have an act to perform
Offer and Acceptance
in a real estate sales transaction, the sales contract sets out the offer by the buyer that is accepted by the seller
Offeror
the person who makes the offer
Offeree
the person to whom the offer is made
Offer
a promise made by one party, requesting something in exchange for that promise
Acceptance
a promise by the offeree to be bound by the exact terms proposed by the offeror
Letter of Intent
used to indicate the interest of a prospective buyer or lessee and if interest is reciprocated to begin negotiations
Consideration
something of legal value offered by one party and accepted by another as an inducement to perform or to refrain from performing some act
Valid Contract
one that meets all the essential elements that make it legally sufficient or enforceable and is binding in a court of law
Void Contract
has no legal force or effect because it lacks some or all of the essential elements of a contract
Voidable Contract
appears on the surface to be valid but it may be rescinded or disaffirmed by one or both parties based on some legal principle ie. was signed by a minor
Enforceable Contract
meets all elements of a valid contract including compliance with any applicable statute of frauds
Unenforceable Contract
appears on the surface to be valid; however, neither party can sue the other to force performance
Time is of the Essence
each of the elements of the contract must be performed within the specified time
Reasonable Time
no written date
Assignment
a transfer of rights or duties under a contract
Novation
substitution of a new contract for an existing contract
Breach of Contract
a violation of any of the terms or conditions of a contract
Suit for Specific Performance
the buyer asks the court to force the seller to go through with the sale and transfer the property as previously agreed
Liquidated Damages Clause
specifies the amount of money to which the seller is entitled if the buyer breaches contract
Rescission
returns the parties to their original positions before the contract, so any monies or property exchanged must be returned; remedy for breach of contract
Offer
real estate sales agreement that has been prepared and signed by the prospective buyer and communicated to the seller; may be withdrawn at any time before it has been accepted
Counteroffer
any change by the seller to the terms proposed by the buyer; may be withdrawn at any time before it has been accepted
Acceptance
when the seller agree to the original offer or a later counteroffer exactly as it is made, signs the document and the seller’s representative advises the buyer / buyer’s representative of the seller’s acceptance
Earnest Money
a deposit made when making an offer to purchase real estate; evidence of the buyer’s intention to carry out the terms of the contract in good faith - discourages the buyer from defaulting, compensates the seller for taking the property off the market and covers any expenses the seller might incur if the buyer defaults
Equitable Title
after the buyer and seller have executed a sales contract it is the buyer’s acquired interest in the land; rights vary by state
Contingencies
conditions that must be satisfied before a sales contract is fully enforceable
Escape Clause
permits the seller to continue to market the property until all the buyer’s contingencies have been satisfied or removed
Amendment
a change or modification to the existing content of a contract
Addendum
any provision added to an existing contract that may change or be an addition to the content of the original
Owner Financing
the seller provides credit for all or part of the funds that will allow the buyer to move forward with the transaction
Land Contract
the owner/ seller (vendor) retains legal title; the buyer (vendee) takes possession and gets equitable title to the property
