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Real Estate > Real Estate Contracts > Flashcards

Real Estate Contracts Flashcards

1
Q

An agreement between 2 or more parties in which 1 party will receive consideration & the other will either perform an act or refrain from performing an act

A

Contract

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2
Q

Legally binding agreements to do or not to do something

A

Contracts

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3
Q

What are the 2 types of agreements?

A

1.) Performance
2.) Forbearance

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4
Q

Requires the contracting parties either to perform certain actions or to uphold certain contractual promises

A

Performance

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5
Q

Requires 1 or more of the contracting parties to refrain from actions they are otherwise legally entitled to perform

A

Forbearance

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6
Q

Drafts & edits the promulgated contract forms

A

13-member Broker-Lawyer Committee

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7
Q

The number of forms promulgated by TREC is…

A

6

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8
Q

What are the 6 contracts promulgated by TREC?

A

1.) One to Four Family Residential Contract (Resale)
2.) Unimproved Property Contract
3.) New Home Contract (Incomplete Contract)
4.) Farm & Ranch Contract
5.) New Home Contract (Completed Construction)
6.) Residential Condominium Contract

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9
Q

TREC promulgated forms aren’t required for:

A

An agent:
1.) buying/selling property on their own behalf
2.) using a form created by the property owner
3.) representing the seller of a sports stadium

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10
Q

If the broker receives a deposit/earnest money, the broker must deposit the money by…

A

close of business on 2nd working day after execution of contract.

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11
Q

Contrast in which the buyer can lease a property for a period of time & then have an option to buy the property at the end of the lease

A

Lease w/option to buy

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12
Q

Someone may make an agreement w/an owner in which they would have the opportunity to buy the property before any other buyer’s offers are considered

A

Right of first refusal

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13
Q

Documents containing additional terms, info, or obligations that are attached to a contract

A

Addenda

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14
Q

A legal concept that states that the court can only consider what appears w/in the 4 corners of the documents

A

4 Corners doctrine

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15
Q

Addenda may be added up until…

A

the sale is consummated

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16
Q

Changes/makes modifications to an already agreed upon contract

A

Amendment

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17
Q

An agreement in which both parties make a promise to perform the actions specified in the contract

A

Bilateral contracts

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18
Q

A contract in which 1 party makes a promise in exchange for a reciprocal act on the part of the 2nd party

A

Unilateral contracts

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19
Q

There are 2 parties but 1 promise

A

Unilateral contracts

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20
Q

Once 2nd party accepts & activates their agreement to the terms of the contract, the 1st party is BOUND & obligated to fulfill their side of the contract

A

Unilateral contracts

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21
Q

B/c one party is obligated from the start while the other party has the option to accept the terms of the agreement, this 1-sided contract is said to lack mutuality.

A

Unilateral contract

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22
Q

Reward offers, contests, & commissions are common types of…

A

unilateral contracts.

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23
Q

A contract in which all terms have been fulfilled by all parties

A

Executed contract

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24
Q

A contract that hasn’t been fully performed

A

Executory contract

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25
Q

What 2 elements must be present for a contract to be considered executory?

A

1.) A binding contract on multiple parties
2.) 1 or more of the parties hasn’t performed their contractual duties

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26
Q

What are the 5 Essential Elements of a Valid Contract?

A

1.) Mutual Assent
2.) Legally competent parties
3.) Consideration
4.) Lawful Objective
5.) Adherence to the statute of frauds

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27
Q

Requires the contracting parties to agree to all of the contract’s provisions & conditions

A

Mutual Assent

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28
Q

Mutual Assent requires:

A
  • An offer & acceptance
  • The absence of fraud, misrepresentation, or duress
  • The absence of mistakes
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29
Q

An offer remains open until it is:

A
  • Accepted
  • Rejected
  • Retracted prior to acceptance
  • Countered
  • Expired
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30
Q

What are the 3 types of acceptance?

A

1.) Express Acceptance
2.) Implied Acceptance
3.) conditional Acceptance

31
Q

A candid & unqualified outward manifestation of an agreement

A

Express Acceptance

32
Q
  • When the parties bound by the contact act in a manner implying acceptance of the offer
  • When all parties involved act all the contract’s obligations instead of openly stating an agreement/acceptance
A

Implied Acceptance

33
Q
  • Requires a specific condition to be satisfied or an event to take place before acceptance of the contract
  • Can be viewed as a counteroffer
A

Conditional Response

34
Q

After what point in the negotiation of the contract is it no longer possible for a buyer to rescind the offer?

A

When the buyer or buyer’s agent receives the notice of acceptance

35
Q

Attempts to find mutually acceptable contract terms

A

Counteroffers

36
Q

Considered a new offer

A

Counteroffers

37
Q

Legal competency implies:

A

1.) Individuals involved are 18 years or older or have parental consent
2.) Individuals don’t have impaired mental capacity

38
Q

No one may obtain anything of value w/o providing some form of compensation

A

Consideration

39
Q

A contract cannot explicitly or implicitly call for any illegal activities

A

Lawful Objective

40
Q

A valid contract must adhere to the_____ __ _____.

A

statute of frauds

41
Q

A law that requires certain types of contracts to be in writing & to be signed by all parties who are bound by the contract

A

Statute of frauds

42
Q

In order for a real estate contract to be valid it must be signed by the seller.

A

Adherence to the Statue of Frauds

43
Q

Requires all contracts related to the conveyance of real estate to be in writing in order to be enforceable, except for leases of 1 year of less

A

Statue of Frauds

44
Q

Means “word of mouth”

A

Parol

45
Q

Holds that when important details of an agreement discussed between 2 or more parties fail to make it into the written contract, the written, signed contract is given authority over any parol evidence\

A

Parol Evidence Rule

46
Q

If 1 or more of the contracting parties either partially or completely fails to fulfill contractual obligations

A

Breach of Contract

47
Q

The terms & conditions of the contract are either canceled or satisfied

A

Discharge of Contract

48
Q

Occurs when 1 or more of the contracting parties perform only a portion of the agreed-upon contractual duties

A

Partial Performance

49
Q

Occurs when a party performs the majority of a contract’s requirements but doesn’t perform according to the contract’s stipulations

A

Substantial Performance

50
Q

Permissable when that performance would require 1 or all parties involved to act illegally

A

Non-Performance Due to Legal Issues

51
Q

Occurs when all parties mutually agree to cancel the contract

A

Mutual Agreement

52
Q

Occurs when a contract isn’t legally valid or becomes unenforceable due to existing legal laws or principals like the statute of frauds, statute of limitations, wetlands designation, eminent domain, or other legal doctrines

A

Operation of Law

53
Q

Occurs when terms/conditions of a contract are violated

A

Breach of Contract

54
Q

When 1 party violates a contract’s terms, they…

A

assume the consequences of default & the who honored the contractual obligations has the right to seek compensation for any damages.

55
Q

What 4 options does the non-breaching party have as potential consequences for the breaching party?

A

1.) Forfeiture
2.) Rescission
3.) Sue for Specific Performance
4.) Sue for Compensatory Damages

56
Q

No contractual relationship - seller is entitled to keep the earnest money & other payments collected

A

Forfeiture

57
Q

Non-breaching party can cancel the contract entirely & seller must return all payments received from the buyer

A

Rescission

58
Q
  • Results in court order requiring all parties to carry out promises stipulated in a contract
  • Court enforcement of original contract
A

Sue for Specific Performance

59
Q
  • Non-breaching party can take breaching party to court to recover damages suffered due to breach
  • Forces breaching party to compensate non-breaching party
A

Sue for Compensatory Damages

60
Q

When all parties mutually agree to cancel the contract

A

Mutual Agreement

61
Q

A party cannot be compelled to perform an illegal act to meet the terms of the contract

A

Non-performance due to legal issues

62
Q

Discharge can be for any reason if all parties agree

A

Mutual Agreement

63
Q

The party injured by the other party’s failure to fully perform can seek legal restitution or discharge the contract

A

Partial Performance

64
Q

When a party performs the majority of the contract’s requirements, but not all

A

Substantial Performance

65
Q

When at least one party performs only a portion of the agreed-upon contractual duties

A

Partial Performance

66
Q

Permissible discharge of a contract to avoid the violation of law

A

Non-performance due to legal issues

67
Q

The under-performing party has usually fulfilled enough of the contract’s obligations to gain legal enforcement of the contract

A

Substantial Performance

68
Q

Stipulations/conditions that must be satisfied before contract terms can be performed

A

Contingencies

69
Q

Most real estate contracts will have at least these 2 common contingencies

A

1.) Financing contingency
2.) Inspection contingency

70
Q

Makes the purchase contract conditional upon the buyer’s ability to obtain financing

A

Financing contingency

71
Q

Makes the purchase contract conditional upon the outcome of the home inspection report or appraisal report

A

Inspection contingency

72
Q

When 1 or more of the parties involved in a contract wants to withdraw from it w/o actually terminating the contract the contracting parties may have the option of transferring their rights & duties to a 3rd party

A

Assignment

73
Q
  • Person/entity that puts the property under contract isn’t the same one that will close
  • Contract could be assigned to a new buyer w/a fee paid to the original buyer
A

Wholesaling

74
Q
  • The act of replacing an existing contract w/a new modified one w/different obligations
  • Legally understood to be the exchange of 1 contract for another
A

Novation

Real Estate (8 decks)

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