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FI 534 Real Estate > Real Estate Sales Contract > Flashcards

Real Estate Sales Contract Flashcards

1
Q

Reality of consent in a contracts includes that the agreement in the contract must be free of the following factors:

A
  1. Menace - Harrassment
  2. Duress/Undue Influence - some one coercing another person; blackmail.
  3. Mistake of fact - Buyer or seller make a mistake of fact
  4. Misrepresentation or Fraud - Lying
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2
Q

“Buyer beware” – applies to the sale of homes

  • This is changing over time.
  • In Alabama; NOT in all states
A

Caveat emptor

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3
Q

Sellers talk up the house to enhance the appeal of house

A

Puffery

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4
Q

Initial step in the contract

A

Offer

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5
Q

What must an offer be?

A
  1. Definite
  2. Complete (location, price, addendums, signatures, etc.)
  3. Communicated and Delivered
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6
Q

Final step of the Contract (Sign-Off)

A

Acceptance

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7
Q

What must an acceptance be?

A
  1. Only done by the one(s) whom the offer was made.
  2. Unconditional and Identical to the offer
  3. Communicated and Delivered
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8
Q

A counter offer includes

A
  1. Changes in Price
  2. Physical Items you want
  3. Closing Costs (Common=Seller Pays)
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9
Q

When would we have an illegal contract?

A
  1. Property Flipping

2. Inflating Price

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10
Q

The promises and actions of the consideration must be legal.

A

Contract and Payment

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11
Q

The mutual exchange of promises and actions stated in the agreement

A

Consideration

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12
Q

What must be exchanged in a real estate contract?

A

Money

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13
Q

The guiding principal is whether the person understands the nature and consequences of the agreement.

A

Competent Parties

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14
Q

What is generally in a R. E. Sales Contract?

A
  • Parties and Property
  • Financial Section
  • Contingency Clauses
  • Miscellaneous Clauses
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15
Q

Deposit to hold the contract (agreed-upon amount)

A

Earnest Money

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16
Q

What are the financial assets ivolved in a real estate deal?

A 
Earnest Money
New Loan
Loan Assumption 
Seller Financing
Cash at Closing
17
Q

Take over the Seller’s loan, occurs when:

  • Interest Rates are high
  • Buyer might not be able to qualify for a loan
A

Loan Assumption

18
Q

Most common type of seller financing?

A

Land

19
Q

What actions end a contract?

A

Discharge of the Contract
Nonperformance of the Contract
Breach of Contract

20
Q

What can one do if a buyer or a seller breaches a contract?

A
  1. Liquidated Damages (Seller)—keep earnest money
  2. Rescission—mutual decision to not do contract
  3. Sue for damages—legal fees may not be justified
  4. Sue for specific performance (Buyer)
21
Q

Mutual decision to not do contract

A

Recission

22
Q

Lease payments that go toward your principle

A

Lease option contract

23
Q

Trade Property for Property

  • 1031 Exchange—Like-Kind Exchange
  • Deferring Capital Gains taxes
A

Exchange agreements

24
Q

A contract where you do not record the deed when the buyer purchases the property; Buyer makes payments and gets title at the end when full payment made

A

Land sales contract or installment contract or contract for deed

25
Q
  • Land sales contract or installment contract or contract for deed
  • Lease-option contract
  • Exchange agreements
A

Other types of Contracts

26
Q

Buyer must diligently seek information about the property such as physical condition, title problems and zoning issues

A

Buyer’s “Duty to Seek”

27
Q

Caveat emptor – “buyer beware” – applies to the sale of homes.

A

Seller’s “Duty to Speak”

28
Q

The following are all examples of:

  1. Buyer to obtain “suitable” financing
  2. Buyer to obtain home inspection w/ possible repairs to be negotiated $1,000 toward repairs
  3. Appraisal to meet or exceed sales contract price
  4. Sale is subject to the sale of previous home
A

Contingency Clauses

29
Q

Contract essentials include:

A 
Reality of Consent
Agreement
Consideration
Legality of Purpose
Sales Contract
Competent Parties
Necessity of Writing

FI 534 Real Estate (8 decks)

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