Real Estate Sales Contracts & Code of Ethics Flashcards
Reality of consent includes what factors?
- Menace
- Duress/Undue Influence
- Mistake of Fact
- Misrepresentation or fraud
Harrassment
Menace
Someone coercing another person (blackmail)
Duress/Undue influence
Buyer/Seller make an error of fact
Mistake of Fact
Lying
Misrepresentation or fraud
Sellers talk up the house to enhance the appeal of house
Puffery
“buyer beware” – applies to the sale of homes – This is changing over time.
Alabama; NOT in all states
Sellers “Duty to Speak”
Buyer must diligently seek information about the property such as physical condition, title problems and zoning issues
Buyers “Duty to Seek”
Initial step in the contract
offer
An offer must be
Definite
Complete (location, price, addendums, signatures, etc.)
Communicated and Delivered
Final step of the contract (sign-off)
Acceptance
This is only done by the one(s) whom the offer was made.
Unconditional and Identical to the offer
Communicated and Delivered
Acceptance
Counter offer includes
Changes in Price
Physical Items you want
Closing Costs (Common=Seller Pays)
When would we have an illegal contract?
Property Flipping (Know State Laws) Inflating Price
The promises and actions of the consideration must be legal.
Contract and payment
The mutual exchange of promises and actions stated in the agreement
Consideration
What must be exchanged in a real estate contract?
Money
The guiding principal is whether the person understands the nature and consequences of the agreement.
Competent parties
What is generally in a R. E. Sales Contract?
Parties and Property
Financial Section
Contingency Clauses
Miscellaneous Clauses
What actions end a contract?
- Discharge of the contract
- Nonperformance of the contract
- Breach of contract
What is it called when someone breaches a contract and gets to keep earnest money?
Liquidated Damages (Seller)
Mutual decision to not do contract - type of contract breach
Recission
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
Land sales contract or installment contract or contract for deed
Lease payments that go toward your principle
Lease-option contract
Take over the Seller’s loan, occurs when:
Interest Rates are high
Buyer might not be able to qualify for a loan
Loan assumption
Most common type of financing ex. land
Seller financing
Their purpose is to help realtors become successful and profitable in their business.
National Association of Realtors
Education programs
Government advocacy
Research Reports
Conferences and networking
Benfits of NAR
In general, it is “moral right and wrong” or “duty and obligation”.
Ethics
In real estate sales and brokerage, it is the morally correct business conduct.
Ethics in real estate
Which takes precedent, ethical standards or the law?
Law
The NAR has relationships with what 3 types of people?
Clients and Customers
General Public
Other Realtors
Realtors shall avoid misrepresentation, exaggeration or concealment of pertinent facts about the real estate property and its transaction.
Article 2 – Duties to Clients and Customers
Adverse factors have to be _____________ ?
Readily apparent
Realtors must protect their client and promote their interests. Further, they must treat others honestly.
Article 1 – Duties to Clients and Customers
Realtors shall cooperate with other agencies except when cooperation is not in the client’s best interest. What do realtors have to do for other agencies?
Article 3 – Duties to Clients and Customers
- Supposed to put listing in MLS
- Post accurate information about property
sq. ft, bed and baths, etc. - Provide times for other realtor to show the property (Ex. Lockbox)
Realtors shall not present offers or purchase property for themselves, their family or firms without letting the other party know their designation. This must be in writing and provided before any contract is made. Why?
Article 4 – Duties to Clients and Customers; The realtor must be up front so the seller cannot be taken advantage of
Realtors shall not provide professional consulting services or provide values in regards to their own property without disclosing the interest. *Also must be in writing
Article 5 – Duties to Clients and Customers
Realtors must disclose if they are profiting or receiving a rebate or commission on “outside” expenditures related to their client’s transaction. Where could realtors make a profit on each deal?
Article 6 – Duties to Clients and Customers
Examples: Referral fees, home inspector, termite control people, mortgage lender, exterminator, surveyor, appraiser, attorney, lenders
Realtors may not accept compensation from more than one party to the transaction without full consent and disclosure of the clients. Why?
Article 7 – Duties to Clients and Customers
Conflict of interest if the buyer tries to pay you and you don’t tell the seller.
Realtors shall keep escrow and/or trust monies in a special account in an appropriate financial institution. Why can’t they keep it in their bank accounts?
Article 8 – Duties to Clients and Customers
People will spend it
Realtors must write listing agreements, leases and purchase contracts in clear language and must provide a copy to clients upon signing.
Why must they provide a copy? Why buyer and seller
Article 9 – Duties to Clients and Customers
Why buyer and seller?
-So they know nothing has been altered or changed, and you have your copy to prove what was right.
Realtors may not discriminate based upon race, color, religion, sex, handicap, familial status or national origin in their services.
Article 10 – Duties to Clients and Customers
Age is not listed.
You can only discriminate on age and can only discriminate on age in 1 way: retirement community
Realtors shall provide truthful advertising, marketing and communications and their status must be readily apparent.
- Can realtors offer inducements (gifts) for business?
- Can they advertise a different price than the listing agreement?
Article 12 – Duties to the public
- Yes, can’t “go crazy” with it, no BIG kickbacks. Can offer small inducements.
- No, must be obedient to seller.
Can listing brokers claim they sold a property even if a different realtor “made” the sale?
Yes > Where does this matter? Perception thing even if didn’t bring the buyer they were still part of deal so can say they made sale.
Do realtors have to list their brokerage firm in any advertising?
Depends on situation (why?) > magazine, newspaper, FB must show firm you work for.
Can the realtor use differing website domain names than their brokerage company name?
Yes must have brokerage name on it.
Can realtors try to advertise and sell their own property without listing it?
Realtors can do for sale by owner, cannot advertise with brokerage company.
Can a realtor solicit business from a person with a real estate sign in their yard or a person that is listed with the MLS?
Depends (why?) > you can if the other realtor wont tell you when listing expires. You have a right after the listing expires. If they don’t tell you the date then you can, if they don’t tell you the date you cant.
Can a realtor place a sign in the yard of the customer at any time?
No must have permission
Can a buyer’s broker make a seller pay more than one commission
No they split commission in original listing contract.
Does a homeowner have to use a broker on a real estate deal if they have used that broker for multiple transactions in the past?
No if they did a bad job you have the right to use someone else.
Can a realtor send out mass mailings to the public?
YES
In the event of contract or other disputes between member firms, realtors must submit to _______ rather than _____.
arbitration rather than litigation.
