Real Estate Test Unit 11 Flashcards
addendum
any provision added to an existing contract without altering the content of the original. must be signed by all parties
amendment
a change to the existing content of a contract (i.e. if words or provisions are added to or deleted from the body of the contract) must be initialed by all parties
assignment
the transfer in writing of interest in a bond, mortgage, lease, or other instrument
binder
an agreement that may accompany an earnest money deposit for the purchase of real property as evidence of the purchaser’s good faith and intent to complete the transaction
breach of contract
violation of any terms or conditions in a contract without legal excuse; for example, failure to make a payment when it is due
contract
a legally enforceable promise or set of promises that must be performed and for which, if a breach of the promise occurs, the law provides a remedy. a contract may be either unilateral, by which only one party is bound to act, or bilateral, by which all parties to the instrument are legally bound to act as prescribed
consideration
1) that received by the grantor in exchange for the deed 2) something of value that includes a person enter into a contract
contingencies
provisions in a contract that require a certain act to be done or a certain event to occur before the contract becomes binding
counteroffer
a new offer made in response to an offer received. it has the effect of rejecting the original offer, which cannot be accepted thereafter unless revived by the offeror
discharge
the act of terminating a contract or agreement; this may be done when it has been completely performed for by another party’s breach or default
earnest money
money deposited by a buyer under the terms of a contract, to be forfeited if the buyer defaults but to be applied to the purchase price if the sale is closed
enforceable contract
a contract that meets all the elements of a valid contract, including compliance with any applicable statute of frauds or other law that requires it to be in writing and signed by the parties
equitable title
the interest held by a vendee (buyer) under a contract for deed or an installment contract in which title is not immediately transferred; the equitable right to obtain absolute ownership to property when legal title is held in another’s name
estate tax
federal tax on a decedent’s real and personal property
executed contract
a contract in which all parties have fulfilled their promises and thus performed the contract
executory contract
a contract under which something remains to be done by one or more of the parties
legally competent parties
people who are recognized by law as being able to contract with others; those of legal age and sound mind
liquidated damages
an amount predetermined by the parties to a contract as the total compensation to an injured party should the other party breach the contract
mutual assent
requirement that there must be complete agreement between the parties about the purpose and terms of a contract
novation
substituting a new obligation for an old one or substituting new parties to an existing obligation
offer and acceptance
two essential components of a valid contract; a “meeting of the minds.” an offer is a promise made by the offeror, requesting something in exchange for that promise. acceptance is a promise by the offeree to be bound by the exact terms proposed by the offeror
offeror/offeree
the person who makes the offer is the offeror. the person to whom the offer is made is the offeree
option
an agreement to keep open for a set period an offer to sell or purchase property
owner financing
the seller is the primary lender, securing the property by means of a deed, note and mortgage, deed of trust, or contract for deed. in its traditional form, the buyer takes possession of the property and the seller retains legal title until paid in full, but some states have softened this outcome to provide that the buyer is entitled to legal title after a specified period of successful loan payments
purchase money mortgage
a note secured by a mortgage or deed of trust given by a buyer, as borrower, to a seller, as lender, as part of the purchase price of the real estate
revocation
canceling or annulling licensed privileges or rights
specific performance
a legal action to compel a party to carry out the terms of a contract
statute of limitations
the law pertaining to the period of time within which certain actions must be brought to court
“time is of the essence”
a phrase in a contract that requires the performance of a certain act within a stated period of time
unenforceable contract
a contract that has all the elements of a valid contract, yet neither party can sue the other to force performance of it. for example, an unsigned contract is generally unenforceable
unilateral contract
a one-sided contract wherein one party makes a promise so as to induce a second party to do something. the second party is not legally bound to perform; however, if the second party does comply, the first party is obligated to keep the promise
valid contract
a contract that complies with all the essentials of a contract and is binding and enforceable on all parties to it
vendee
a buyer, usually under the terms of a land contract
vendor
a seller, usually under the terms of a land contract
void contract
a contract that has no legal force or effect because it does not meet the essential elements of a contract
voidable contract
a contract that seems to be valid on the surface but may be rejected or disaffirmed by one or both of the parties
