Sales Contracts Flashcards
Essentials to a sales contract
Reality of consent, agreement, consideration, legality of purpose, competent parties, necessity of writing
Define reality of consent
The agreement must be free of menace, duress/undue influence, mistake of fact, and misrepresentation of fraud
What is caveat emptor?
Buyer beware; in the seller’s “duty to speak” - puffery
Buyer and seller duties
Seller’s duty to speak - buyer beware
Buyer’s duty to seek - information about the property
What are the first and last steps in a contract?
First- offer
Last- acceptance
What must an offer be?
Definite, complete (location, price, signature), communicated and delivered
Counteroffer- change in price, physical items you want, closing costs
What must an acceptance be?
Done by the one to whom the offer was made, unconditional and identical to the offer, communicated and delivered
What is the consideration to be exchanged in a real estate agreement?
Money; the mutual exchange of promises and actions stated in the agreement
What is included for the necessity of writing in the contract?
Parties and property, financial section, contingency clauses,
miscellaneous clauses
Who has to sign a sales contract?
The seller, buyer, and realtor (all)
What type of property is owner financed the most?
Land
**Examples of contingency clauses
Buyer to obtain “suitable” financing
Buyer to obtain home inspection
Appraisal to meet or exceed sales contract price
Sale is subject to sale of previous home
*An event must occur for contract to close
What actions end a contract?
Discharge (closes/sells), nonperformance, breach
What can happen with a breach of contact?
Liquidate damages- keep the earnest money
Rescission- mutually agree not to do contract
Sue for damages
Sue for specific performance (buyer)- fulfill the contract
When is the deed (title) not recorded when purchased?
In a land sales contract, installment contract, or contract for deed
The title is given when paid off
