Section 11 Flashcards
A verbal contract is referred to as a parol or
oral contract
Contracts that can be upheld in court are
enforceable
Per Statute of Frauds, some contracts are only enforceable if they are in writing and signed which
includes:
Real estate purchase sales agreements
option contracts
deeds
mortgages
lease agreements that are for more than one year
listing agreements that are for longer than one year
any contract that cannot be performed within one year of the date created.
may cause an unenforceable contract to be deemed as valid and enforceable
Partial performance
Per the Statute of Limitations, a legal remedy for a WRITTEN contract can be pursued for __ years
5
Per the Statute of Limitations, a legal remedy for a VERBAL contract can be pursued for __ years
4
legally never existed and is unenforceable
A void contract
a contract that can be upheld by one of the parties but not all of the parties
A voidable contract
Essential elements for a valid contract include:
Competent Parties
Offer and Acceptance
Legal Purpose
Consideration
A minor may enter into a contract, the contract is voidable by:
only the minor
An offer must be made and accepted to form a contract each with a natural meeting of minds and with
no coercion
the promise to perform and fulfill the contract
Consideration
Consideration that can be measured in terms of money
Valuable consideration
That cannot be measured in terms of money such as love and affection.
Good consideration
is not required to form a contract to purchase real estate.
Money (earnest money deposit)
Real estate licensees may draw up from scratch four specific types of contracts:
Listing Contracts
Buyer Broker Contracts
Sale and Purchase Contracts
Option Contracts
the individual who takes an option
The Optionee
the individual who gives an option
The optionor
obligates both parties to perform
bilateral contract
only obligates one party
unilateral contract
A purchase and sale contract is an example of
bilateral contract
An option contract is an example of
unilateral contract
details the contract terms in either a written or verbal agreement
expressed contract
contract created by action
an implied contract
a contract with terms yet to be fulfilled
An executory contract
an contract that has been completed
an executed contract
A contract that must be written in a certain way to be valid by law
formal contract
A promissory note or a mortgage are examples of
formal contract
Contract that may be written using any format
Informal contract
the person making the offer
offeror
The offer is made to the
offeree
Methods of terminating offers include:
Counteroffer Acceptance Rejection Withdrawal Time Death/mental instability Destruction of property.
Methods of terminating contracts include:
Performance not accomplished time specified not met impossibility of performing mutual agreement breach of contract
occurs with the failure of one or both parties to perform
A breach of contract
Remedies for breach of contract include:
specific performance
award of damages
rescission
compensatory damages
when one party demands that the other party perform as stated in the contract.
Specific performance
the retaining of the earnest money deposit in a real estate purchase and sale agreement
Liquidated damages
the court rectifying that the parties be made whole matching how they were before the contract.
Rescission
are damages equal to the amount lost.
Compensatory damages
replaces one party with another in a contract
Assignment of contract
Assignment of mortgage does not release the original party from the obligation or debt of the contract unless _______ occurs.
novation
Legally per Florida Statutes Chapter 475, listing contracts can be
in writing
verbal
implied
Listing agreements must be in writing if for a period longer than __ ____
1 year
Florida Statutes Chapter 475 prescribes that written listing agreements must contain
a definite expiration date
a description of the property
the listing price with acceptable sale terms
the commission structure to be paid to the broker either at the time of listing or upon a sale
A copy of the signed listing agreement must be delivered to the owners
either at the time of listing or within 24 hours
Listing agreements must not contain a provision for
automatic renewal
allows for the seller to list the property with multiple brokerages
open listing
prevents the seller from listing with any other brokerage.
exclusive agency listing
obligates the seller to only list with the one brokerage and to pay the broker no matter who secures the buyer
exclusive right of sale listing agreement
the seller agrees to an amount that the seller will receive after all selling costs
net listing
Should an amount less than agreed upon be paid by the listing broker to the buyer broker, then the ______ would be obligated for the difference.
buyer
The sales contract must contain certain information to be a legal contract:
Date, time and Place of closing Price and Financing Terms of Purchase Quality of Title to be Conveyed Type of Deed Items of Personal Property included Type of Title Prorated Items
Required disclosures for purchase and sale agreements include:
Radon Gas Disclosure Energy Efficiency Disclosure Lead-based Paint Disclosure HOA Disclosure Flood Insurance Disclosure Condo/Coop Disclosures Property Tax Disclosure Building Code Violation Disclosure
Buyers and renters must receive a written disclosure about _____ ___ before or at the time of executing an agreement.
radon gas
Buyers entering into a purchase and sale agreement must receive an ______ ________ prior to signing the agreement.
energy disclosure
Buyers and renters of homes built before 1978 must receive a
lead-based paint disclosure
Buyers are allowed a __ _______ ____ right of rescission upon receipt of an HOA disclosure summary if the disclosure summary was not provided at the time the contract was signed.
3 calendar day
Buyers must receive this before or at the time of signing purchase agreements
Property Tax Disclosure
Designed to warn buyers that the amount of ad valorem taxes may be dramatically different for new buyers as compared to existing homeowners.
property tax disclosure
If one exists, sellers are required to disclose this to buyers as part of the purchase agreement with full details provided prior to closing
building code violation
Upon the transfer of property, the seller is obligated to notify the code enforcement department the name and address of the new owner within __ days of the sale
5
the landmark case that set the legal precedence that material defects must be disclosed by the seller.
Johnson vs Davis
further clarified that it is not only the seller who has the duty to disclose a material defect.
Rayner vs. Wise Realty of Tallahassee
Failure to disclose can lead to charges under
misrepresentation
fraud
breach of contract
consists of both the practice to deceive and by willful device with intent to deprive another of his right, or in some manner to do him an injury.
Fraud
Real Estate licensees who choose to join the National Association of Realtors® are held to a standard of conduct established by the
NAR Code of Ethics
a private organization with brokers from different brokerages agreeing to share listing information and compensation
The multiple listing service, or MLS
states that if a broker (when members of the MLS) introduced the buyer to the property continued to work with the buyer in an uninterrupted manner – that broker deserves to be paid a commission as outlined in the multiple listing service agreement.
Procuring cause
also called a land contract or contract for deed.
installment sales contract
The guilt of fraud is based on four elements:
Misstatement or failed to disclose material fact
The licensee knew or should have known the statement was inaccurate
The party relied on the misstatement
Damage resulted to the party who relied on the statement
the level of criminal violation for fraud depends upon the amount of money involved in the value of the property: $50,000 or more =
a felony of the first-degree;
the level of criminal violation for fraud depends upon the amount of money involved in the value of the property: between $20,000 up to $50,000 =
a felony of the second-degree
the level of criminal violation for fraud depends upon the amount of money involved in the value of the property: less than $20,000 =
a felony of the third-degree.
Real estate licensees may be charged with culpable negligence even if the licensee did not know of a damaging issue - but should have which is punishable as
misdemeanor of the second-degree.
Only someone who has a power of attorney acting as an attorney-in-fact may sign a contract for
another person and never the
real estate licensee
a way for one party to be released from obligation to a contract without actually terminating the contract.
Assignment of contract
Performing duties of an attorney under their direction.
attorney-in-fact
an equally binding agreement between two or more parties
contract
Failing to use the same care a reasonable person would exercise in a given situation
culpable negligence (failure to account for and deliver)
When two parties reach an agreement through mutual assent
meeting of the minds
relieves the first party of legal responsibility
novation
an agreement between a buyer and seller that gives the purchaser the right to buy or sell a particular asset at a later date at an agreed upon price.
option contract
a law which places a time limit on pursuing a legal remedy in relation to wrongful conduct.
statute of limitations
