Section 11 Vocabulary Flashcards
Verbal Contract
Referred to as a parol or oral contract.
Assignment
Assignment of contract is a way for one party to be released from obligation to a contract without actually terminating the contract.
Attorney-In-Fact
Performing duties of an attorney under their direction.
Bilateral Contract
A bilateral contract obligates both parties to perform per the terms of the contract.
Competent
Competent or contractual capacity of the parties means that the participating parties must have the legal, mental capacity to contract.
Contract
A contract is an equally binding agreement between two or more parties. It is an agreement to do a legal act for legal consideration.
Exclusive-Agency Listing
The only brokerage who is going to get paid is the one broker who signs the agreement. The agreement is written in such a way that it legally prevents the property owner from working with or paying any other brokers.
Exclusive-Right-of-Sale Listing
The exclusive-right-of-sale listing agreement, also known as the exclusive right to sell listing agreement, is the most popular form of listing agreement. This contract is preferred by brokers because it guarantees the broker payment as long as a buyer is secured within the listing timeline.
Liquidated Damages
Most real estate purchase contracts specify how much of the earnest money could be retained by the seller as liquidated damages should the buyer fail to perform in the purchase of the property.
Meeting of the Minds
When two parties reach an agreement through mutual assent.
Net Listing
A net listing is when the seller tells the broker how much he has to net, or take away, from the closing. The broker calculates expected closing costs, adds in for his commission, and this sets a price to market the property for sale.
Novation
The novation relieves the first party of legal responsibility. This is particularly important when the contract that is being assigned is a mortgage. Without the novation agreement, the original borrower is still responsible if the person who took over the mortgage defaults. With the novation agreement, the lender agrees to no longer hold the original borrower responsible.
Open Listing
An open listing means that the seller has listed with multiple brokerages. The first brokerage to bring an acceptable contract earns a commission. If the seller finds a buyer first, no commission is paid to any brokerage. An open listing is actually a unilateral contract. If a broker secures a buyer, the owner is obligated to pay the broker.
Option Contract
An option contract is an agreement between a buyer and seller that gives the purchaser of the option the right to buy or sell a particular asset, the real estate property, at a later date at an agreed upon price.
Statute of Frauds
Florida Statute of Frauds provides that certain types of contracts are not valid and cannot be enforced unless they are in writing and signed by the party against whom enforcement is sought. The purpose of the statute of frauds is to prevent injury from fraudulent conduct.
