The Contract of Sales and Leases Flashcards
In New York State, an individual must be at least __ _____ __ ___ to enter into a contract.
18 years of age.
Minors (less than 18 years old) CANNOT enter into a contract. The contract is voidable if signed by a minor.
In New York State, an individual must be ________ ___ ___________ capable to enter into a contract.
mentally and emotionally.
Generally, the purchaser signs the contract of sale first because…
the purchaser is the party making the offer.
The purchaser is stating the purchase price he/she wants to offer and the terms.
A bi-lateral contract…
includes two parties.
Most contracts in real estate are bi-lateral.
A few common examples of bi-lateral contracts include …
listing contracts, sales contracts, buyer representation agreements and independent contractor agreements.
A uni-lateral contract is an “open contract” where one party promises to pay another party if the other party performs a specific action.
An open listing contract is an example of a uni-lateral contract.
one party promises to pay another party if the other party performs a specific action.
An open listing contract is an example of a…
uni-lateral contract.
The down payment is the…
portion of a property’s purchase price that is paid in cash and is not part of the mortgage loan.
The down payment must be placed in a…
a separate escrow account.
The following people generally hold the deposit/down payment:
- Listing agent (seller’s broker)
- Seller’s attorney
Earnest money deposit is a deposit that a…
buyer makes at the time of submitting an offer to demonstrate the true intent of the purchase; also referred to as a binder, good faith deposit, and escrow deposit.
An earnest money deposit is usually binding.
Proration is the…
division of certain settlement costs between buyer and seller.
Prorated settlement costs can include…
real estate taxes, fuel, a survey, water and sewer charges, rent, and security deposits.
Proration ensures fair apportionment of expenses between buyer and seller.
A contract may be discharged or terminated in the case of: Agreement of the parties:
If both parties agree to terminate the contract, a release of contract can be performed.
Novation is is the act of either:
1) replacing an obligation to perform with a new obligation; or
2) adding an obligation to perform; or
3) replacing a party to an agreement with a new party
A contract may be discharged or terminated when the duties of the contract are performed by both parties, ____ ___________ is achieved.
full performance.
This is the most common and desirable way to discharge a contract
If there is a change in the law which makes full performance of the contract illegal, the contract may be discharged due to
impossibility of performance.
In another example, if a property is destroyed by fire, the listing contract between the owner and broker may be discharged due to ‘impossibility of performance’.
A contract may be discharged or terminated in the case of: Operation of law: This includes
the statue of limitations.
Specific performance: This is an order from the court requiring…
specific performance. This means that the contract is to be completed as the parties originally agreed.
Compensatory damages equal the…
amount of money actually lost due to the breach of contract.
Liquidated damages are…
damages agreed to be paid in the contract.
Reformation is a
doctrine that permits the court to rewrite a contract.
The right of first refusal may be added to a sales contract or a lease. It allows the holder to…
purchase (or lease) a property if the seller decides to sell or another purchaser (or lessee) comes along. The holder of the right of first refusal can match the offer from the third party or forfeit their claim to purchase or lease the property.
The ‘use provisions’ is a clause in a lease that…
requires a tenant reasonably use the space for its intended use.
For example, a tenant cannot continuously throw loud, late-night parties, which disturb the other tenants in the building.
In an assignment, the assignee is responsible for…
paying the rent directly to the landlord. The assignee takes responsibility of the lease.
In a sublease, the original tenant is…
still responsible to the landlord for the lease payments under the lease contract.
In a sublease arrangement, the sub-lessee pays the rent to…
the tenant (lessee) and the tenant pays the landlord.
Eviction is a legal proceeding by a landlord to…
recover possession of real property.
Actual eviction occurs when…
the landlord removes the tenant from the property without aid or control of the court system.
Actual eviction is wrongful use of self-help.
Constructive Eviction occurs when…
the tenant is prevented from the quiet enjoyment of the property.
In other words, the landlord deliberately renders the property unfit or unsuitable to live in.
An example may be refusing to repair a broken toilet or bathtub.
If a rental has become unlivable, tenants can use the legal concept of constructive eviction to break their lease without penalties
