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Real Estate > Types of Contracts > Flashcards

Types of Contracts Flashcards

1
Q

Two types of contracts:

A

express or implied

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2
Q

express

A

written or stated

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3
Q

implied

A

actions or evidence

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4
Q

Contracts can be:

A

unilateral/bilateral
unilateral - binds only one party….If then contract
bilateral - binds both parties - exchange of promises

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5
Q

Example of unilateral contract

A

Option

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6
Q

Option Contract

A

Option to purchase within a definite time period at a definite price

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7
Q

Option exercised-

A

contract becomes bilateral

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8
Q

Bilateral contract

A

exchange of promises, which bind both parties

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9
Q

Required elements of a contract:

A

Competent Parties - sane, sober consenting adults
Offer Acceptance - mutual agreement or consent w/o qualifications
Legal Purpose - legality of object
In writing - Statute of Frauds
Consideration - something of value (payment or promise) in exchange for what is being offered

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10
Q

Is a contract valid w/o being in writing

A

Yes, but not enforceable

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11
Q

Executed vs executory

A

Executed/fully executed - all terms/conditions have been met & carried out.

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12
Q

Executory

A

contract signed but not carried out

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13
Q

Valid/void

A

Valid -meet the requirements without in writing
Void/invalid - no binding effect on the parties who made it - (documented insane)

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14
Q

Voidable/unenforceable

A

one party has the right to withdraw (a minor, someone who signed under duress, or under the influence of alcohol or drugs, and injured party)

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15
Q

unenforceable

A

absent of statue of frauds

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16
Q

Termination, rescission, & breach of contract -

A

contract can be terminated for any of several reasons, including bankruptcy or foreclosure

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17
Q

mutual rescission

A

parties agree to cancellation, the contract is terminated

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18
Q

default

A

non-performance of a duty under a contract

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19
Q

Liquidated damages

A

money damages set out in the contract

20
Q

Punitive damages

A

punish the defaulting party

21
Q

compensatory damages

A

set to cover the actual injury or economic loss

22
Q

Sellers Options if Buyer Default:

A

keep earnest money
Hold other party to his duties through a suit of performance - ask the court to force the buyer to buy the property
sue for money damages - money damages are both actual/compensatory and punitive
decide on mutual rescission - release the buyer

23
Q

Buyer options if the seller default:

A

mutual rescission and recover the earnest money
hold the other party to his duties through specific performance - ask court to force the seller to sell
Sue for money damages

24
Q

All contracts that relate to the transfer of any interest in real estate must be

A

in writing to be forceable

25
Q

Time is of essence

A

clause in contract that allows each party to hold other to strict performance by the date specified

26
Q

Contract

A

becomes voidable at the option of the other party

27
Q

Offer

A

properly completed form with a price less than, equal to, or more than the seller’s asking price & signed by the buyer

28
Q

Purchase Agreement

A

offer may be called purchase agmt

29
Q

counteroffer

A

actually a rejection of the offer presentation of a new offer

30
Q

Earnest Money

A

isn’t necessary in a sales contract, it is not consideration

31
Q

Real estate sales contract Earnest Money

A

will be the liquidated damages if the buyer defaults

32
Q

contingency

A

a condition that hasn’t been met

33
Q

installment Sale

A

is not the same as an installment contract

34
Q

installment sale

A

is one where the sales price is paid in installments,

35
Q

Principal-Agent relationship

A

is a fiduciary relationship

36
Q

Common Law of Agency

A

governs the relationship between broker and his principal.

37
Q

principal

A

is often referred to as the client

38
Q

as licensees in agency relationships

A

must treat all parties with honesty and fairness

39
Q

Two levels of responsibility

A

Public - honesty, integrity, fairness, disclosure of material facts, and accounting of funds held.

Agent does not support or defend a customer’s interest

Fiduciary responsibility - put the interest of your client first, give full disclosure to your client

40
Q

Ratification

A

occurs when a principal accepts actions that were not authorized by the agent agreement

41
Q

Level of Agency:

A

Universal - represent client in all matters both business and personal

General - gives the agent power to bind his principal in a particular trade or business. (is the power to sign a legally binding agreement in the name of your principal)

Limited power of attorney can be used to create general agency (Owner - Property Manager) (Broker - Sales Agent)

Special or limited agency gives the agent the power to perform only specific acts and no others.

42
Q

Duties of the Parties In an agency relationship

A

CRIP
Compensation - pay the commission when earned
Reimbursement - repay approved expenses
Indemnification - defend the agent when the agent acts on the client’s instruction
Performance - comply with the written agreement

43
Q

An agent’s duties to his principal

A

OLD CAR
Obedience - adhere to given instructions
Loyalty - (considered the agent’s primary or most important duty) place your client’s best interest first
Disclosure - reveal all known facts, give non-legal advice and opinions
Confidentiality - protect the private information of your client
Accounting - handle funds with care. (easiest duty of a dual agent
Reasonable Care - protect the property and legal interest of your client

44
Q

Negligence

A

is carelessness

45
Q

Agency coupled with an interest

A

agent is also the seller or the buyer

46
Q

contract for deed

A

buyer - vendee
seller - vendor

Real Estate (5 decks)

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