Unit 10: Sales Contracts and Practices

Question 1

Expression of intent by the offeree to be bound by the terms of the offer; must be in writing if the contract pertains to real property. Acceptance must be communicated to the opposite party to create a contract.

Answer 1

acceptance

Question 2

An offer submitted to the property owner with knowledge that the owner is already under contract; a secondary offer.

Answer 2

backup offer

Question 3

A provision in a contract that requires a certain act to be done or a certain event to occur before the contract becomes binding; a condition of the contract.

Answer 3

contingency

Question 4

(1) a buyer’s investigative process of having experts inspect the property, examine title, and review any leases to determine if the property meets the buyer’s needs and if buyer wishes to proceed with the purchase. During the “due diligence period,” the buyer can terminate the purchase contract for any reason or no reason; (2) a licensee’s affirmative duty to discover and disclose any material facts about the property in question.

Answer 4

due dligence

Question 5

A contract for the sale of real estate financed by the seller whereby the purchase price is paid in periodic installments by the purchaser, who is in possession of the property even though legal title is retained by the seller until a future date, which may not be until final payment. Also called a contract for deed or land contract.

Answer 5

installment land contract

Question 6

A rule of law stating that once written acceptance is placed in control of the mailing service, and out of the control of the offeree, it is considered accepted—not when the acceptance is actually received by the offeror.

Answer 6

mailbox rule

Question 7

A form often used by REALTOR®/licensees and/or North Carolina attorneys to establish a legally binding agreement between the buyer and seller concerning the terms of purchase or transfer of residential real property.

Answer 7

NCBA/NCAR 2-T Offer to Purchase dn Contract (OPC)

Question 8

An agreement between the property owner (optionor) and the possible buyer (optionee), secured by the payment of an option fee, to buy or not buy property within a specific time period at terms that have been negotiated in the underlying contract; also called option to purchase or option contract.

Answer 8

option

Question 9

Buyer in a sales/contract

Answer 9

optionee

Question 10

Seller in a offer/ sale contract

Answer 10

optionor

Question 11

A provision giving a person the first right to purchase real property; most often found in commercial leases.

Answer 11

preemptive right

Question 12

The right of a party to have the first opportunity to purchase or lease real estate for a designated price, if the owner ever decides to sell or lease; if the holder of the right does not opt to purchase, the owner may sell to a third party within a specified time. If sale to third party does not occur, the right is still valid and process restarts.

Answer 12

right of first opportunity to purchase

Question 13

The right of a person to have the first opportunity to either purchase or lease real property, if the owner ever decides to sell or lease; no terms are negotiated.

Answer 13

right of first refusal

Question 14

A codification of commercial law, adopted in most states, that attempts to make uniform all laws relating to commercial transactions, including chattel mortgages and bulk transfers. When chattels are purchased on credit, security interests are created by an instrument known as a security agreement. To give notice of the security interest, a financing statement must be recorded. Article 6 of the code regulates bulk transfers—the sale of a business as a whole, including all fixtures, chattels, and merchandise.

Answer 14

Uniform Electronic Transaction Act (UETA)