Unit 11 Flashcards
Contract
Voluntary Agreement or promise Between legally competent parties supported by legal consideration to perform some legal act
OFFER, ACCEPTANCE, CONSIDERATION
Express
State the term and show intentions in words, oral or written
contracts for real property must be in writing to be enforceable in court
Implied
Agreement demonstrated by acts and conduct
Bilateral
both parties promise to do something; real estate sales contract
unilateral
one sided; exclusive listing contract; option contract
option contract
where a party retains option to enforce contract at a later date
executed
all parties have fulfilled their promise; at closing sales contract is executed
executory
exists when one or both parties still have an act to perform; sales contract once signed until closed
Elements of Valid Contract
offer and acceptance (mutual assent) - meeting of the minds
any offer or counter may be withdrawn at any time before it has been accepted
Acceptance
if signed, the offer is accepted and contract is formed
Offers
Can be terminated by a counter or rejection
Consideration
give something of legal value, parties agree and no undue influence or fraud
Legal purpose
legal purpose or void
Validity of Contracts
VALID
meets all the essential elements that make it legally sufficient or enforceable
void
no legal effect because it lacks some of essential elements
void
no legal effect because it lacks one or more of the essential elements; was never valid
unenforceable
Can’t sue each other
ex - not in writing
performance
perform certain rights and duties usually within a specified time
performance
perform certain rights and duties usually within a specified time; once fulfilled the contract is terminated
assignment
transfer of rights or duties
ex elderly person assigns handling of contract to someone
novation
substitution of new contract for existing one
ex. writing new contract accepted by all parties
breach of contract
violation of any of the terms or conditions without legal excuse
breach of contract
violation of any of the terms or conditions without legal excuse; or failing to fulfill duties and obligations under the contract
Statute of Limitations
time limit in which rights may be enforced
oral - 5 years
written 10 years
Delivery of signed contract
within 24 hours
Ripening of Contract
when doc is signed by seller, it becomes contract of sale
Earnest $
discharge buyer from defaulting
help seller feel comfortable taking property off the market
cover any expenses the seller might incur if buyer defaults
Earnest $
discourage buyer from defaulting
deposited by next business day into separate account
records keep for min of 5 years
help seller feel comfortable taking property off the market
cover any expenses the seller might incur if buyer defaults
equitable title
interest buyer has in land after contract is signed
destruction of the premises
seller responsible until title transfers and has to return earnest $
liquidated damages
when parties agree on certain amount of $ that will compensate nonbreaching party
Contingencies
make it a voidable contract
- specific actions
- time frame
- who pays any costs involved
Types of Contingencies
- mortgage
- inspection
- property sale
Contingencies - buyer can get out of contract without breaching the contract
make it a voidable contract
- specific actions
- time frame
- who pays any costs involved
Types of Contingencies
- mortgage
- inspection
- property sale
amendment
change to existing contract
addendum
new contract that includes provisions in original contract “by reference”
option
owner gives prospective buyer option to buy at fixed price within a certain period of time
option agreement
is UNILATERAL
pay consideration and can be renewed usually with additional consideration
option agreement
is UNILATERAL
pay consideration and can be renewed usually with additional consideration
Land Contract/Installment contracts/Seller Financing
seller retains legal title, buyer takes possession and equitable title. Make installment payments, taxes, insurance, repairs and upkeep
Land Contract is Void if:
forbids buyer to record contract
provides recording does not constitute notice
any penalty for recording
