Unit 11 Key Terms

Question 1

A change to the existing content of a contract (if words of provisions are added or deleted from the body of the contract). Must be initialed by all parties.

Answer 1

Amendment

Question 2

The transfer in writing of interest in a bond, mortgage, lease or other instrument.

Answer 2

Assignment

Question 3

A contract by which all parties to the instrument are legally bound to act as prescribed.

Answer 3

Bilateral contract

Question 4

Violation of any terms or conditions in a contract without legal excuse; ie failure to make a payment when due.

Answer 4

Breach of contract

Question 5

1) That received by the grantor in exchange for the deed. 2) Something of value that induces a person to enter into a contract.

Answer 5

Consideration

Question 6

Provisions in a contract that require a certain act to be done or a certain event to occur before the contract becomes binding.

Answer 6

Contingencies

Question 7

A legally enforceable promise or set of promises that must be performed and for which, if a breach of the promise occurs, the law provides a remedy.

Answer 7

Contract

Question 8

A new offer made in response to an offer received. It has the effect of rejecting the original offer, which cannot be accepted thereafter unless revived by the offeror.

Answer 8

Counteroffer

Question 9

Relevant information of facts that are known or should have been known.

Answer 9

Disclosure

Question 10

Money deposited by the buyer under the terms of the contract, to be forfeited if the buyer defaults but to be applied to the purchase price if the sale is closed.

Answer 10

Earnest money

Question 11

A contract that meets all the elements of a valid contract, including compliance with any applicable statue of frauds, or other law that requires it to be in writing and signed by the parties.

Answer 11

Enforceable contract

Question 12

A contract in which all parties have fulfilled their promises and thus performed the contract.

Answer 12

Executed contract

Question 13

A contract under which something remains to be done by one or more of the parties.

Answer 13

Executory contract

Question 14

An oral or written contract in which the parties state the contracts terms and express their intentions in words.

Answer 14

Express contract

Question 15

A contract under which the agreement of the parties is demonstrated by their acts and conduct.

Answer 15

Implied contract

Question 16

A real estate sale can be made under a _____ contract. Under this, the owner/seller (vendor) retains legal title.

Answer 16

Land contract

Question 17

An amount predetermined by the parties to a contract as the total compensation to an injured party should the other party breach the contract.

Answer 17

Liquidated damages

Question 18

Substituting a new obligation for an old one or substituting new parties to an existing obligation.

Answer 18

Novation

Question 19

Two essential components to a valid contract; a “meeting of the minds.” An ____ is a promise made by the offeror, requesting something in exchange for that promise. ___ is a promise by the offeree to be bound by the exact terms proposed by the offeror.

Offeror- makes the offer
Offeree- the person to whom the offer is made

Answer 19

Offer and accptance

Question 20

An agreement to keep open for a set period an offer to sell or purchase property.

Answer 20

Option

Question 21

The seller is the primary lender, securing the property by means of a deed, note and mortgage, deed of trust, or contract for deed. The buyer takes possession of the property and the seller retains legal title until paid in full, but some states have allowed the buyer to legal title after a specified period of successful loan payments.

Answer 21

Owner financing

Question 22

A note secured by a mortgage or deed of trust given by a buyer, as borrower, to a seller, as lender, as part of the purchase price of the real estate.

Answer 22

Purchase money mortgage

Question 23

The practice of one party cancelling or terminating a contract, which has the effect of returning the parties to their original positions before the contract was made.

Answer 23

Rescission

Question 24

The law pertaining to the period of time within which certain actions must be brought to court.

Answer 24

Statue of limitations

Question 25

If a seller breaches a real estate sales contract, they buyer may sue for ______ unless the contracts specifically states otherwise. The buyer asks the court to force the seller to go through with the sale and transfer the property as previously agreed.

Answer 25

Suit for specific performance

Question 26

A phrase in a contract that requires the performance of certain act within a stated period of time.

Answer 26

“Time is of the essence”

Question 27

A contract that has all the elements of a valid contract, yet neither party can sue the other to force performance on it. ie an unsigned contract is generally unenforceable.

Answer 27

Unenforceable contract

Question 28

A one-sided contract wherein one party makes a promise so as to induce a second party to do something, The second party is not legally bound to perform; however, if the second party does comply, the first party is obligated to keep the promise.

Answer 28

Unilateral contract

Question 29

A contract that complies with all the essentials of a contract and is binding and enforceable on all parties to it.

Answer 29

Valid contract

Question 30

A contract that has no legal force or effect because it does not meet the essential elements of a contract.

Answer 30

Void contract

Question 31

A contract that seems to be valid on the surface but may be rejected or disaffirmed by one or both of the parties.

Answer 31

Voidable contract