Unit 11- Real Estate Contract Flashcards
A contract
An offer and acceptance, bound by consideration(money), between legally competent parties and for legal purposes
Unilateral contract
One person bound to act
Optionor is bound to act
Person giving bound to act
Executed
Commission paid
Done contract
Executory
Waiting for the contact to be executed
Offer and acceptances
Agreement on purpose and term
Must be in writing due to statute of frauds
No deviation from original contract
Statute of frauds
Must be in writing
Statute of limitations
Time restrictions
Reality of consent
Awareness of knowing what your doing
Voidable
Voidable
Could go either way
Seems valid, but upon further investigation, someting wrong
16year old signing , not of legal age
Mental illness/age/fraud
Legally competent parties
Must be of legal age
Of right mind
Void
Contract not valid
Lacks 4 points to make it valid
Valid contract
Offer and acceptance
Bound by consideration.
Competent parties
Legal
Unenforceable
Not in writing
Discharge of contracts
Performence of contract- time is of the Essence - not making an acceptance in a matter of time
Assignment- new person to take over. Transfer rights to a third party
Breach of contract
Novation- sub new contract for old contract
Assignment
- new person to take over.
Transfer rights to a third party
Sublease
Substitute people
All contract are assignable by law unless noted
Novation
- sub new contract for old contract
Cancellation
Canceled contract
Terminates contract with out return to original position
Rescission
Returns to original position
Ernest money returned
Land contract syn
Contract for deed / installment contract/ owner financing/ rent to own
Contract forms
RE agents don’t practice law
Preprinted forms
Sales contract
Contains the offer between buyer and seller
Sakes price and terms Legal description Title evidence Title condition Statement of terms agreed on Contingencies
Destruction of premises
WV law says seller responsible for any loss before closing
Executory stage
Liquidated damages
Ernest money serves liquidated damages. Decide not to buy house for no good reason. Must be stated
Proper sale contingency
Protect buyer from owning two house
I’ll buy this house when mine sells
Escape clause
Continue to market property until contingency are done
Can continue to take offers
Specific performance
Buyer or seller can sue to enforce term if one party backs out
Consumer financial protection
Lender must
Show billing info writing Give 2 month warning for ARM rate change Promptly credit borrowed payment Respond quickly about payoffs Not charge for insurance that we don’t need Resolve complaints in 30-45 days Customer service Trouble making payment help Allow review of loan workout request
Homeowner insurance
Basic and broad forms
Broad covers more and is more expensive
Basic - fire and lighting Glass breakage Windstorm and hail Explosion Riot Airplane Vehicle Smoke Vandalism Theft
Broad Snow damage Tree Collapse of building Hot water system Overflow of water Freezing of plumbing Injury to electronics Egg
Co insurance clause
Maintain 80% of replacement cost of dwelling
Cover 80% of home
Flood insurance
Flood prone area need insurance. Federal
FEMA
Effective 30 days after purchase
Not covered: Pools Animals Underground systems Any unnatural floods
Rent or buy
Housing affordability and current mortgage insurance rates
PITI
Principal
Insurance
Taxes
Interest
Debt to income
28% with no expenses
36% with expenses
Hypothecation
Mortgage secured by real property
Deed of trust
CLUE
Comprehensive loss underwriting exchange
Insurance company data base in claims
