UNIT 11 REAL ESTATE CONTRACTS Flashcards
AMENDMENT
A change to the existing content of a contract. Must be initialed by all parties.
ASSIGNMENT
The transfer in writing of interest in a bond, mortgage, lease, or other instrument.
BIALATERAL CONTRACT
A bilateral contract is a contract in which both parties exchange promises to perform.
BREACH OF CONTRACT
Violation of any terms or conditions in a contract without legal excuse’ for example, failure to make a payment when it is due.
CONSIDERATION
(1) Something of value that induces a person to enter into a contract (2) received by the grantor in exchange for the deed.
CONTINGENCIES
Provisions in a contract that require a certain act to be done or a certain event to occur before the contract becomes binding.
CONTRACT
A legally enforceable promise or set of promises that must be performed and for which, if a break of the promise occurs, the law provides a remedy. May be unilateral or bilateral.
COUNTEROFFER
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.
DISCLOSE
Relevant information or facts that re known or should have been known.
EARNEST MONEY
Money deposited by a buyer under the terms of a contract, to be forfeited if the buyer defaults bu to be applied to the purchase price if the sale is closed.
ENFORCEABLE CONTRACT
A contract that meets all the elements of a valid contract, including compliance with any applicable statute of frauds or other law that requires it to be in writing and signed by parties.
EXECUTED CONTRACT
A contract under which all parties have fulfilled their promises and thus performed the contract.
EXECUTORY CONTRACT
A contract under which something remains to be done by one or more of the parties.
EXPRESS CONTRACT
An oral or written contract in which the parties state the contract’s terms and express their intentions in words.
IMPLIED CONTRACT
A contract under which the agreement of the parties is demonstrated by their acts and conduct.
LAND CONTRACT
Land contracts are seller-financed alternatives to traditional mortgage financing. They’re typically used when buyers are unwilling to get a mortgage through a bank or other mortgage originator.
LIQUIDATED DAMAGES
An amount predetermined by the parties to a contract as the total compensation to an injured party should the other party breach the contract.
NOVATION
Substituting a new obligation for an old one or substituting new parties to an existing obligation.
OFFER AND ACCEPTANCE
Two essential components of a valid contract; a “meeting of the minds.” An offer is a promise made by the offeror, requesting something in exchange for that promise. Acceptance is a promise by the offeree to be bound by the exact terms proposed by the offeror.
OPTION
An agreement to keep open for a set period an offer to sell or purchase property.
OWNER FINANCING
The seller is the primary lender, securing the property by means of a deed, note and mortgage, deed of trust, or contract for deed. In its traditional form, the buyer takes possession of the property and the seller retains legal title until paid in full, but some states have softened this outcome to provide that the buyer is entitled to legal title after a specified period of successful loan payments.
PURCHASE MONEY MORTGAGE
A note secured by a mortgage or deed of trust given by a buyer to a seller as part of the purchase price of the real estate; can also refer to any loan secured by the property it finances.
RECISSION
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.
STATUTE OF FRAUDS
That part of a state law that requires certain instruments, such as deeds, real estate sales contracts, and certain leases, to be in writing to be legally enforceable.
“TIME IS OF THE ESSENCE”
A phrase in a contract that requires the performance of a certain act within a stated period of time.
UNENFORCEABLE CONTRACT
A contract that has all the elements of a valid contract, yet neither party can sue the other to force performance of it. EX./ unsigned contract.
UNILATERAL CONTRACT
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.
VALID CONTRACT
A contract that complies with all the essentials of a contract and is binding and enforceable on all parties to it.
VOIDABLE CONTRACT
A contract that seems to be valid on the surface but may be rejected or disaffirmed by one or both of the parties.
