UNIT 11 REAL ESTATE CONTRACTS

Question 1

AMENDMENT

Answer 1

A change to the existing content of a contract. Must be initialed by all parties.

Question 2

ASSIGNMENT

Answer 2

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

Question 3

BIALATERAL CONTRACT

Answer 3

A bilateral contract is a contract in which both parties exchange promises to perform.

Question 4

BREACH OF CONTRACT

Answer 4

Violation of any terms or conditions in a contract without legal excuse’ for example, failure to make a payment when it is due.

Question 5

CONSIDERATION

Answer 5

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

Question 6

CONTINGENCIES

Answer 6

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

Question 7

CONTRACT

Answer 7

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.

Question 8

COUNTEROFFER

Answer 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.

Question 9

DISCLOSE

Answer 9

Relevant information or facts that re known or should have been known.

Question 10

EARNEST MONEY

Answer 10

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.

Question 11

ENFORCEABLE CONTRACT

Answer 11

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.

Question 12

EXECUTED CONTRACT

Answer 12

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

Question 13

EXECUTORY CONTRACT

Answer 13

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

Question 14

EXPRESS CONTRACT

Answer 14

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

Question 15

IMPLIED CONTRACT

Answer 15

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

Question 16

LAND CONTRACT

Answer 16

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.

Question 17

LIQUIDATED DAMAGES

Answer 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.

Question 18

NOVATION

Answer 18

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

Question 19

OFFER AND ACCEPTANCE

Answer 19

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.

Question 20

OPTION

Answer 20

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

Question 21

OWNER FINANCING

Answer 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. 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.

Question 22

PURCHASE MONEY MORTGAGE

Answer 22

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.

Question 23

RECISSION

Answer 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.

Question 24

STATUTE OF FRAUDS

Answer 24

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.

Question 25

“TIME IS OF THE ESSENCE”

Answer 25

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

Question 26

UNENFORCEABLE CONTRACT

Answer 26

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.

Question 27

UNILATERAL CONTRACT

Answer 27

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.

Question 28

VALID CONTRACT

Answer 28

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

Question 29

VOIDABLE CONTRACT

Answer 29

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