Unit 11 Real Estate Contracts Flashcards
What is a valid contract?
A voluntary agreement based on the consent of the parties to the agreement. An offer by one party (offeror) is accepted by other (offeree). Contract must be supported by consideration, and have a legal act as its objective, parties must be legal age and competent.
What must a contract have?
1-Voluntary 2-An agreement or a promise. 3-Legally competent parties 4-Legal consideration 5-Legal act
What is a bilateral contract?
Requires both parties promise to do something, one promise is given in exchange for another.
A promise for a promise.
What is a unilateral contract?
One party makes a promise to entice a second party to do something.
A promise for an act.
What is an executed contract?
Contract where all sides have fulfilled their promises.
What is an executory contract?
Exists when one or both parties still have an act to perform. Contract is executory until closing.
What are the basic elements for a contract to be valid?
1-Offer and acceptance 2-Consideration 3-Legally competent parties 4-Consent 5-Legal purpose
What can contracts be described as?
Valid, Void, Voidable, Unenforcable
What is a valid contract?
Meets all the essential elements that make it legally sufficient or enforceable, and is binding.
What is a void contract?
No legal force or effect because it lacks some or all the essential elements.
What is a voidable contract?
A contract that can be rescinded by one or both parties based on some legal principle.
What is an unenforceable contract?
A contract were neither party can force the performance of the other.
What does “time is of the essence” mean?
A clause in a contract that requires performance by a specific time, failing to do os would cause the party to be in breach.
What right does assignment provide?
The right to transfer a contract.
What is novation?
The substitution of an existing contract for a new one.
What is a breach of contract?
A violation of any of the terms of the agreement.
What does specific performance mean?
The buyer is suing the seller to completed the transaction.
What is the statute of limitations?
A limitation in time to when a party can bring suit to enforce their rights.
What does rescission mean?
A cancellation of the contract which terminates the contract as if it never happened.
What are reasons for the discharge of a contract?
Performance Partial Performance Substantial performance Impossibility of performance Assignment Novation Breach Statute of limitations. Mutual Agreement Operation of the law. Rescission.
When can a licensee complete a contract?
When contracts are preprinted.
What are the types of possible standard forms?
Real Estate Sales Contract
Land Contract
Contingencies
Escrow Agreement
What is a contingency?
Additional conditions that must be satisfied before a sales contract is fully enforceable.
What is an amendment?
A change or modification to the existing content of a contract.
What is an addendum?
Any provision added to the existing contract without altering the content of the original.
What is an option?
The right to buy or lease the owners property at a fixed price within a certain period of time.
1-Optionee pays a fee for the option right.
2-The optionee has to decide to either exercise the option before it expires.
What is a land contract?
Aka Contract for Deed, a bond for title, or installment contract, or a land sales contract, or articles of agreement for a warranty deed.
Buyer takes possession and gets equitable title. They make payments on the property and pays taxes, insurance, and repairs and upkeep.
What does the statute of frauds do?
Requires certain types of contracts have to be in writing to be enforceable.
What is implied contract?
The agreement of the parties is demonstrated by their acts and conduct.
What is mutual assent?
A meeting of the minds, complete agreement of the intent of both parties.
What are the most common written agreements used by residential real estate professionals?
1-client representation agreements 2-sales contracts 3-options 4-escrow agreements 5-property management agreements 6-leases 7-owner financing agreements
What are the most common written agreements used by residential real estate professionals?
1-client representation agreements 2-sales contracts 3-options 4-escrow agreements 5-property management agreements 6-leases 7-owner financing agreements
What is usually accompanied with a real estate sales contract?
EMD (Earnest Money Deposit)
What is a contingency?
A
What is a purchase money mortgage?
Buyer receives the title to the property immediately but places a security interest on the property in favor of the seller.
