Unit 11 Real Estate Contracts

Question 1

What is a valid contract?

Answer 1

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.

Question 2

What must a contract have?

Answer 2

1-Voluntary
2-An agreement or a promise.
3-Legally competent parties
4-Legal consideration
5-Legal act

Question 3

What is a bilateral contract?

Answer 3

Requires both parties promise to do something, one promise is given in exchange for another.

A promise for a promise.

Question 4

What is a unilateral contract?

Answer 4

One party makes a promise to entice a second party to do something.

A promise for an act.

Question 5

What is an executed contract?

Answer 5

Contract where all sides have fulfilled their promises.

Question 6

What is an executory contract?

Answer 6

Exists when one or both parties still have an act to perform. Contract is executory until closing.

Question 7

What are the basic elements for a contract to be valid?

Answer 7

1-Offer and acceptance
2-Consideration
3-Legally competent parties
4-Consent
5-Legal purpose

Question 8

What can contracts be described as?

Answer 8

Valid, Void, Voidable, Unenforcable

Question 9

What is a valid contract?

Answer 9

Meets all the essential elements that make it legally sufficient or enforceable, and is binding.

Question 10

What is a void contract?

Answer 10

No legal force or effect because it lacks some or all the essential elements.

Question 11

What is a voidable contract?

Answer 11

A contract that can be rescinded by one or both parties based on some legal principle.

Question 12

What is an unenforceable contract?

Answer 12

A contract were neither party can force the performance of the other.

Question 13

What does “time is of the essence” mean?

Answer 13

A clause in a contract that requires performance by a specific time, failing to do os would cause the party to be in breach.

Question 14

What right does assignment provide?

Answer 14

The right to transfer a contract.

Question 15

What is novation?

Answer 15

The substitution of an existing contract for a new one.

Question 16

What is a breach of contract?

Answer 16

A violation of any of the terms of the agreement.

Question 17

What does specific performance mean?

Answer 17

The buyer is suing the seller to completed the transaction.

Question 18

What is the statute of limitations?

Answer 18

A limitation in time to when a party can bring suit to enforce their rights.

Question 19

What does rescission mean?

Answer 19

A cancellation of the contract which terminates the contract as if it never happened.

Question 20

What are reasons for the discharge of a contract?

Answer 20

Performance
Partial Performance
Substantial performance
Impossibility of performance
Assignment
Novation
Breach
Statute of limitations.
Mutual Agreement
Operation of the law.
Rescission.

Question 21

When can a licensee complete a contract?

Answer 21

When contracts are preprinted.

Question 22

What are the types of possible standard forms?

Answer 22

Real Estate Sales Contract
Land Contract
Contingencies
Escrow Agreement

Question 23

What is a contingency?

Answer 23

Additional conditions that must be satisfied before a sales contract is fully enforceable.

Question 24

What is an amendment?

Answer 24

A change or modification to the existing content of a contract.

Question 25

What is an addendum?

Answer 25

Any provision added to the existing contract without altering the content of the original.

Question 26

What is an option?

Answer 26

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.

Question 27

What is a land contract?

Answer 27

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.

Question 28

What does the statute of frauds do?

Answer 28

Requires certain types of contracts have to be in writing to be enforceable.

Question 29

What is implied contract?

Answer 29

The agreement of the parties is demonstrated by their acts and conduct.

Question 30

What is mutual assent?

Answer 30

A meeting of the minds, complete agreement of the intent of both parties.

Question 31

What are the most common written agreements used by residential real estate professionals?

Answer 31

1-client representation agreements
2-sales contracts
3-options
4-escrow agreements
5-property management agreements
6-leases
7-owner financing agreements

Question 32

What are the most common written agreements used by residential real estate professionals?

Answer 32

1-client representation agreements
2-sales contracts
3-options
4-escrow agreements
5-property management agreements
6-leases
7-owner financing agreements

Question 33

What is usually accompanied with a real estate sales contract?

Answer 33

EMD (Earnest Money Deposit)

Question 34

What is a contingency?

Answer 34

A

Question 35

What is a purchase money mortgage?

Answer 35

Buyer receives the title to the property immediately but places a security interest on the property in favor of the seller.