unit 4 Flashcards
What is the difference between a void contract and a voidable contract?
A void contract is an agreement that does not meet the tests for validity, and therefore is no contract at all.
A voidable contract is one which initially appears to be valid, but is subject to cancellation by a party to the contract who is believed to have acted under some kind of disability.
What is the difference between an express contract and an implied contract?
An express contract is one in which all the terms and covenants of the agreement have been clearly stated and agreed to by all parties, whether verbally or in writing.
An implied contract is an unstated or unintentional agreement that may be considered to exist when the actions of any of the parties suggest the existence of an agreement.
What are the five criteria of a valid contract?
Competent parties
Mutual agreement
Lawful objective
Consideration
In writing
When must a suit for damages be initiated?
The suit must be initiated within the time period allowed by the Statute of Limitations.
How does a contract for deed differ from a contract of sale?
With a contract for deed, the purchase price is deferred and paid in installments to the sellers. The buyers take possession and get equitable title, but sellers retain legal title until the buyers complete their payments, at which time the sellers deliver the title by way of deed. With a contract of sale, the buyers pay for the property and take title at closing.
Define an option.
An enforceable contract in which a potential seller grants a potential buyer the right to purchase a property before a stated time, for a stated price and terms. In exchange for the right of option, the buyer pays the seller valuable consideration.
What happens when a counteroffer is made?
The original offer terminates and the counteroffer in effect becomes a new offer.
What happens when both buyers and sellers sign the purchase and sale agreement?
It immediately becomes a legal contract designed to hold both parties to the agreement until closing.
Name four items that must be present in a purchase and sale agreement for it to be legal.
Identify the parties to the contract.
Describe the property to be transferred.
Give the offering price.
Outline and explain any contingencies.
What is important to note about the street address of a property when writing a purchase and sale agreement?
A street address is rarely enough. A complete legal description should be attached to the agreement.
What does “time is of the essence” mean?
This phrase emphasizes the requirement that events related to the contract must be performed on time.
What is a right of first refusal?
The right of a person to have the first opportunity to purchase or lease a property.
Which type of leasehold estate is commonly referred to as a periodic tenancy?
Estate from period to period
What are a tenant’s primary obligations when leasing a property?
Pay the rent on time
Maintain the property’s condition
Comply with the rules and regulations of the building
List three covenants that are essential in a lease. (See page 34 for other correct answers.)
Demising clause
Description of the premises
Clear statement of term
How can a landlord restrict the use of a residential property?
By including such restrictions or limitations in the lease. If no such limitations are written into the lease, the tenant may use the property for any lawful purpose, providing the tenant does not violate any deed restrictions.
Why do landlords collect security deposits?
For the repair of any damages to the apartment for which the tenant is responsible
What is the difference between a sublease and an assignment?
A sublease is the transfer by a tenant of a portion of the leasehold interest to another party.
An assignment of the lease is a transfer of the entire leasehold interest by a tenant to a third party.
List three common causes of a lease termination.
Term expiration
Voluntary agreement
Property destruction
Define a gross lease.
The tenant pays a fixed rent and the owner pays the taxes, insurance, and other normal ownership expenses.
A _____ is an agreement between two or more parties who, in a “meeting of the minds,” have pledged to perform or refrain from performing some act.
contract
A ___ contract is one which meets the legal requirements for validity.
valid
A ____contract is an agreement that does not meet the tests for validity, and therefore is no contract at all.
void
A ____ contract is one which initially appears to be valid, but is subject to cancellation by a party to the contract who is believed to have acted under some kind of disability.
voidable
An _____ contract is one in which all the terms and covenants of the agreement have been clearly stated and agreed to by all parties, whether verbally or in writing.
express
An _____ contract is an unstated or unintentional agreement that may be considered to exist when the actions of any of the parties suggest the existence of an agreement.
implied
