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Real Estate National > UNIT 5--Real Estate Contracts > Flashcards

UNIT 5--Real Estate Contracts Flashcards

1
Q

A voluntary, binding agreement between 2 or more competent parties to do (or not do) a specific thing

A

Contract

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2
Q

An __________ contract is indicated by intent with action.

A

Implied—can not use implied contracts for transferring real estate

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3
Q

Express(declared) contracts can be _______ or ________.

A

Oral or Written

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4
Q

To be enforceable under the State Statute of Frauds, all real estate contracts must be express ________ ________.

A

Express Written Documents

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5
Q

In this contract, both parties exchange a promise for a promise and both are bound to perform

A

Bilateral

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6
Q

This type of contract is a promise exchanged for performance, only 1 party is bound.

A

Unilateral

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7
Q

A valid contract contains all 5 ______ _______ to be enforceable.

A

Essential Elements

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8
Q

If a contract lacks an essential element, it is said to be _____.

A

Void–lacks legal effect, NOT enforceable by either party

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9
Q

This contract appears to be valid, but one party may disaffirm it because the party is a minor or was subject to duress, fraud, or misrepresentation.

A

Voidable

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10
Q

This stage of a contract has NO legal obligation and could be used on more than one project at a time.

A

Letter of Intent–usually with Commercial property, it is a way for buyer to seek info about a potential transaction

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11
Q

This is the negotiation period before a contract exists.

A

OFFER stage–offer can be countered, new offers made until there is a “meeting of the minds”

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12
Q

T or F: Strikethroughs or changes in a contract must be initialed and dated by both parties to be enforecable.

A

True

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13
Q

Upon a meeting of the minds and communication of acceptance, a _________ is formed.

A

Contract

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14
Q

__________ terminates an original offer and creates a new offer.

A

Counteroffer

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15
Q

Once a contract is made, the only way to change it before closing is with an ____________.

A

Amendment

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16
Q

A contract is considered __________ once it is closed on.

A

Executed

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17
Q

Contractual capacity/legally competent parties means the parties are _____________.

A

18, sane, and sober

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18
Q

Mutual agreement/consent/offer and acceptance is also a meeting ___________.

A

Meeting of the minds

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19
Q

One party to a contract can withdraw an offer before communication of acceptance and it would not be _______.

A

Binding

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20
Q

Contracts become binding upon communication of ____________.

A

Acceptance

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21
Q

Legally, a counteroffer is a rejection that __________ the original offer.

A

Terminates

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22
Q

In a counteroffer, the original offeree becomes the _________.

A

Offeror

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23
Q

T or F: The 5 elements of a RE contract are Competent Parties, Meeting of the Minds, Lawful Objective, Consideration, In Writing and Signed

A

True

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24
Q

In order to be enforceable, the _________________ requires certain contracts must be in writing and signed by all parties expected to perform.

A

Statute of Frauds

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25
Q

If a lease is for 12 months or less, does it have to be in writing?

A

No

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26
Q

A contract that is not yet fully performed, incomplete is considered ___________.

A

Executory

27
Q

A purchase contract is _________ once the deed has been delivered and accepted at closing.

A

Executed

28
Q

Additional material attatched to and made part an offer is an __________.

A

Addendum

29
Q

Transferring contract rights, but NOT liability is called an __________.

A

Assignment

30
Q

A new contract replacing an old is called a _________.

A

Novation

31
Q

A __________ will terminate a contract when a condition is not met, such as appraisal or financing.

A

Contingency

32
Q

This is when all parties agree to return to their original condition before the contract was executed(earnest money will be returned).

A

Mutual Rescission

33
Q

Does the sale of a property terminate a lease contract?

A

No–buyer is “subject to” the lease

34
Q

_________ , which are not contracts, terminate upon death of the parties.

A

Offers

35
Q

When a party is in default without a legal excuse they are __________.

A

In Breach of Contract

36
Q

Suing to force performance for completion of the contract, available to both buyer and seller, is ____________.

A

Specific performance

37
Q

Liquidated damages are paid with ________.

A

Earnest Money–this is only available to the seller

38
Q

In Colorado, a Contract to buy and sell is also called a ____________.

A

Purchase contract

39
Q

An offer becomes ____________ upon communication of acceptance.

A

Executory

40
Q

The seller is a vendor, buyer is a ____________.

A

Vendee

41
Q

The buyer holds ____________ title until the contract is executed.

A

Equitable

42
Q

A ___________ clause states that the party is not responsible for completing the purchase under certain conditions.

A

Contingency

43
Q

If a buyer terminates a contract because of a contingency, the ________ is returned to the buyer.

A

Earnest money

44
Q

Parties can be in breach of contract if they do not adhere to specific dates for action because time is _________________.

A

of the essence

45
Q

This is a contract where a specific buyer purchases the right to buy in the future from a seller who agrees to sell within a set period for a set price.

A

Option–Unilateral, binding on the seller, becomes bilateral when exercised by the optionee

46
Q

T or F: Option contracts typically includes a non-refundable option fee to hold the option for the buyer,

A

True–fee can be applied to purchase price, no recourse for seller if buyer decides not to buy

47
Q

This is used when a tenant wants to purchase a property but can’t get financing for the full amount.

A

Lease-purchase, part of rent may be applied to the purchase price

48
Q

This is when an owner sells property to an investor and leases it back, converting equity to working capital without giving up possession.

A

Sale-leaseback

49
Q

A promise for possession with the promise to pay rent is a ________.

A

Lease

50
Q

A lessor/landlord has a ____________interest in property, allowing them to retake possession.

A

Reversionary

51
Q

In this lease, a tenant agrees to pay fixed rent and the landlord pays all the expenses.

A

Gross or Fixed lease-most stable income for landlord

52
Q

Commercial lease where the tenant pays base rent plus expenses i.e. property taxes, insurance, maintenance

A

Net lease

53
Q

This lease is when rent is based on a % of gross sales/income; typically in retail properties.

A

Percentage lease

54
Q

This lease increases and decreases rent at predetermined levels i.e. can be graduated or Index

A

Variable lease

55
Q

This lease is used to rent unimproved property.

A

Ground(land) lease

56
Q

T or F: Termination of a lease happens on the expiration date or required notice.

A

True

57
Q

This estate tenancy DOES terminate with death.

A

Estate(Tenancy) at will

58
Q

This is a court action brought by the landlord against a tenant who is in breach.

A

Actual Eviction

59
Q

The lease is terminated by this when tenant must vacate because landlords failure to act.

A

Constructive Eviction–cancels the lease and tenant’s obligation to pay, but tenant must move i.e. not fixing heater in winter

60
Q

T or F: ACTR, is a way to remember ACTS to lessen Risk,

A

True–Avoid(remove it), Control(prepare for it), Transfer(shift to another party, insurance company), Retain(chances are it wont happen)

61
Q

This insurance covers a tenant’s personal property.

A

Tenant’s rental insurance

62
Q

Theft, burglary, vandalism, and machinery damage are all covered under this insurance.

A

Casualty

63
Q

This insurance covers brokerage firms, brokers, and salespeople for liability for errors and negligence in listing and selling activities.

A

E & O insurance

64
Q

This means that there was an offer and acceptance, there was no fraud, misrepresentation, or mistake, and the consent was genuinely and freely given.

A

Mutual Agreement

Real Estate National (8 decks)

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