Unit 5: Real Estate Contracts

Question 1

Implied Contract

Answer 1

Handshake, non verbal, like in a restaurant - it’s implied that you will pay at the end.
There are NO Implied contracts in Real Estate

Question 2

Express/Declared Contract

Answer 2

1 . Bilateral
2. Unilateral
3. Forbearance
In general, May be written or parol (verbal)

Question 3

Bilateral

Answer 3

Binding to both sides

Promise in exchange for a promise

Question 4

Unilateral

Answer 4

Binding on 1 Side

I promise THIS ,IF, you will do that.

Question 5

Forbearance

Answer 5

An agreement NOT to perform - like a non-compete

Question 6

Enforceablity of Contracts

Answer 6

Valid
Void
Voidable

Question 7

Valid

Answer 7

Meets all legal requirements

Enforceable in Court

Question 8

Void

Answer 8

No Legal Effect, unenforceable by either party, lacks one or more of the essentials of a valid contract

Question 9

Voidable

Answer 9

One party is not bound but the other is because one party is a minor, or fraud, or duress.
Injured party may take legal action to disaffirm the contract

Question 10

Essential Elements of a VALID Real Estate Contract

Answer 10

1. Contractual Capacity
2. Mutual Assent (Meeting of the Minds)
3. Lawful Objective
4. Consideration
   5.

Question 11

Contractual Capacity

Answer 11

1. 18

2 Sane and Sober

Question 12

Mutual Assent (Meeting of the Minds)

Answer 12

1. Offer and communication of acceptance before offer is withdrawn
   a. Any offer can be withdrawn prior to acceptance (Think forgot to email it out right away, buyer finds new property before they learn that the seller accepted their offer)
   b. Counter offer from seller is a legal rejection and kills the original offer. Either can get out.
2. No Fraud or misrepresentation - don’t lie about material facts, causes damage to innocent party (hole in roof that won’t show up till rainy season must be disclosed)
3. No duress or menace (threats)
4. No undue influence - don’t give someone an unfair advantage (don’t give friend broker heads up on offer price)
5. No mutual mistake or misunderstanding. Can kill the deal.

Question 13

Lawful Objective

Answer 13

Must have a LEGAL purchase - marajuana plants don’t convey.

Question 14

Consideration

Answer 14

1. Valuable - Money or something that can be measured in dollars
2. Good - Love, or not measured in dollars

Question 15

Contracts that transfer any interest in real property must be ____ and ______ to be enforcable.
Exception: _______ and _____________

Answer 15

Statute of Frauds: Contracts that transfer any interest in real property must be in writing and signed to be enforceable.
2 Exceptions: Lease or listing of less that 1 year

Question 16

Executory

Answer 16

Duties are not complete

Question 17

Executed

Answer 17

Duties are complete - once you are at the closing table

Question 18

Addendum

Answer 18

Additional material attached to and made part of the contract.

Question 19

Amendment

Answer 19

Modification of exisiting contract terms

Must be written (or crossed out and rewritted and intialed) by all parties

Question 20

Assignment

Answer 20

Transfer duties but not liability - like a sublease, or sandwich lease

Question 21

Novation

Answer 21

Transfers duties AND liablilty, terminate old lease and start new one with new tenant, dont sublease.
New Contract, new party, or both.

Question 22

Mutual Recission

Answer 22

Cancellation

Both Parties are returned to their pre-contract state, like it never happened.

Question 23

Breach of Contract

Answer 23

Sets forth the amount of time the non breaching party can take legal action against the breaching party.

1. Written contract - 5 years
2. Parol (Oral) - 4 years (Not real estate, obvs)

Question 24

Remedies for Breach of Contract

Answer 24

1. Acceptance of Partial Performance - don’t sue
2. Unilateral rescission
3. Specific Performance
4. Actual Damages
5. Liquidated Damages

Question 25

Unilateral Recession

Answer 25

1. One sided cancellation by innocent party because breacher didnt' hold up their end of the bargain.

Question 26

Specific Performance

Answer 26

Make you do it - sue for completion of transaction

Question 27

Liquidated Damages

Answer 27

Available only if specified in the agreement Retain breaching party's deposit Damage deposit or earnest money

Question 28

Actual Damages

Answer 28

Sue for money lost, ex: Lawyer fees

Question 29

Types of Real Estate Contracts

Answer 29

``` Contract for Sale and Purchase Option Lease-Option Lease-Purchase Lease ```

Question 30

Contract for Sale and Purchase

Answer 30

1. I promise to buy and you promise to sell 2. Bilateral - bindiing on both sides 3. Parties a. Buyer - vendee - holds EQUITABLE TITLE b Seller - vendor - holds actual title

Question 31

Essential Elements of Contract for Sale and Purchase Include

Answer 31

1. Signature of Buyer and Seller and non-owning spouses in Homestead. 2. Legal description 3. Price and Terms 4. Personal Property Included (Appliances would be checked off. A house full of furniture would be on a separate bill of sale)

Question 32

Contract for Sale and Purchase- contingency

Answer 32

May include one or more contingency clauses - inspection, appraisal, financing and many more, stating buyer will not be responsible to complete the purchase under certain conditions.

Question 33

Contract for Sale and Purchase - Required Disclosures

Answer 33

1. Special Assessments, possible lien of same 2. Radon gas - get info from county if concerned 3. Mold - Contact a professional 4. Receipt of enery efficiency 5. Foreign person compliance with Foreign Nvetment in Real Property Tax Act (FIRPTA) 6. HOA - 3 days to review/can't waive 7. Property Tax summary. Use county calculator to calculate next year's. Don't give an opinion here. 8. Lead Rider - 1978

Question 34

Foreign person compliance with Foreign Nvetment in Real Property Tax Act (FIRPTA) -

Answer 34

Buyer must withold money for foreign seller's income tax unless house is 300k or less.

Question 35

Lead Rider

Answer 35

On all houses built before 1978

Question 36

Express Contract

Answer 36

One that;s in words - written or spoken.

Question 37

Landlord tenant relationship created through a

Answer 37

Lease

Question 38

Gross Lease

Answer 38

All inclusive, one rent covers everything

Question 39

Net Lease

Answer 39

Rent plus expenses

Question 40

Percentage Lease (commercial)

Answer 40

May be Net or Gross, plus % of sales

Question 41

Variable/graded/index lease

Answer 41

rent charged on predetermined amount to PROTECT LANDLORD FROM INFLATION

Question 42

Sales-Leaseback

Answer 42

Walgreens, sells property to someone, leases it back,

Question 43

Sandwich lease

Answer 43

Sublet situaton

Question 44

Property Management

Answer 44

Big here because of absentee ownership

Question 45

Management Responsibilities -

Answer 45

1. Leasing 2. Managing 3. Marketing 4. Maintenance

Question 46

Advance Rent and security deposit

Answer 46

1. Held in FL 2. Interest or non interest bearing account 3. If interest bearing, delcare who gets interest 4. Surety bond posted with clerk of circuit court 5 Must tell tenant in 30 days where it is

Question 47

Damage Deposit

Answer 47

1. Returned 15 days after lease end 2. 30 days to impose a claim by certified mail 3. Tenant has 15 days to respond 4 . Total max amoutn of time is 45 days

Question 48

Termination of Tenancy at Will (No specified Term)

Answer 48

``` Pay Weekly - 7 days notice required Monthly - 15 days notice required Quarterly - 30 days notice required Annually - 60 days notice required ```

Question 49

Contract for deed

Answer 49

Seller Financing Purchase Price is paid in installments till its paid off. The buyer gets the deed. Buyer - vendee - equitable title Seller - Vendor - legal title

Question 50

Lease-purchase

Answer 50

Created from the beginning that they will purchase the property.

Question 51

Lease Option

Answer 51

They have the option to buy, during or after the lease