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Real Estate Class > Unit 5: Real Estate Contracts > Flashcards

Unit 5: Real Estate Contracts Flashcards

1
Q

Implied Contract

A

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

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2
Q

Express/Declared Contract

A

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

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3
Q

Bilateral

A

Binding to both sides

Promise in exchange for a promise

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4
Q

Unilateral

A

Binding on 1 Side

I promise THIS ,IF, you will do that.

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5
Q

Forbearance

A

An agreement NOT to perform - like a non-compete

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6
Q

Enforceablity of Contracts

A

Valid
Void
Voidable

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7
Q

Valid

A

Meets all legal requirements

Enforceable in Court

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8
Q

Void

A

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

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9
Q

Voidable

A

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

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10
Q

Essential Elements of a VALID Real Estate Contract

A
  1. Contractual Capacity
  2. Mutual Assent (Meeting of the Minds)
  3. Lawful Objective
  4. Consideration
    5.
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11
Q

Contractual Capacity

A
  1. 18

2 Sane and Sober

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12
Q

Mutual Assent (Meeting of the Minds)

A
  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 Offer and communication of acceptance before offer is withdrawn
    a. Any offer can be withdrawn prior to acceptance (Think forgot to email it out right away, buyer finds new property before they learn that the seller accepted their offer)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.
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13
Q

Lawful Objective

A

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

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14
Q

Consideration

A
  1. Valuable - Money or something that can be measured in dollars
  2. Good - Love, or not measured in dollars
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15
Q

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

A

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

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16
Q

Executory

A

Duties are not complete

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17
Q

Executed

A

Duties are complete - once you are at the closing table

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18
Q

Addendum

A

Additional material attached to and made part of the contract.

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19
Q

Amendment

A

Modification of exisiting contract terms

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

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20
Q

Assignment

A

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

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21
Q

Novation

A

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

22
Q

Mutual Recission

A

Cancellation

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

23
Q

Breach of Contract

A

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)
24
Q

Remedies for Breach of Contract

A
  1. Acceptance of Partial Performance - don’t sue
  2. Unilateral rescission
  3. Specific Performance
  4. Actual Damages
  5. Liquidated Damages
25
Q

Unilateral Recession

A
  1. One sided cancellation by innocent party because breacher didnt’ hold up their end of the bargain.
26
Q

Specific Performance

A

Make you do it - sue for completion of transaction

27
Q

Liquidated Damages

A

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

28
Q

Actual Damages

A

Sue for money lost, ex: Lawyer fees

29
Q

Types of Real Estate Contracts

A 
Contract for Sale and Purchase
Option
Lease-Option
Lease-Purchase
Lease
30
Q

Contract for Sale and Purchase

A
  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
31
Q

Essential Elements of Contract for Sale and Purchase Include

A
  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)
32
Q

Contract for Sale and Purchase- contingency

A

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.

33
Q

Contract for Sale and Purchase - Required Disclosures

A
  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
34
Q

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

A

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

35
Q

Lead Rider

A

On all houses built before 1978

36
Q

Express Contract

A

One that;s in words - written or spoken.

37
Q

Landlord tenant relationship created through a

A

Lease

38
Q

Gross Lease

A

All inclusive, one rent covers everything

39
Q

Net Lease

A

Rent plus expenses

40
Q

Percentage Lease (commercial)

A

May be Net or Gross, plus % of sales

41
Q

Variable/graded/index lease

A

rent charged on predetermined amount to PROTECT LANDLORD FROM INFLATION

42
Q

Sales-Leaseback

A

Walgreens, sells property to someone, leases it back,

43
Q

Sandwich lease

A

Sublet situaton

44
Q

Property Management

A

Big here because of absentee ownership

45
Q

Management Responsibilities -

A
  1. Leasing
  2. Managing
  3. Marketing
  4. Maintenance
46
Q

Advance Rent and security deposit

A
  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
47
Q

Damage Deposit

A
  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
48
Q

Termination of Tenancy at Will (No specified Term)

A 
Pay
Weekly - 7 days notice required
Monthly - 15 days notice required
Quarterly - 30 days notice required
Annually - 60 days notice required
49
Q

Contract for deed

A

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

50
Q

Lease-purchase

A

Created from the beginning that they will purchase the property.

51
Q

Lease Option

A

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

Real Estate Class (12 decks)

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