Unit 9: Real Estate Contracts

Question 1

contract

Answer 1

agreement entered into by 2 or more legally competent parties

Question 2

express contract

Answer 2

oral or written contract which the parties state the contracts terms & express their intentions in words

Question 3

implied contract

Answer 3

agreement of parties is demonstrated by their acts & conduct

Question 4

bilateral contract

Answer 4

both parties to the contract are legally bound to act as promised

Question 5

unilateral contract

Answer 5

one sided contract wherein one party makes a promise in order to induce a second party to do something

Question 6

executory contract

Answer 6

something remains to be done by one or more parties

Question 7

executed

Answer 7

all parties have fulfilled their promises

Question 8

valid contract

Answer 8

complies w/ all the essentials of a contract & is binding & enforceable to all parties to it

Question 9

void contract

Answer 9

no legal force or effect b/c it does not meet essential elements of a contract

Question 10

voidable contract

Answer 10

seems to be valid on the surface but may be rejected or disaffirmed by one or both parties

Question 11

unenforceable contract

Answer 11

all elements of a valid contract but neither party can sue the other to force performance of it

Question 12

competent parties

Answer 12

recognized by law as being able to contract w/ others (legal age & sound mind)

Question 13

offer & acceptance

Answer 13

two essential components of a valid contract “meeting of the minds”

Question 14

consideration

Answer 14

something of value that induces a person to enter into a contract

Question 15

legality of object

Answer 15

essential component of a valid contract

Question 16

agreement in writing & signed

Answer 16

contracts for sale of RE & leases for more that 1 year must be in writing to be enforceable

Question 17

assignment

Answer 17

transfer in writing of interest in a contract, mortgage lease or other instrument

Question 18

novation

Answer 18

substituting a new obligation for an old one or substituting new parties to an existing obligation

Question 19

breach of contract

Answer 19

violation of any terms or conditions in a contract w/o legal excuse, ex: failure to make payment

Question 20

specific performance

Answer 20

legal action brought to compel a party to carry out the terms of a contract

Question 21

liquidated damages

Answer 21

amount predetermined by the parties to an agreement as the total amount of compensation an injured party should receive if the other breaches contract

Question 22

statute of limitations

Answer 22

law pertaining to the period of time which certain actions must be brought to court

Question 23

counteroffer

Answer 23

new offer made as a reply to an offer received

Question 24

equitable title

Answer 24

interest held by a vendee under a contract for a deed or an installment contract

Question 25

earnest money deposit

Answer 25

money deposited by a prospective buyer as evidence of good faith, that is to be forfeited if the buyer defaults, but applied to purchase price if the sale is closed

Question 26

option

Answer 26

right to purchase property w/in a definite time at a specified price

Question 27

contract for deed

Answer 27

sales/ financing agreement under which the buyer purchase the sellers real estate on time

Question 28

escrow agreements

Answer 28

contract used when a transaction is closed thru escrow, that sets forth duties of the escrow agent & requirements/ obligations of the parties to the transaction