Real Estate Definations Chapter 11

Front 1

Bilateral Contract

Back 1

A contract (legally enforceable promise or set of promises that must be performed) by which all parties to the instrument are legally bound to act as prescribed.

Front 2

Breach of Contract

Back 2

Violation of anyterms or conditions in a contract without legal excuse: i.e. failure to make a due payment

Front 3

Counteroffer

Back 3

A new offer made in response to an offer received. It has the effect of rejecting the original offer which cannot be accepte thereafter unless received by the offeror.

Front 4

Disclosure

Back 4

Relating pertinent information to the purchasing party that affect the condition of the property. Also informing all parties when brokers relationship warrants disclosure.

Front 5

Earnest Money

Back 5

Money disposited by a buyer under the terms of a contract to be forfeited if the buyer defaults but applied to the purchase price if the sale is closed.

Front 6

Equitable Title

Back 6

The interest held by a vendee under a contract or deed or an installment contract. The equitable right to obtain absolute ownership to property when legal title is held in another's name.

Front 7

Escrow Contract

Back 7

An agreement between a buyer seller and escrow holder setting forth rights and responsibilities of each. An escrow contract is entered into when earnest money is deposited in a broker's escrow account

Front 8

Executed Contract

Back 8

A contract in which all parties have fullfilled their promises and thus performed the contract.

Front 9

Executory Contract

Back 9

A contract under which something remains to be done by one or more of the parties

Front 10

Installment Contract

Back 10

A contract for the sale of real estate where by the purchase price is paid in periodic installments by the purchaser, who is in possession of the property even though title is retained by the seller until a future date which may not be until final payment. AKA contract for deed or articles of agreement for warrantee of deed.

Front 11

Land Contract

Back 11

Same as installment contract whereby the purchaser pays payments, lives on land if applicable and does not receive deed until sometime in future or until final payment.

Front 12

Lease

Back 12

A written or oral contract between landlord (lessor) tenant(lessee) that transfers the right ot exclusive possession and use of the landlords real property for a specified period of time and for stated (consideration) rent. By state law leases for longer must be in writing to be enforcable.

Front 13

Option

Back 13

An agreement to keep open for a set period an offer to sell or purchase property

Front 14

Rescission

Back 14

The practice of one party canceling or terminating a contract, which has the effect of returning the parties to their original positions before the contract was made.

Front 15

Time is of the essence

Back 15

The contract must be performed within the time limit specified. A party who fails to perform on time is liable for breach of contract.

Front 16

Unilateral Contract

Back 16

A one sided contract where in one party makes a promise so as to induce a second party to do something. The second party is not legally bound to perform; however if the second party does comply, the first party is obligated to keep the promise.

Front 17

Valid

Back 17

A contract that complies with all the essentials of a contract and is binding and enforceable on all parties to it.

Front 18

Void

Back 18

A contract that has no legal force or effect because it does not meet the essential elements of a contract.

Front 19

Voidable

Back 19

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

Front 20

Consideration

Back 20

That which is received by the grantor in exchange for his or her deed. Something of value that induces a person to enter into a contract.

Front 21

Contingencies

Back 21

A provision in a contract that requires a certain act to be done or a certain event to occur before the contract becomes binding.

Front 22

Contract

Back 22

A legally enforceable promise or a set of promises that must be performed and for which, if a breach of promise occurs, the law provides a remedy.

Front 23

Express Contract

Back 23

An oral or written contract in which the parties state the contracts terms and express their intentions in words.

Front 24

Implied Contract

Back 24

A contract under which the agreement of the parties is demonstrated by their acts and conduct.

Front 25

Liquidated damages

Back 25

An amount predetermined by the parties to a contract as the total compensation to an injured party should the other party bereach the contract.

Front 26

Offer and acceptance

Back 26

Two essential components of a valid contract a "meeting of the minds."

Front 27

Statute of Frauds

Back 27

The part of a state law that requires certain instruments, such as deeds, real estate sales contracts, and certain leases to be in writing to be legally enforceable.

Front 28

Suit for Specific Performance

Back 28

Buyer asks court to force the seller to go through with the sale and convey the proerty as previously agreed. The buyer may choose to sue for damages, however, in which case he or she asks that seller pay any costs and hardships suffered by the buyer as a result of the seller's breach

Front 29

Unenforceable Contract

Back 29

A contract that has all the elements of a valid contract, yet neither party can sue the other for performance of it. For example an unsigned contract is generally unenforceable.

Front 30

Reality of Consent

Back 30

Each party in a contract must be able to make prudent and knowledgable decision without undue influence. A mistake, misrepresentation, fraud, undue influence, or duress would deprive a person of that ability. If any of these are present the contract is vvoidable by the injured party.

Front 31

Assignment

Back 31

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

Front 32

Novation

Back 32

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