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52 Cards in this Set

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  • Back
A contract entered into between an adult and a minor is unenforceable by both parties.
A person being appointed to act under a power of attorney must be a lawyer.
A real estate contract must be in writing to be enforceable.
A real estate agent or broker, to earn a commission, must be the procuring cause of the sale.
A liquidated damage provision in a contract is enforceable, provided it does not result in a penalty.
It is not necessary for a contract to state the purchase price of the property.
The date on which the parties agree to perform all their promises under the contract is known as the closing date.
A purchaser usually takes possession of the property at the time the contract is signed.
Contracts are freely assignable by purchaser and seller.
Property taxes for the current year are prorated under a contract.
What is the Statute of Frauds, and what effect does it have on the validity of contracts?
The original Statute was enacted in England in 1677 to prevent fraudulent practices of proving oral contracts in court. It requires that certain contracts be in writing, such as contracts for the sale or interest in land. Each state has its own Statute of Frauds.
Explain the three remedies available for the breach of a real estate contract.
Money damages.
Specific performance.
When is a real estate broker entitled to a commission?
When he produces a person who is ready, willing, and able to purchase the property at the price and terms of the seller.
Seller and purchaser enter into a contract for the purchase and sale of real property for the price of $90000. The property has a value of $100000. The purchaser fails to perform. What is the amount of money damages awarded to the seller?
The measure of damages for breach of contract is the difference between contract price and fair market value at the time of breach. The seller is not entitled to any damages. If the property has a higher fair market value than the purchase price then the seller has not been damaged by failure of performance.
Sam Seller offers to sell his home to Pat Purchaser for the sum of $75000. Pat Purchaser responds that she will only purchase the home for $65000. Sam Seller rejects the offer of $65000. Pat Purchaser then offers $75000 for Sam Sellers's home. Is there a contract between Sam and Pat for the sale and purchase of the home at $75000.
No, a contract does not exist until there has been mutual agreement of the parties. The counteroffer must be accepted by the seller before a contract exists.
Why is careful attention to detail required in the preparation of a real estate contract?
It must reflect the negotiation of the buyer and seller and capture their agreement in writing. The contract dictates the rights and responsibilities of the parties and establishes a blueprint for the closing of the purchase and sale.
What does the "time is of the essence" phrase mean to a real estate contract?
The phrase makes dates for performance critical dates, and lack of timely performance may be cause for default. If the phrase is not included in the contract the contract may not be strictly enforceable and the parties may be able to perform after the dates specified in the contract.
If, under a real estate contract, the Seller is to provide financing to the purchaser, what issues should be discussed concerning the seller financing?
a) security for the note.
b) priority of the lien.
c) when installments are due.
d) late penalties.
e) prepayment penalties.
f) obligation due on subsequent sale of of the property by the purchaser.
g) interest rate
h) maintenance of insurance.
i) personal liability.
j) amount of the note and the exact method which the note will be determined at selling.
k) copies of the paperwork attached to the contract.
Wha items are prorated in a real estate contract?
Real estate taxes.
Lease income.
Expenses in the maintenance of the property.
The following is a list of contract provisions. Do these provisions favor the seller or the purchaser?
a) seller to convey insurable title to the real property at closing.
b. Seller is to convey title to the real property subject to utility easements and other restrictions of record.
c. Seller shall not alter or encumber the title to the property after the date of the contract without the prior written consent of purchaser.
d. The real estate contract is freely assignable.
e. The contract is silent as to risk of loss between date of contract and date of closing.
a) Seller
b) Seller
c) Purchaser
d) Purchaser
e) Neutral provision with slight favor to seller.
What is meant by legal capacity to contract?
The parties are responsible for the promises and the law will make them bound by their promises.
What are the necessary elements in order to have a mutual agreement?
The parties must agree on the same thing, the same terms, and at the same time.
What is a listing agreement?
An agreement between a property owner and a broker giving the broker the authority to sell the property.
What is a closing?
This is the date which the contracting parties fulfull their obligations under the contract. Also called settlement in some states.
When does the risk of loss shift from seller to buyer in a real estate contract?
The risk shifts when the contract is entered into although by agreement it may not shift until closing.
What duties are owed by an agent to a principal?
a) Follow the principal's instructions.
b) Exercise reasonable care and skill in performance.
c) Disclose all matters related to the agency relationship.
d) Account for any money belonging to the principal which comes into the agent's possession.
What duties are owed by the principal to the agent?
a) Compensation to the agent.
b) Reimburse the agent for any expenses reasonably incurred.
c) Indemnify the agent against any 3rd party claims made against the agent due to performance under the agency agreement.
In the absence of an express covenant for title, the full risk of title failure falls on the purchaser of real property.
A covenant of quiet enjoyment is a future covenant.
A deed that covenants against the lawful claims of people claiming by, through, or under the grantor is known as a quitclaim deed.
The grantee of a deed is a competent witness to the grantor's signature of a deed.
A deed must be in writing.
Deeds are signed only by the grantor.
Deeds for love and affection with no monetary consideration are not valid.
Possession of the deed by the grantor is presumption of delivery.
The execution portion of a deed is known as the testimonium.
The law of the state in which the land to be conveyed is located controls the formal requirements of a deed.
What warranties does a quitclaim deed contain?
Do both the grantor and the grantee sign a deed?
No, normally only the grantor.
What are the general requirements for witnesses in regard to a deed?
Witnesses must be disinterested parites and actually see the grantor sign the deed. In some states a witness may need to be a notary public.
The law of which state controls the form as well as the formal requirements of a deed.
Controlled by the state where the property is located.
Must the grantee of a deed be competent?
What is the difference between a general warranty deed and a limited warranty deed?
A general warranty deed is an absolute warranty regarding the property that includes warranties for what predecessors in title may have done. A limited warranty deed warrants only against lawful claims of people by, through, or under the grantor. The grantor in a limited warranty deed does not warrant against the actions of any predecessors in title.
What are the basic requirements of a valid deed?
a) Written instrument.
b) Competent grantor.
c) Identity of grantee.
d) Words of conveyance.
e) Description of land.
f) Consideration.
g) Grantor signature.
h) Witnesses.
i) Delivery of deed to grantee.
Does a quitclaim deed convey marketable title?
It conveys title to what ever the grantor has. If the grantor has marketable title, the quitclaim deed will convey marketable title.
List the six covenants or warranties included in a general warranty deed?
a) Seisin.
b) Right to convey.
c) Against encumbrances.
d) Further assurance.
e) Quiet enjoyment.
f) Warranty.
Samuel Adams signed his Boston townhouse to Harrison Stone. Who is required to sign the deed in connection with the transfer of ownership?
Samuel Adams.
List and briefly describe the formal parts of a deed.
a) Caption.
b) Premises or preamble.
c) Granting clause.
d) Description.
e) Habendum.
f) Warranty clause.
g) Testimonium.
You are a legal assistant involved in a closing of a purchase of real property. The real property is owned by Ruth White. The purchasers of the property are Albert Greene and Aretha Greene. You have prepared the deed for Ruth White's signature and you are in a state that requires two witnesses to Ruth White's signature. Can Timothy White, Ruth White's husband, witness her signature on the deed? Can Aretha Greene Witness Ruth White's signature on the deed? Can you witness Ruth White's signature on the deed?
Timothy White may witness.
Aretha Greene (grantee) is an interested party and cannot witness.
A legal assistant may witness.
What is the difference between a present covenant and a future covenant?
The covenants of seizen, right to convey, and against encumbrances are present covenants. If they are breached it is at the time when the deed is delivered. Covenants of further assurance, quiet enjoyment, and warranty are future covenants. They may be breached in the future. Present covenants are not transferable when the land is subsequently sold. Future covenants run with the land and are transferable.
If you are a purchaser of real property, which type of deed would you prefer to receive?
General warranty deed. It contains the six covenants and protects the purchaser against a number of title problems.
Briefly describe three presumptions regarding delivery of deeds.
Possession of the deed by the grantee is presumption of delivery. Possession of a deed by the grantor is presumption of nondelivery. Recordation of a deed in the public records is presumption of delivery. All these presumptions are rebuttable if facts can be shown to the contrary.