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49 Cards in this Set
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- Back
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Bilateral Contract
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A legally enforceable agreement under which both parties promise to do something for each other.
Unit 12 Page 203 |
Express Implied Unilateral Bilateral
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Unilateral Contract |
A one-sided agreement. One party makes a promise in order to entice the second party to do something.
Unit 12 P.203 |
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Executed |
An _______ contract is one in which all parties have fulfilled their promises; the contract has been performed.
Unit 12 P.203 |
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Executory
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Exists when one or both parties still have an act to perform. Ownership has not yet changed hands. At closing, when the contract terms have been met, the sales contract is executed. Unit 12. P.203 |
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Contract |
a voluntary agreement or promise between legally competent parties, support by legal consideration , to perform (or refrain from performing some legal act. Some legal act in exchange for consideration. |
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A contract must be... |
* Voluntary
* Made by legally competent parties
* Supported by lawful consideration
* For a legal act Unit 12 Page 202 |
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Addendum |
Any provision added to an existing contract that may change or be an addition to the content of the original. Includes the original contract's provisions by reference, meaning the addendum mentions the original contract and must be signed by all parties Unit 12 Page 213 |
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Real Estate Contracts |
All Outline info |
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Contract Issues |
Essential Elements: Offer and acceptance, consideration, legal purpose, consent, legal capacity
Classification: valid, void, voidable enforceable, unenforceable express, implied unilateral, bilateral executory, executed
Discharge performance breach remedies (damages, specific performance, recission) Unit 12 P203 |
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Elements of a Valid Contract |
Offer and acceptance Consideration Legally competent parties Consent Legal Purpose Unit 12 P204 |
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A Contract may be..... |
Valid Void Voidable Unenforceable Enforceable Unit 12 P205 |
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Valid Contract |
meets all essential elements that make it legally sufficient, or enforceable, and is binding in a court of law Unit 12 P205 |
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Void Contract |
has no legal force or effect because it lacks some or all of the essential elements of a contract Unit 12 P205 |
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Voidable Contract |
Appears on the surface to be valid, but it may be rescinded or disaffirmed by one or both parties based on some legal principle. Unit 12 P205 |
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Enforceable contract |
meets all the elements of a valid contract, including compliance with any applicable statue of frauds or other law that requires it to be in writing and signed by the parties. Unit 12 P205 |
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Unenforceable contract |
may also appear on the surface to be valid; however, neither party can sue the other to force performance Unit 12 P206 |
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Discharge |
A contract is discharged when the agreement is terminated. A contract terminates when it has been completely performed, with all items fulfilled. A Contract can also be terminated for a breach. Unit 12 P206 |
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Offer and Acceptance (Elements of a Contract) |
Offer is a promise made by one party, requesting something in exchange for that promise.
Acceptance is a promise by the offeree to be bound by the exact terms proposed by the offeror. Any deviation from the terms of the offer is considered a rejection of the original offer and is known as a counteroffer.
An offer can also be terminated if offeree fails to accept it before expiration of the time stated in the offer or offeree outright rejects it.
Offeror may revoke the offer at any time before acceptance (revocation)
Unit 12 P204 |
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Consideration (Elements of a Contract) |
something of legal value offered by one party and accepted by another as an inducement to perform or to refrain from performing some act
Must be good and valuable between the parties
Only requirements are that the parties agree and no undue influence or fraud has occurred.
Unit 12 P204 |
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Revocation |
When offeror revokes a contract anytime before the acceptance by the offeree.
must be communicated to the offeree by the offeror, either directly or through the parties agents.
Unit 12 P204 |
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Consent (Elements of a Contract) |
A contract must be entered into by consent as a free and voluntary act by each party.
Without undue influence, mistake, misrepresentation, fraud or duress.
Unit 12 P205 |
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Legally Competent Parties (Elements of a Contract) |
Unit 12 P205 |
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Legal Purpose (Elements of a Contract) |
A contract must have a legal reason for existence. A contract for an illegal purpose or for the performance of an act against public policy is not a valid contract.
Unit 12 P205 |
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Validity of a Contract |
A contract can be described as...
* Valid - has all legal elements
* Void - lacks one or more elements and has no legal force or effect
* Voidable - has all legal elements on its face, but it may be rescinded or disaffirmed
* Unenforceable - appears to have all legal elements but cannot be enforced in court * Enforceable - meets all elements of a valid contract in writing and signed by both parties
Unit 12 P205 |
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Performance of a Contract |
Must be performed within a specified time. Usually termed due diligence.
"time is of the essence"
Unit 12 P206 |
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Assignment |
Transfer of rights or duties under a contract. May be assigned to a third party. Obligations may be delegated, but the original party remains liable unless specifically released.
Substitution of parties Unit 12 P206 |
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Novation |
Substitution of a new contract for an existing contract. Unit 12 P207 |
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Breach of Contract |
A violation of any of the terms or conditions of a contract. Unit 12 P207 |
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Suit for Specific performance |
Buyer asks the court to force the seller to go through with the sale and transfer the property as previously agreed (seller breaches the real estate sales contract). Unit 12 P207 |
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Other Reasons for Termination |
Partial performance of the terms, along with a written acceptance Substantial performance Impossibility of performance Mutual agreement Operation of law Unit 12 P207 |
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Contracts used in real estate |
Client Representation agreements Real Estate Sales Contracts Options Escrow agreements Property management agreements Leases Owner Financing Contracts
Unit 12 P208 |
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Recission |
Return all parties to their original positions before the contract, so any monies or property exchanged must be returned. Unit 12 P208 |
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Statue of Limitations |
limits on time which parties to a contract may bring legal action, or lawsuit, to enforce their rights. Unit 12 Page 207 |
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Real Estate Sales Contract "RSA" |
complete agreement between buyer of real estate and seller. In addition to essential elements of a contract, this type of contract will include:
* Sales price and terms * Adequate description of property and improvements * Statement of kind and condition of title & form of deed to be delivered by the seller * Kind of title evidence required, who will provide it, and how many defects in the title will be eliminated * Statement of all terms of the agreement between parties, including any contingencies
Unit 12 P209 |
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Binder |
In some states, and particularly when transaction involves commercial or industrial property, a buyer's offer may be presented in a shorter document. Also known as "Letter of Intent" Unit 12 P210 |
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Earnest Money Deposits |
Buyers deposit when making an offer to purchase real estate. The deposit is evidence of the buyer's intention to carry out the terms of the contract in good faith. Deposit is typically enough to ... * discourage the buyer from defaulting * compensate the seller for taking the property off the market * cover any expenses the seller might incur if the buyer defaults Unit 12 P210 |
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Equitable Title |
When a buyer signs a contract to purchase real estate that is accepted by the seller, the buyer does not immediately receive title to the land. After both buyer and seller have executed sales contract, the buyer acquires an interest in the land known as ________ _________. Unit 12 page 211 |
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Destruction of premises |
Once the sales contract is signed by both parties, the buyer assumes the risk of any damage to the property that may occur before closing the contract. This is known as ________ of _______. Unit 12 page 211 |
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Liquidated damages |
To simplify matters in the event that one party breaches a contract, the parties may agree on a certain amount of money that will compensate the non-breaching party. Such a money is called _______ _______. Unit 12 page 211 |
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Contingencies |
Conditions that must be satisfied before a sales contract is fully enforceable are known as _________. This contract clause will include 3 elements: 1 the action necessary to satisfy 2 the time frame within which the action must be performed 3 the party who is responsible for paying any costs involved
Unit 12 page 212 |
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Amendment |
A change or modification to the existing content of a contract. Unit 12 page 213 |
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Addendum |
Any provision added to an existing contract that may change or be in addition to the content of the original. Unit 12 page 213 |
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Disclosure(s) |
Many states have enacted mandatory property condition _______ laws, which help consumers make informed decisions.
_______ of property conditions may be included as part of a sales contract.
Unit 12 page 213 |
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Option(s) |
An _______ is a contract by which an optionor gives an optionee the right to buy or lease the owner's property.
Unit 12 page 214 |
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Owner financing |
A traditional lender does not always have to be involved in the financing of a real estate purchase. With blank, the seller provide credit for all or part of the funds that will allow the buyer to move forward with the transaction.
Unit 12 page 214 |
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Land contract |
A real estate sale can remain under _______, also called a contract for deed, a contract for sale, Avon for title, on installment contract, hail and sales contract, 4 articles of agreement for warranty deed. Unit 12 page 214 |
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Purchase money mortgage |
The seller who finances a cell can also make use of a _______ _______ _______ in which the buyer receives title to the property but places a security interest on it, the mortgage, in favor of the seller. Unit 12 page 214 |
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Escape clause |
The seller may insist on blank blank , which permits the seller to continue to market the property until all the buyers contingencies have been satisfied or removed. Unit 12 page 213 |
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Statute of frauds |
That 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. Glossary |
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