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40 Cards in this Set
- Front
- Back
What are contracts and agreements when selling property? |
They need to be voluntary agreement that do legal acts supported by legal consideration. |
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What characteristics do enforceable real estate contracts have?
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They will have competent parties - legal age, mentally competent.
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When is a contract considered to be void?
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When one party is judged to be incompetent. |
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When is a contract voidable? |
When contract is entered into with a minor, intoxicated person, or one thought to be incompetent.
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What is "meeting of the minds" when selling property? |
When offer and acceptance are by mutual consent.
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What do all transfer of real property need to have in order for them to be legal?
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They must be written and signed.
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For a contract classification bilateral means?
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Both parties are bound; one promise given in exchange for another; real estate offer to purchase, one promises to buy, one promises to sell.
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For a contract classification unilateral means?
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one party makes promise, if second party complies, first party is obligated i.e., option.
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What does an executed contract mean?
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Both parties have fulfilled obligations; completed.
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What does executory mean when referring to a contract?
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It means that one or both parties have not performed; something remains to be done.
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What does valid mean when referring to legal effects of contracts?
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Contract is enforceable and binding on both parties; complies with all essential elements of a contract.
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What does void mean when referring to legal effects of contracts?
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has no legal effect, unenforceable on both parties; same as no contract at all. |
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What does voidable mean when referring to legal effects of contracts?
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It appears to be valid, but may be disfavored because one party signed when a minor, under duress, result of fraud; may be cancelled by party who would be injured if contract were carried out; i.e., minor or intoxicated. |
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What does unenforceable mean when referring to legal effects of contracts?
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Appears to be valid on surface, but neigher party may sue to force performance; situation where performance is considered impossible; i.e., verbal contract.
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What is the performance of contract?
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Each party has certain rights and duties to fulfill. The question of when a contract must be performed is an important factor. "Time is of the essence". Contract must be performed within a specified time. |
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What happens when one party withdraws after contract is accepted by both parties?
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Assignment or novation can happen.
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What does assignment mean when referring to selling contracts?
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Transferring rights and duties of a contract to another party; does not relieve original maker of liability. |
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What does novation mean when referring to sell contracts?
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Substituting a new contract for an existing one, thus extinguishing the old contract and releasing original maker of all liability.
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What does discharge of contract mean?
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A contract is discharged when the agreement is terminated.
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What does "time is of the essence" mean?
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The contract must be performed within a specified time. |
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What is a breach of contract?
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It is a violation of any of the terms or conditions of a contract without legal reasons. Example: A seller who fails to deliver title to the buyer breaches a sales contract. The breaching or defaulting party assumes certain burdens, and the non-defaulting party has certain legal remedies.
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What options does the buyer have if a seller defaults? |
Rescind or terminate contract and recover earnest money back to original position. |
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What options does a seller have if buyer defaults on the contract?
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Declare contract forfeited and retain earnest money; liquidated damages. |
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The written agreements most commonly used by licensees are |
Listing agreements and buyer agency agreements
Real estate sales contracts Options agreements Escrow agreements Leases Land contracts or contracts for deed. |
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What is a real estate sales contract?
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It is the most important document in the sale of real estate. It establishes the legal rights and obligations of the buyer and seller. |
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What is in a real estate sales contract?
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In addition to the essential elements of a contract several details appear in the contract. |
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What is an offer to purchase?
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Is the meeting of the minds, when a prospective buyer is found a licensee helps that consumer prepare an offer to purchase. The offer is signed by the perspective buyer and presented by the licensee to the seller. |
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What is an counteroffer?
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Any change my the seller to the terms proposed by the buyer creates a counteroffer. The original offer ceases to exist because the seller has rejected it. The buyer may accept or reject the seller's counteroffer. If the buyer desires they can make another counteroffer. |
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Can an offer or counteroffer be withdrawn at any time?
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Yes, but it must be done before it has been accepted by the other party. |
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What does acceptance of an offer mean?
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If the seller agrees to the original offer or a later counteroffer exactly as it is made and signs the document, the offer has been accepted and a contract is formed. |
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When is an offer considered to be accepted?
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When the person making the offer has been notified of the other party's acceptance. Note: licensee needs to fax or email all offers, acceptances, or other responses as soon as possible to avoid questions of proper communication. |
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What is equitable title?
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Gives the buyer an insurable interest in the property. This document comes after sales contract is accepted and before a deed is delivered. Buyer has right to demand transfer of legal title upon payment of full purchase price.
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What is the Uniform vendor and purchaser risk act?
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Specifically provides that the seller bear any loss that occurs before the tile passes or the buyer takes possession.
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What is earnest money?
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It is customary, although not essential, for a purchaser to provide a deposit when making an offer to purchase real estate. Money is placed in an escrow contract. |
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What is commingling?
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Money mixed with a broker's personal funds.
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What is conversion?
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Brokers may not use earnest money funds for their personal use. |
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What is an option?
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Gives the right to buy or lease property at a fixed price within a stated period of time; not revocable by Optionor (seller).
They are unilateral contracts binding on optionor (seller) only. |
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What is the role of an optionee (buyer)?
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Pays for right and assumes no other obligation until option is exercised or expires.
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What is the role of an optionor (seller)?
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Is obligated to act if the optionee (buyer) gives notice of intent to exercise option.
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What rights does a minor have as an interesting party in real estate?
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Minor maybe a devisee (receiver) in a will. |