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CA Real Estate > From Principles Workbook Unit 4 > Flashcards

From Principles Workbook Unit 4 Flashcards

1
Q

a contract is a legally binding agreement

A

between two or more competent parties to do or not do certain things for consideration

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2
Q

contract that has been put into words, either spoken or written

A

express contract

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3
Q

implied contract

A

created by the actions of the parties

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4
Q

in order to comply with statute of frauds (and enforaceable by courts), all contracts for the sale or transfer of real estate must be

A

express written contracts with the exception of a lease for 12 months or less

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5
Q

a breach of contract occurs when

A

a party fails, without legal excuse, to perform any promise contained in the agreement.

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6
Q

after a breach, the nonbreaching party has four options:

A
  • acceptance of partial performance
  • specific performance
  • liquidated damages
  • actual money damages
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7
Q

bilateral contract

A

promise exchanged for a promise
both parties are boudn to perform
I.E. a purchase agreement

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8
Q

unilateral contract

A

promise exchagned for performance
only one party is bound
I.E. an option

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9
Q

statute of limiations for breach of oral contract

A

two yeras

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10
Q

statute of limiations for breach of written contract

A

four years

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11
Q

statute of limiations for fraud

A

three years from the date of discovery

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12
Q

stages of a contract

A
  • offer
  • contract
  • termination
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13
Q

the offer stage is

A

a negotiation period, no contract exists yet

- offers may be countered and new offers made until there is “meeting of the minds”

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14
Q

in the offer stage, earnest money is

A

not usually deposited because there is not a contract yet

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15
Q

strike-through changes on an offer must be

A

initialed (and dated for clarity) by all parties to be enforceable

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16
Q

a contract is formed when

A

a meeting of the minds and communication of acceptance by the parties

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17
Q

termination of an offer can occur through

A
  • counteroffer
  • revocation or withdrawl by offeror
  • rejection by offeree
  • lapse of an unreasonable time
  • event that destroys the property
  • death of either party
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18
Q

in order for the contract terms ot be changed,

A

an amendment must be negotiated and signed by all parties

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19
Q

termination of a contract examples

A

lease - on expiration date or notice as determined by the lease contract
option - on expirationd ate unless option is excercised, then the option will need a purchase contract to close
purchase contranct - either by a party excercising a contingency and termination or at closign with conveyance of the deed
breach - nonbreaching party will have remedies against he breaching party per the contract

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20
Q

ESSENTIALS OF A VALID CONTRACT

A 
CO-CA-CO-LA
COnsent/Mutual Agreement
CApacity/Legally
COnsidersation
LAwful objective
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21
Q

when does a contract become binding?

A

upon communication of acceptance

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22
Q

a counteroffer is a

A

rejection of the original offer and the creation of a new one

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23
Q

in a counteroffer, the original offerre becomes

A

the offeror

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24
Q

caveat emptor means

A

“let the buyer beware”

not common due to disclosure requirements

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25
Q

seller must disclose

A

all material defects and facts even if selling as is

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26
Q

actual fraud consists of

A
  • lyling
  • suppressing known facts
  • making a promise with no intention of performing it
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27
Q

to be a competent party, you must be

A
  • 18 years old or an emancipated minor

- must be sane

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28
Q

executory

A

not yet fully performed

starts upon communication of acceptance of the offer

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29
Q

executed

A

duties fully performed

purchase agreement is executed once the deed has been delivered and accepted

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30
Q

assignments transfer

A

contract rights, but not liability

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31
Q

novation transfers

A

contract rights and liability

this is a new contract that replaces original contract

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32
Q

most contracts are

A

not terminated by death so a deceased’s estate would have to honor the contract. a contract would terminate when there is no one left to perform.

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33
Q

do listings terminate by death?

A

yes - personal services contract

34
Q

mutual recission

A

return of all parties to their original condition before contract was executed

35
Q

acceptance of partial performance from a breach

A

choose not to sue

36
Q

specific performance from a breach

A

sue to force to performance - for completion of the contract

available to btoh buyer and seller

37
Q

liquidated damages from a breach

A

retain breachign party’s deposit, available only to seller in a purchase contract

38
Q

actual damanges from a breach

A

sue for money lost

39
Q

essential elements of a purchase agreement

A
  • buyer and seller’s signatures
  • property description
  • price and terms
  • is in writing and signed
40
Q

a lessor has a reversionary interest

A

which allows the lessor to retake possession

41
Q

gross/fixed lease

A

tenant pays fixed rent and landlord pays all expenses

typical for residential property

42
Q

net lease

A

commercial lease
tenant pays base rent + expenses (NNN)
tenant pays property taxes, insurance and maintenance costs

43
Q

percentage lease

A

rent is baesd on a percentage of gross income/sales

most typical in retail properties

44
Q

does the sale of a property terminate a lease?

A

no, the bueyr takes title “subject to” the lease

45
Q

leases can be terminated in the following ways:

A
  • estate for years (expiration date) NOT DEATH
  • periodic estate (Notice) NOT DEATH
  • Estate at will (Notice or death
  • Actual eviction (if tenant is in breach)
  • constructive eviction
46
Q

before the landlor files the unlawful detainer, the landlord must first deliver

A

a notice to pay or quit to the tenant in default.

47
Q

what is constructive eviction?

A

the lease is terminated if the lessee must vacate due to the lessor’s act or failure to act. it cancels the lease and the tenant’s obligation to pay rent, but the tenant must move.

48
Q

the TILA-RESPA Rule regulates

A

lendors, title companies and real estate licensees.

49
Q

the TILA-RESPA rule standardizes closing practices for

A

one-to-four family residential propertyes finance by federally-related loans. includes FHA and VA Loans, conventional loans funded by regulated lendors and loans that will be sold on the secondary mortage market.

50
Q

lenders must give a

A

loan estimate form of all closing costs (including loan origination and discount points) and a Shopping for Your Home Loan settle costs booklet at the loan application or within 3 business days of application

51
Q

the loan estimate is used at

A

the beginning of the loan process to provide the borrower with an estimate of the total closing costs so the borrower knows what funds to bring to closing.

52
Q

lenders must provide the CLosing Disclosure

A

at closing (one day before settlement upon request).

53
Q

the closing disclosure must match

A

the loan estimate

54
Q

RESPA restricts

A

the amount of advance escrow payments (taxes and insurance) and prohibits kickbacks

55
Q

escrow accounts may not have more than

A

two months of additional fees plus what is owed.

56
Q

closings are conducted using

A

escrow agents

57
Q

escrow agents may initiate a court procedure called

A

an interpleader to resolve a dispute over deposit money

58
Q

two stages of escrow

A
  • perfect escrow

- complete escrow

59
Q

perfect escrow

A

the documents and money have been deposited in the escrow and parties are waiting to close

60
Q

complete escrow

A

escrow has closed, which is normally upon recordation of deed.

61
Q

a closing statement is

A

a detailed accounting of each party’s debits and credits (amounts paid and received)

62
Q

a debit to the bueyr is

A

anythign that increases teh amount of meny the buyer must bring to the closing

63
Q

examples of debits to the buyer

A

sales price, new loan origination fees, recording the deed, or discount points if paid by bueyr

64
Q

a credit to the buyer is

A

anything that decreases the amount of money the bueyr must bring to the closing

65
Q

examples of credits to the buyer

A

earnest money, new loan amount (all loans are always a buyer credit), interest on assumed mortgage or seller financing

66
Q

a debit to the seller is

A

anything that decreases the amount of money the seller takes from the closing

67
Q

examples of debti to the seller

A

brokerage, owner’s title insurance, payoff o existing loan, or seller fnancing

68
Q

a credit to teh seller is

A

anything that increase the amount of money the seller takes from the closing

69
Q

examples of credit to the seller

A

sales price

70
Q

examples of prorations

A

interest on assumed mortgages, rents, utilities, HOA dues and taxes

71
Q

items paid in advance are

A

buyer owes seller

72
Q

items paid in arrears are

A

seller owes buyer

73
Q

days used in proration calculation

A

usually 360 and buyer owns on day of closingnot

74
Q

not consideration but may be rquired as part of liquidated damages in a purchase contract

A

earnest money

75
Q

a contract created by the actions of the paties is

A

an implied contract

76
Q 
A contract between two parties that legally binds one party to perform, but allows the other party to disaffirm it, is
A) executed
B) Void
C) Voidable
D) Bilateral
A

C) Voidable

In most voidable contract, only one of the paties is legally bound to perform

77
Q 
Upon acceptance and communication of acceptance, an offer is considered to be
A) A counteroffer
B) Unilateral
C) A contract
D) Valid
A

C) A contract
Upon communication of acceptance, the offer becomes a contract. The Offer and contract could be invalid if they were missing an essential element, such as competent parties.

78
Q

In an executory purchase contract, the buyer’s interest is described as

A

ownership in equity. Under a purchase agreement or a contract for deed, the bueyr holds equitabl title. The seller holds legal tutle until the seller delivers the deed to the buyer.

79
Q

earnest money is

A

a remedy for default and not part of consideration

80
Q

consideration can be

A

a promise, money, somethign of value. NOT EARNEST MONEY

81
Q

specific performance is availabel to

A

both buyer and seller as a remedy for parties in default

CA Real Estate (22 decks)

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