Chapter 8: Real Estate Contracts Flashcards
What’s another name for a real estate contract?
Purchase agreement.
The contract determines what goes into the deed.
What is a binder (deposit receipt)
An agreement formed by the receipt of an earnest money deposit as evidence of the buyer’s good faith and intent.
It is used to bind the parties until a more formal contract can be prepared
Does the signing of a contract by both parties mean everything has been executed?
No
What is equitable title?
Means the buyer has the “right” to receive legal title, but it in and of itself is not the legal title
What happens to the contract when it is time to close?
The contract merges with the deed as title passes from seller to buyer.
What is a survival clause?
A clause that specifies which contract provisions will remain in effect after the termination or expiration of the agreement
A clause that prevents a contract or any specific covenant of the contract from merging with the deed.
It allows an agreement to survive after closing and prevents the act of closing from nullifying the agreement once title is transferred.
What typical provisions included in a contract?
- Date and offer is made & when it will expire
- Parties: Must include names of buyer and seller
- Mutual Agreement: Buyer agrees to buy & seller sell
- Legal description of the property
- Price & Terms: Selling price & terms of agreement
- Earnest Money: Initial deposit to show intent to buy
- Type of Deed
- Marketable Title: seller agrees 2 deliver a good title
- Destruction of the premises
- Possession: Date buyer can possess the property
- Closing date: Both parties must agree
- Broker’s Commission
- Signatures
What statement is included in a contract to enforce all parties to faithfully adhere to contract dates and timelines or contract becomes voidable?
“Time is of the essence”
What is an option?
Is a “unilateral” contract which involves either the right to buy or the right to lease real estate.
Optionor grants the optionee the irrevocable and exclusive right to buy or lease the optionor’s property at a “fixed price” and for a “specific period of time”.
- Option must be in writing and signed by the optionor
- Optionee pays optionor a valuable consideration
- Optionee has interest in time only
What is a sale-leaseback
A commercial owner sells his property to an investor with the agreement that the investor will lease it back to him Original seller has a right to be leased to built into the agreement
What is a land contract?
A land contract is a real estate transaction in which a buyer finances a property by making installment payments to the seller. The buyer gains access to the home, but the seller maintains the legal title until the buyer pays off the loan
It is also called an installment contract, contract for deed, or conditional sales contract.
What is right of first refusal (First right of refusal)?
A person’s right to have 1st opportunity to purchase or lease a property
