Chapter 11 - Real Estate Contracts Flashcards
(66 cards)
1
Q
Contract
A
Voluntary agreement or promise between legally competent parties
2
Q
Bilateral Contract
A
Reciprocal, both parties agree to do a specific thing. One promise is pledged in return for another promise.
3
Q
Unilateral contract
A
Only one person is bound to perform. It is a one-sided contract where one party makes a promise to encourage a second party to perform an action.
4
Q
Option to Purchase
A
contract where one party retains the option to enforce the contract in the future during a specific time period. Form WB-24
5
Q
Executed Contract
A
agreement in which all parties have fulfilled their duties.
6
Q
Executory Contract
A
Agreement when something remains to be done by one or both parties.
7
Q
Essential Elements of a valid contract
A
Offer and Acceptance
Consideration (something of value)
Legal Purpose
Legally competent parties
8
Q
Mutual assent
A
meeting of the minds or an absolute agreement about the terms of the contract.
9
Q
Offer
A
expression of willingness by one party
10
Q
Acceptance
A
Means that both buyers and sellers have signed an identical contract/offer.
11
Q
Consideration
A
Something of value. Its the incentive of a thing of value presented by one party and accepted by another as an inducement to act or refrain from acting.
12
Q
Discharge of a contract
A
Discharge of a contract means a contract has been terminated. Ideally, in the case that a contract is fully performed, and every party receives what they initially agreed to.
13
Q
Assignment
A
When the rights and duties of a contract are assigned to another third party called the assignee.
14
Q
Novation
A
When a new, clear contract with all accepted changes is signed by all parties.
15
Q
Breach of contract
A
Violation of a contract or agreement that occurs when the party fails to fulfill its promises according to the provisions of the agreement.
16
Q
Specific Performance
A
The buyer is forcing the seller to transfer the title.
17
Q
Reasons a termination of contract can occur
A
- Mutual Agreement
- Operation of law
- Partial Performance
- Substantial performance
- Impossibility of performance
- Rescission
18
Q
Operation of Law
A
Expiration of statue of limitations
19
Q
Partial Performance
A
terms are partially performed, accompanied by a written acceptance by the other party
20
Q
Substantial Performance
A
which one party has substantially performed the duties of the contract but has not completed all the details exactly as required in the contract (this performance may be enough to force an adjusted payment, along with any damages suffered by the second party)
21
Q
Impossibility of performance
A
The contract cannot legally be accomplished
22
Q
The use of preprinted forms raises three issue:
A
- what to write in the blanks
- what words and phrases should be ruled out by drawing lines through them because they don’t apply
- what additional clauses or agreements (called riders or addenda*) should be added. All changes and additions are usually initialed in the margin or on the rider by both parties when a contract is signed.
23
Q
Time required to give each person signing a contract
A
24 hours
24
Q
Ripening the contract
A
When the offer is accepted and signed by the sell and becomes a contract of sale.
25
Sales Contracts Include
1. Purchaser's name and statement of the purchaser's obligation to purchase the property
2. An adequate description of the property
3. Seller's name and statement of a deed
4. Purchase price and how the purchaser tends to pay for the property
5. Amount and form of down payment or earnest money
6. Provision for closing of the transaction and the transfer of possession of the property to the purchaser by a specific date
7. A provision for title evidence
8. The method by which real estate taxes, rents, fuel costs, and other expenses are to be prorated
9. A provision for the completion of the contract should the property be damaged or destroyed between the time of signing and the closing date
10. A liquidated damages clause, a right-to-sue provision, or another statement of remedies available in the event of default
11. Contingency clauses (such as the buyer’s obtaining financing or selling a currently owned property or the seller’s acquisition of another desired property or clearing of the title; attorney approval and home inspection are other commonly included contingencies)
12. The dated signatures of all parties (the signature of a witness is not essential to a valid contract)—In some states, the seller’s non-owning spouse may be required to release potential marital or homestead rights. An agent may sign for a principal if the agent has been expressly authorized to do so. When sellers are co-owners, all must sign if the entire ownership is being transferred
13. In most states, an agency disclosure statement
26
Sale of a Residence
includes personal property, such as appliances, as well as items that are fixtures, such as screens and storm windows or a built-in range. In Wisconsin, any fixtures that might be questioned as fixtures need to be listed in the contract.
27
Statute of limitations for contracts
6 Years
28
IBRETA
interest bearing common real estate trust account.
29
Punishment for commingling of funds
1000 or imprisoned for not more than 6months or both
30
Conversion
The act of using escrow funds for personal use
31
Time that a firm should deposit all real estate trust funds
48 Hours
32
Equitable Title
Gives the equitable right to obtain ownership to a property when title is being held by another party. After both buyer and seller have executed a sales contract, the buyer simply acquires an interest in the land. This interest is known as equitable title
33
Uniform Vendor and Purchaser Risk Act
the seller accepts any loss that occurs before the title passes or before the buyer takes possession
34
Statute 706
when neither the legal title nor the possession of the subject matter of the contract has been transferred, all or a material part thereof is destroyed without fault of the purchaser or is taken by eminent domain, the vendor cannot enforce the contract, and the purchaser is entitled to recover any portion of the price that the purchaser has paid.
35
Amendment
Change to any pre-existing terms in a contract used to remedy a specific term within the contract.
36
Addendums
Provisions added or attached and made part of an existing contract without changing the original body of the contract
37
What form are the disclosures including in?
WB 42 and WB 40
38
Options
An agreement to keep open for a certain period of time an offer to sell or purchase the property. - Example of a unilateral contract
39
Land Contracts or Installment Contracts
Used when creative seller financing is needed to consummate a sale. A land contract is similar to a contract for deed. Installment contract for sale with buyer receiving equitable title and right to possession.
40
REEB 16.02 (1)
Agency Agreement written agreement between a firm and a client in which the client authorizes the firm to provide brokerage services to the
41
REEB 16.02 (1e)
Approved Form contractual or conveyance form which is either prepared and approved by the board, pursuant to s.452.05 (1) (b), Stats., or approved in s.REEB 16.03
42
REEB 16.02 (1m)
Buyer Agency/ tenant representation agreement - written agency agreement authorizing a firm to provide brokerage services to the client for the procurement of an interest in property and providing the terms whereby the firm may earn a commission.
43
REEB 16.02 (2)
Exclusive Agency Listing - listing agreement containing all of the elements of an exclusive right to sell listing, except that the owner retains the right to sell the property himself or herself without owing the listing broker a commission.
44
REEB 16.02 (2e)
Exclusive right to locate buyer agency/tenant representation agreement- written buyer agency/tenant representation agreement giving the firm the exclusive right to locate an interest in property for the client.
45
REEB 16.02 (2m)
Exclusive right to locate and negotiate buyer agency/tenant representation agreement - written buyer agency/tenant representation agreement giving the firm the exclusive right to locate an interest in property and to negotiate the procurement of an interest in property for the client.
46
REEB 16.02 (2s)
Exclusive right to negotiate buyer agency/tenant representation agreement - written buyer agency/tenant representation agreement giving the firm the exclusive right to negotiate the procurement of an interest in a property for the client.
47
REEB 16.02 (3)
Exclusive right to sell listing - written listing contract making a firm the exclusive agent for the sale of property for a specific period of time, and which entitles the listing firm to a commission if the property is sold by the owner, by the firm, or by anyone else.
48
REEB 16.02 (3m)
Listing contract - written agency agreement authorizing a firm to provide brokerage services to the client for the sale or rental of property and providing the terms whereby the broker may earn a commission.
49
REEB 16.02 (4)
Open listing - written listing agreement, which may be given to any number of firms, with the first firm to secure a buyer under the terms of the listing agreement earning the commission.
50
REEB 16.02 (4m)
One-party listing - written listing contract containing all of the elements of an exclusive right to sell listing, except that listing firm is entitled to a commission only if the property is sold by the owner, by the firm, or by anyone else to a specific party or parties identified in the written listing contract.
51
REEB 16.02 (5)
Use a form - to complete a contractual or conveyance form by filling in the blanks or modifying printed provisions on a form for the purpose of accomplishing the instruction of a party in a specific real estate transaction.
52
REEB 16.03(1)(a)
Forms prepared and approved by the state bar of Wisconsin for deeds, mortgages, mortgage notes, truth-in-lending disclosures, land contracts, release of mortgage, satisfaction of mortgage, assignment of mortgage, and assignment of land contract.
53
REEB 16.03 (1)(b)
Uniform commercial code forms: 1, 2, 3, 4, 11, 410, 411, 430, 445, 450, and 451.
54
REEB 16.03 (1)(c)
Contractual forms for the sale, purchase or rental of real estate or a business opportunity located in another state, if the contractual forms are those which licensees may legally and customarily use for such transactions in the state where the real estate or business opportunity is located. HUD and VA property
55
REEB 16.03 (1)(d)
Forms prepared by governmental, quasi-governmental, and tribal agencies for use in programs administered by them under authority provided by law.
56
REEB 16.03 (1)(e)
Forms to be used for a property management agreement between a firm and a landlord, prepared by the broker entering into the agreement, an attorney, or the landlord, that contain provisions relating to leasing, managing, marketing, and overall management of the landlord's property
57
REEB 16.03 (2)
In addition to forms prepared and approved by the board pursuant to s. 452.05 (1) (b), Stats., the board grants approval of the forms in sub. (1) (c), (d), and (e) for use by salespersons. Board-approved contractual forms for use in real estate practice may be used by licensees and shall be available on the department's webpage
58
REEB 16.04
When to utilize approved forms
59
REEB 16.04 (1)
a licensee shall use approved forms when acting as an agent or a party in a real estate or business opportunity transaction.
60
REEB 16.04 (2)
For those kinds of real estate or business opportunity transactions for which the board has not approved contractual forms, a licensee, when acting as an agent or a party, may use contractual forms drafted by a party or an attorney, if the name of the drafter is imprinted on the form before use by a licensee. For the purpose of this subsection, a listing firm is a party to the listing contract transaction.
61
REEB 16.04 (3)
A licensee may in any transaction where the licensee is acting as an agent, negotiate an agreement and permit the parties or an attorney for one or other of the parties to draft or prepare a contractual agreement which embodies all of the negotiated terms and conditions.
62
REEB 16.05
Legal advice and practice of law
63
REEB 16.05 (1)
licensee may not provide advice or opinions concerning the legal rights or obligations of parties to a transaction, the legal effect of a specific contract or conveyance, or the state of title to real estate.
64
REEB 16.05(2)
Notwithstanding sub. (1), a licensee may provide a general explanation of the provisions in an approved form to the parties to a transaction at the time of completing the form or when delivering an approved form for the seller's or buyer's acceptance.
65
REEB 16.05 (3)
A licensee may use approved forms only in those transactions in which the licensee is acting in a capacity as licensee or in which the licensee is a principal, and in either case the use of such forms is incidental to the real estate practice of the licensee.
66
REEB 16.05 (4)
A licensee may not make a separate charge for completing an approved form in connection with a transaction.
