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1

most important document in real estate transaction

contract of sale

2

seller responsibilities

obligated to deliver clear and marketable title to the property to the buyers at closing, to maintain the property in good repair until closing, to allow the buyers to inspect the property just prior to closing, and to pay the agreed upon brokerage commission

3

any contract must contain the following elements

competent parties
legal objective
offer and acceptance
consideration
no defects to mutual assent

**sale of RE req's

written form
proper description of property

4

The value given up, or promise made, by each party to a contract is

consideration

5

both parties to a valid and enforceable contract must provide

consideration

6

parol evidence rule

prohibits the admission of oral evidence in disputes involving written contracts

7

legal title

ownership of a freehold estate

8

equitable title

right to obtain legal title

9

when does equitable title arise

after contract of sale is signed, buyers immediately obtain equitable title, and the seller cannot sell the property to someone else

10

the best standard form contracts are those prepared and approved by

local board of realtors

11

contracts for the purchase and sale of larger more complex income-producing properties are usually drafted by

attorneys

12

contract form has __ distinct parts

2

13

first part of contract from is comprised of sections __ - ___. these concern issues most likely to depend on

1-9; depend on specific property and transaction, and thus need to be customized or negotiated

14

second part of contract from is comprised of sections __ - ___. these include topics thought to be

10-18; less dependent on the specific transaction, and thus are routine

15

contracts for sale may contain section that cause implementation of the contract to depend on the successful completion of some prior action or condition. these are known as

contracts with contingencies

16

broker holds deposit in segregated account called _______________ until closing or until other arrangements are made for its disposition

escrow account

17

assignment means

that one party's contractual rights and obligations are transferred to someone else

18

t/f a contract can prohibit assignment

true

19

when a party fails to perform (breach of contract, nonperformance, default) an aggrieved SELLER may

1. sue for damages
2. retain earnest money deposit as liquidated damages
3. agree to rescission of the contract

20

when a party fails to perform (breach of contract, nonperformance, default) an aggrieved BUYER may

1. sue for damages
2. agree to rescission of the contract
3. sue for specific performance

21

to lessen the chances for nonperformance, real estate contracts are often place in

escrow

22

a third party who is instructed to carry out the provisions of the contract by means of a separate escrow agreement; must be impartial and may not benefit from the provisions of the purchase and sale contract

escrow agent

23

escrow agents are usually

attorneys, financial institutions, or title companies

24

the first step in RE transaction is

negotiating and completing the contract for sale

25

the final step in RE transaction is

closing

26

normally when a buyer signs an offer to purchase, the broker receives _________ from the purchaser amounting to __ - ___ % of the _________

earnest money; 5-10%; purchase price

27

in soft markets, ______ can often insist _______ pay all or part of the expenses that would normally be the ___________'s responsibility

buyers; sellers; buyer's

28

the ____________ is the principal charge paid from the buyer's funds at closing. it is the ultimate closing cost; without its payment there would be no closing

purchase price

29

the _________________ has already been paid by the buyer before the closing. thus the amount of cash req'd from the buyer at closing is reduced by the previously paid ________________

earnest money; earnest money

30

interest on a mortgage is generally paid at _________________

the end of each month