Law of Contracts Flashcards
(137 cards)
1
Q
Government Rights in Land
A
- Police Power
- Eminent Domain
- Taxation
- Escheat
2
Q
Police Power
A
right to regulate and control how land is used
3
Q
Eminent Domain
A
right to take private land for public use
4
Q
Escheat
A
transferring real estate to the state when a person dies without will or heirs
5
Q
Fixed- Rate Mortgage
A
- Rate does not change
- Amortized loan
- Payment applied to interest first
6
Q
Adjustable-Rate Mortgage
A
rate changes
7
Q
Advantages of ARM Loans
A
- Lower interest rate
- Higher loans
- Falling rates
8
Q
Disadvantages of ARM Loans
A
- Early refinancing
- Unpredictable home mortgage payments
- Long-term cost
- Confusion
9
Q
Blanket Mortgage
A
covers more than one property
10
Q
Package Mortgage
A
Includes real and personal property
11
Q
Budget Mortgage
A
Payment includes PITI, principal, interest, taxes, insurance
12
Q
Balloon Note
A
- Partially amortized final payment is much larger
- Lower interest rate
- High cost of refinancing
13
Q
Collateral- Dependent Loans (Hard Money Loans)
A
Funds secured by value of parcel
14
Q
Wraparound Mortgage
A
- Low interest rate
- Seller financing, new loan takes secondary lien original not repaid
15
Q
Open-End Mortgage
A
- Additional borrowing on same note
- Home Equity Line of Credit
- Minimum withdrawal is $4,000
16
Q
Participation Loan
A
- 2+ lenders own a share
- Share appreciation mortgage
- Lender collected PI and shares when sold
17
Q
Reverse Annuity Mortgage
A
- At least 62 years old
- Due upon sale or death
18
Q
Sub-Prime Loans
A
- Risk-based pricing
- Borrowers rated A-F
- Interest is based on rating
19
Q
Right of First Refusal
A
A tenant has the right to match or better any offer the landlord may receive on the property before the property is sold to someone else.
20
Q
Chain of Title
A
history of all previous owners
21
Q
Abstract of Title
A
complete history of title
22
Q
Attorney’s Opinion of Title
A
opinion regarding state and transferability of title
23
Q
Cloud on the Title
A
claim or encumbrance on title
24
Q
Patent
A
original conveyance of land from government
25
Title Commitment
statement of condition of title from title company
26
Title Insurance Policy
title company agrees to compensate for losses due to defects in title
27
Real Estate Settlement Procedures Act (RESPA)
- Consumer Financial Protection Bureau (CFPB) Regulation X
- Ensures consumers are provided with information regarding mortgage settlement and protected from unnecessarily high settlement charges
- Prohibits undisclosed referral fees and kickbacks
28
Mortgage Insurance Premium
- Part of FHA loan
- Covers claims when borrower defaults on loan
- Pays up-front and annual premium
- Can be added to loan even if it exceeds appraised value
29
Private Mortgage Insurance
- Allows lenders to increase LTV
- Required when LTV exceeds 80% in conventional loans
- Insures difference between down payment and 80% LTV
30
Five elements of a valid and enforceable contract
COLIC
- Competent Parties
- Offer and Acceptance
- Legal Purpose
- In Writing
- Consideration
31
Contract
Agreement between two or more parties to do or refrain from doing something
32
Special Warranty Deed
promises to defend title only against claims during their ownership
33
Bargain and Sale Deed
no guarantees or warranties. Implies ownership
34
Quitclaim Deed
no guarantees, warranties or covenants. Does not claim to own property
35
Gift Deed
consideration is love and affection
36
Guardian's Deed
minor’s interest is conveyed
37
Sheriff/Trustee's Deed
foreclosure
38
Correction Deed
corrects error in previous deed
39
Tax Deed
property sold by government at a tax sale
40
Intestate Succession
person dies with no will
41
Probate
judicial proceeding to confirm validity of will
42
Formal Will
prepared by attorney
43
Holographic Will
handwritten
44
Nuncupative Will
oral or deathbed will, only valid for personal property
45
Codicil
addition to existing will
46
Types of Leasehold Estates
- Estate for years
- Periodic Tenancy
- Tenancy at Sufferance
- Tenancy at Will
47
Estate for Years
set term. Survives death and sale
48
Periodic Tenancy
renews automatically. Survives death and sale
49
Tenancy at Sufferance
tenant occupies against owner’s wishes
50
Tenancy at Will
tenant occupies with permission for uncertain time
51
Gross Lease
- landlord pays charges. taxes, insurance, repairs
| - tenant only pays rent
52
Net Lease
- tenant pays rent plus expenses
53
Double net lease
Tenant pays rent, property taxes and property insurance
54
Triple Net Lease
tenant pays rent and all fixed and variable expenses
55
Single Net Lease
tenant pays rent and property taxes
56
Percentage Rent
- rent is based of gross receipts of tenant's business
57
Easement
Gives one right to use or pass through another’s property
58
Easement in Gross
Belongs to person or corporation and not land
59
Easement Appurtenant
Right to benefit from piece of land
60
Creation of Easements
- Grant
- Reservation
- Implied grant
- Prescription- continuous use without permission
- Necessity
- Condemnation
61
Termination of Easements
- Merger
- Release
- Abandonment
- Death
62
Subrogation
Title insurance policy that allows title company to reduce compensation from claim by amount seller is paying
63
Contingency
Provision in contract requiring specific act for contract to be binding
64
Presentation of offers
- All offers must be presented
| - Imputed notice- offered presumed to be delivered when given to agent
65
Acceptance
```
-No changes to offer, as is
Intent
-Manner of acceptance
-Timeliness of acceptance
-If acceptance is unconditional
```
66
Remedies for Buyer Default
- Liquidated Damages- earnest money
- Monetary Damages- decided by court
- Specific Performance- force to complete contract
67
Remedies for Seller Default
- Refund of Earnest Money
- Monetary Damages- decided by court
- Specific Performance- force to complete contract
68
Physical Characteristics of Land
- Indestructibility
- Immobility
- Nonhomogeneity
69
Economic Characteristics of Land
- Scarcity- supply and demand
- Modification- value affected by man made changes
- Fixity- land pays for itself
- Situs- location from economic viewpoint
70
Paragraph 11- Special Provisions
Terms can be addressed that are not covered in contract or addenda
71
Statute of Frauds
All contracts for longer than one year must be in writing
72
Texas Veterans Land Board
- Veteran’s loan is sold to TVLB
| - Rate is up to 1% lower
73
TREC Temporary Lease Agreements
When buyer or seller occupies for less than 90 days from closing
74
Option Contracts
Seller gives buyer right to purchase for a period for some form of consideration
75
Prorated Items at Closing
Property taxes and HOA fees
76
Common Law
- Based on local custom and common sense
- Developed in England
- Uses previous decisions
77
Statutory Law
based on laws and regulations
78
Bill of Sale
personal property being transferred with real property
79
Cooperatives
- Do not own specific unit
| - Buy shares and receive proprietary leases
80
Executory Contracts
Contract is binding on parties but some duties have not been performed yet
81
Earnest Money
- Shows buyer is serious about intent to purchase
- Placed into escrow when contract signed
- If not delivered on time, seller can terminate
82
Buffer Zone
area of land separating one land use from another
83
Setback
amount of space required from lot line to building line
84
Variance
permission to violate rules
85
Addendum
attachment to contract that adds or further describes duties
86
Amendment
changes to contract
87
Encumbrance
claim, lien char or liability attached to and binding real property
88
Lien
right given by law to certain creditors to have debts paid out of property of a defaulting debtor
89
Equal Credit Opportunity Act (ECOA)
- 1974
- All consumers given equal chance for credit
- Prohibits discrimination on protected classes, and for receiving public assistance
- Does not prevent obtaining information
90
Truth in Lending Act (TILA)
Disclosure of key terms in lending arrangement and all costs
91
Regulation Z
Advertisement must disclose key terms
92
Community Reinvestment Act (CRA)
prohibits redlining and ensures banks serve needs of community in which they do business
93
Dodd-Frank Wall Street Reform and Consumer Protection Act
- Established Consumer Financial Protection Bureau
- Promote financial stability by improving accountability and transparency
- Ending bailouts
94
Seller's Disclosure Notice
Seller discloses all facts and defects concerning property
95
Offer Requirements
- Communicated to specific offeree
- Intended to be serious offer
- Definite and certain enough to be accepted
96
Counteroffer
- Party changes offer in some way
| - Reject initial offer and make new offer
97
Rejection with Invitation to Resubmit
Reject offer and makes suggestions to what would be acceptable
98
Ownership in Severalty
Ownership by one person or entity
99
Co-Ownership
Ownership by 2+ people or entities
100
Tenancy in Common
Ownership by 2+ in undivided interests
101
Joint Tenancy
- Right of survivorship
- 4 Unities
- Time- acquire at same time
- Title- from same source
- Interest- equal shares
- Possession- shared equally
102
Community Property
Property acquired during marriage is owned equally
103
Separate Property
Property owned by married person that is not community property
104
Tenancy by Entirety
Joint tenancy between two married individuals
105
Syndicate
Two or more join to create and operate investment
106
The Secure and Fair Enforcement for Mortgage Licensing Act (SAFE Act)
- Enhance consumer protection and reduce fraud by establishing minimum standards for licensing and registration of loan originators
- Must be registered with Nationwide Mortgage Licensing System and Registry
107
Sole Proprietorship
Venture owned by one individual
108
Partnership
- Must have one or more general partners
| - Can be created with written or oral agreement
109
Joint Venture
Individuals join for project them dissolve upon completion
110
Corporate Ownership
- Filed with Office of Secretary of State
- 3 components
- Shareholders
- Board of directors
- Corporate officers
111
S Corporation
Under 100 shareholders
112
Sublet
Transfer of some or all of tenants rights to another party with liability remaining on lessee
113
Assignment
Rights and liabilities of tenant transfer to another
114
Option to Buy
Allows tenant to buy at preset price and terms for given period
115
Mutual Rescission
Lease termination by agreement of both parties
116
Essential Elements of Option Agreement
- Term
- Price
- Conditions
117
Contract for Deed
- Title transfers at closing
| - No lender used, seller financing
118
Lease-Purchase Agreement
- Tenant agrees to purchase the property at some agreed-to time and terms
- Binding on both parties
- Payments applied to down payment or sale price
119
Residential Financing Options
- Third Party
- Assumption of existing mortgage, FHA, VA
- Seller Financing
120
Causes for contract termination
- Non-performance
- Performance is illegal
- Destruction of Property
- Mutual Rescission
121
Escalation Clause
Anything above a certain amount of taxes and utilities is charged to tenant
122
Fair Housing Advertisement Protected Categories
- Use of Racial and Ethnic Terms
- Religious Preference
- Gender Preference
- Handicapped Persons
- Familial Status
123
Title Contingency
Title must be marketable and examined
124
Financing Contingency
Must be able to obtain financing approval
125
Sale of Other Property Contingency
Sale is contingent on buyer selling existing property
126
Appraisal Contingency
Property must appraise for sales price
127
Inspection Contingency
Subject to satisfactory inspection
128
Mandatory Disclosures
- Lead-based paint if home built before 1978
- Environmental hazards
- Radon
129
Potential Hazardous Materials
- Radon
- Asbestos
- Urea Formaldehyde Foam Insulation
- Lead
- Landfills- water testing
- Underground Storage Fuel Tanks- water testing
- Farming Herbicides and Pesticides- water testing
- Electromagnetic Fields
130
Consideration in a valid contract
Something given in exchange for a promise
131
Paragraph 21 of the 1-4 Family Sales Contract
- Notices
| - Must enter client’s contact information
132
DTPA Coverage Categories
- Producing cause of
- Deceptive act
- Breach of warranty
- Unconscionable course of action
- Act in violation of Texas Insurance Code
133
Mortgage
Contract between lender and borrower
134
Deed of Trust
Contract between borrower, lender, and trustee
135
Promissory Note
Borrower’s unconditional promise to repay
136
Escrow
- Bank account to pay expenses
- Escrow agent is fiduciary
- Administered by lender
137
Trust
- Hold funds until completion
| - Benefit beneficiary, trustee
