Brainscape's Knowledge GenomeTM


Top Flashcards (Certified)
All Flashcards

Texas National Exam Test Prep > Real Estate Contracts > Flashcards

Real Estate Contracts Flashcards

(78 cards)

Start Studying
1
Q

True or False: Contracts can be Express or Implied.

A

True

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
2
Q

What is an Express contract?

A

Written or Stated

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
3
Q

What type of contract is made by actions or evidence and is neither written nor discussed just simply performed?

A

Implied Contract

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
4
Q

Contracts can also be _______ or ________.

A

Unilateral or Bilateral

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
5
Q

What type of contract binds only one party?

A

Unilateral Contract

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
6
Q

What type of contract allows the right to purchase property within a definite time period at a definite price where There is NO obligation to the purchaser TO BUY, but the seller is obligated to sell?

A

Option Contact

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
7
Q

When an option is exercised, the unilateral contract becomes ___________.

A

Bilateral

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
8
Q

“What is the process for a buyer to extend their option?”

A

The buyer would need to pay an added fee

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
9
Q

What is an exchange of promises which binds both parties in a contract?

A

Bilateral Contract

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
10
Q

What must a contract have to be valid and enforceable?

A

(COLIC)
Competent Parties
Offer and Acceptance
Legal Purpose
In Writing
Consideration

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
11
Q

Explain Competent.

A

sane, sober, and consenting adults

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
12
Q

Legal purpose is also called

A

the “Legality” of the object

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
13
Q

What states that All real estate contracts should be In Writing in order to be enforceable by law?

A

Statute of Frauds

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
14
Q

What is something of value (a payment or a promise) should be given in exchange for what is being offered?

A

Consideration

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
15
Q

True or false: This is considered earnest money

A

False it is not considered earnest money

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
16
Q

Without a contract being in writing, the contract would be ________ but NOT __________.

A

Valid; enforceable

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
17
Q

What is an executed contract?

A

a contract that has been performed fully – there is nothing left to do – a contract that is closed and funded

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
18
Q

What is a contract that is signed but has not yet been carried out?

A

Executory Contract

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
19
Q

True or false: A Valid Contract does NOT have to be in writng

A

True

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
20
Q

The _________ or ___________Contract has no binding effect on the parties who made it

A

Void ; Invalid

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
21
Q

If your client is documented insane and signs a contract it is considered?

A

Void

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
22
Q

When there is a contract, one party has the right to withdraw or rescind, such as a minor, someone who signed under duress it is considered?

A

Voidable

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
23
Q

What contract violates the Statute of Frauds and will NOT be enforced by the courts (verbal real estate agreement)?

A

Unenforceable Contract

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
24
Q

What are the different ways a contract may be Terminated?

A

bankruptcy or foreclosure, new laws making it illegal, or destruction of the property

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
25
If one of the parties to a contract dies, the contract will be binding on the ________.
Heirs
26
What refers to when the parties to a contract agree to cancel the contract, resulting in its termination?
Mutual Recission
27
What is the non-performance of a duty under a contract?
Default
28
When one of the parties to the contract is in default, is the agreement considered?
breached
29
What monetary damages are set out in the contract, and is it NOT necessary to go to court?
Liquidated Damages
30
What are Punitive Damages?
Damages that punish the defaulting party in addition to the actual damages are awarded through the courts when the action is especially harmful.
31
What are Compensatory Damages?
set to cover the actual injury or economic loss.
32
What are the Seller's options if the buyer defaults ?
- Accept Damages - Suit for Specific Performance - Sue for Money Damages - Decide on Mutual Rescission
33
If a seller decides to keep the buyer's deposit if they default in their contract, then the seller has?
Accepted Damages
34
What does it mean when the seller holds the other party to their duties by asking the courts to force the buyer to buy the property?
Suit for Specific Performance
35
True or False: The seller can seek damages for money that are both actual/compensatory and punitive.
True
36
What releases a buyer from all obligations under a contract?
Mutual Rescission
37
What are the Buyer's options if the seller defaults?
-Decide on Mutual Rescission -Suit for Specific Performance -Sue for Money Damages
38
What states that all contracts that relate to the transfer of any interest in real estate must be in writing to be Enforceable?
Statute of Frauds
39
A verbal agreement is _________ and ___________ be enforced by the courts.
voluntary; Will Not
40
What are the only exceptions to the Statute of Frauds Law, which requires contracts to be in writing to be enforcable?
A lease for one year or less is the exception
41
A clause in a contract that allows each party to hold the other to strict performance by the date specified is called?
Time is of the Essence
42
In a contract with a time is of the essence clause, if one party cannot perform exactly on time, the contract becomes __________ at the option of the other party
Voidable
43
True or false: the Time is of the Essence clause is NOT a requirement of a valid contract. It is a choice.
true
44
What is the difference between an Assignment and Novation?
Assignment- A new party will step in and replace the existing party. The agreement does NOT change Novation- new contract is substituted or an existing contract
45
What is open negotiations between the buyer and the seller?
An Offer
46
What might also an offer be called?
a purchase agreement
47
What are 3 key things to know about an offer ?
- it can be withdrawn at any time - All offers must be presented - accepted, rejected, or countered
48
What is a rejection of the offer and the presentation of a new offer?
Counteroffer
49
What is the primary purpose of a counter offer?
Continue negotiations and work towards an agreement
50
What is not necessary in a sales contract, is the consideration and the amount of money is determined by the parties' agreement?
Earnest Money
51
If a buyer defaults earnest money will be the ____________ ______________
Liquidated Damages
52
What is A condition in a contract that has not yet been met, and if it can't be met, the contract will be terminated?
A Contingency
53
True or False: If the parties agree to cancel or a contingency cannot be met, the Cancellation (or Mutual Rescission) should be done by written agreement.
True
54
The offer becomes a contract when it is ___________ by both parties and ______________ is communicated.
Accepted, Acceptance
55
What is A major advantage to the owners of investment properties?
ability to depreciate their investment on their income tax return
56
_________ can never be depreciated on income-producing property. Only ___________ can be depreciated.
Land, Improvements
57
Which method of depreciation allows for equal amounts of depreciation every year during the economic life, which is set by the IRS?
Straight-Line Method
58
What is the period of profitable use during which improvements contribute to value or are being depreciated?
Economic Life
59
What does 1031 Tax Deferred Exchanges mean?
An investor can trade a business or investment property for one or more other investment properties
60
Additional capital or property included in a transaction to even out the exchange is called the ___________.
Boot
61
True or False: The boot is fully taxable at the time of the 1031.
True
62
What is considered the single biggest incentive to investing in real estate?
Th 1031 exchange
63
What are 3 key things to know about the 1031 exchange?
- investor must own a property for 1 year before 1031 -taxes on capital gains are deferred -only thing taxed is the boot
64
An individual can have a tax-free capital gain on the sale of real property up to ___________ and __________ for a couple if the property was the individual’s principal residence for at least two of the last five years. A taxpayer can do this an ___________ number of times.
$250,000, $500,000, Unlimited
65
How can an owner of a single-family home depreciate their property?
if it is used as a rental property
66
WHat are two different types of seller financing?
Installment Sale and an Installment Contract
67
When a seller saves on capital gains tax by spreading the gain over a period of more than one tax year and allows the Title to transfer to the buyer at closing this is what type of seller financing?
Installment Sale
68
What type of contract is also considered a "contract for Deed" ?
Installment Contract
69
When would an Installment contract be used ?
when a seller is working with a buyer who typically cannot qualify for traditional financing
70
True or False: In an installment contract the buyer will not receive the title until the final loan payment is made
True
71
WHat does the IRS regulate?
regulates accounting for all industries in the US, including real estate
72
Your client is an investor who would like to have the right to purchase a commercial tract for $5 million within the next 6 months. What type of contract should he enter into with the seller?
An Option Contract
73
A seller comes into the office to sign a contract. The seller is stumbling and smells of alcohol. How do you proceed?
Send the seller home in a cab and tell then to return at another time
74
A signed sales contract that has not yet gone to closing is:
Executory
75
An underage college student signs a lease, then discloses his age to the landlord. What is true?
The Contract is Voidable at the minor's option
76
A buyer and seller have negotiated a contract on the seller’s property with a closing set for June 14th; time is of the essence. On June 12th, the listing agent calls the buyer’s agent and tells him the seller cannot close on the 14th. The seller can close on the 16th. At this time, what is true?
The Contract is Voidable by the buyer
77
When does an offer become a contract?
When it is accepted and Acceptance is communicated
78

Texas National Exam Test Prep (5 decks)

Brainscape helps you reach your goals faster, through stronger study habits.
© 2025 Bold Learning Solutions. Terms and Conditions