Unit 11 - Real Estate Contracts

Question 1

Assignment

Answer 1

The transfer in writing of interest in a bond, mortgage, lease, or other instrument.

Question 2

bilateral contract

Answer 2

A bilateral contract is one where there is a promise for a promise. Sales contracts and listings are examples of bilateral contracts. In a listing contract, the seller promises to pay if the agent promises to procure a purchaser.

Question 3

Breach Of Contract

Answer 3

Violation of any terms or conditions in a contract without legal excuse; for example, failure to make a payment when it is due.

Question 4

Commingling

Answer 4

The illegal act by a real estate licensee of mingling client or customer funds with the licensee’s personal funds.

Question 5

Consideration

Answer 5

(1) That received by the grantor in exchange for his deed. (2) Something of value that induces a person to enter into a contract.

Question 6

Contingency

Answer 6

A provision in a contract that requires a certain act to be done or a certain event to occur before the contract becomes binding.

Question 7

Contract

Answer 7

A legally enforceable promise or set of promises that must be performed and for which, if a breach of the promise occurs, the law provides a remedy. See also unilateral contract and bilateral contract.

Question 8

Conversion

Answer 8

The wrongful appropriation of property belonging to another (i.e. earnest money); also, the process of changing a property’s status from rental to condominium.

Question 9

Counteroffer

Answer 9

A new offer made in response to an offer received. It has the effect of rejecting the original offer, which cannot be accepted thereafter unless revived by the offeror.

Question 10

Earnest Money

Answer 10

Money deposited by a buyer under the terms of a contract. It may be forfeited if the buyer defaults but applied to the purchase price if the sale is closed.

Question 11

Equitable Title

Answer 11

The interest held by a vendee under a contract for deed or an installment contract; the equitable right to obtain absolute ownership to property when legal title is held in another’s name.

Question 12

Executed Contract

Answer 12

A contract in which all parties have fulfilled their promises and thus performed the contract.

Question 13

Executory Contract

Answer 13

A contract under which something remains to be done by one or more of the parties.

Question 14

express contract

Answer 14

An express contract is an exchange of promises where terms by which the parties agree to be bound are declared either orally or in writing, or a combination of both, at the time it is made.

Question 15

Implied Contract

Answer 15

A contract under which the agreement of the parties is demonstrated by their acts and conduct.

Question 16

Land Contract

Answer 16

A contract for the sale of real estate whereby the purchase price is paid in periodic installments by the purchaser, who is in possession of the property even though title is retained by the seller until all payments are received in full. Also called a contract for deed or an articles of agreement for warranty deed.

Question 17

Liquidated Damages

Answer 17

An amount predetermined by the parties to a contract as the total compensation to an injured party should the other party breach the contract.

Question 18

Novation

Answer 18

Substituting a new obligation for an old one or substituting new parties to an existing obligation.

Question 19

Offer And Acceptance

Answer 19

Two essential components of a valid contract; a “meeting of the minds.”

Question 20

Option

Answer 20

An agreement to keep open for a set period an offer to sell or purchase property.

Question 21

Specific Performance

Answer 21

A legal action to compel a party to carry out the terms of a contract.

Question 22

Statute Of Frauds

Answer 22

The part of a state law that requires that certain instruments, such as deeds, real estate sales contracts, and certain leases, be in writing to be legally enforceable.

Question 23

Time Is Of The Essence

Answer 23

A phrase in a contract that requires the performance of a certain act within a stated period of time.

Question 24

Unenforceable Contract

Answer 24

A contract that has all the elements of a valid contract, yet neither party can sue the other to force performance of it.

Question 25

Unilateral Contract

Answer 25

A one-sided contract wherein one party makes a promise so as to induce a second party to do something. The second party is not legally bound to perform; however, if the second party does comply, the first party is obligated to keep the promise.

Question 26

Valid Contract

Answer 26

A contract that complies with all the essentials of a contract and is binding and enforceable on all parties to it.

Question 27

Void Contract

Answer 27

A contract that has no legal force or effect because it does not meet the essential elements of a contract.

Question 28

Voidable Contract

Answer 28

A contract that seems to be valid on the surface but may be rejected or disaffirmed by one or both of the parties.