UNIT 19 SALES CONTRACTS Flashcards
(39 cards)
Mishandling confidential information or any other conduct that harms the principles bargaining position is a violation of the agents __________
(PG 384)
-FIDUCIARY OBLIGATIONS
-PENNSYLVANIA R.E. LICENSEES are required to first present the _______ __________ to explain agency relationships at the initial contact. – The consumer then decides the _________ of _________ and enters into a _________
- CONSUMER NOTICE
- The consumer then decides the LEVEL of REPRESENTATION and enters into a WRITTEN AGREEMENT
-It is the licensees obligation to disclose
known costs associated with selling or
buying the property when?
-There should be no_________
(PG 384)
- BEFORE their clients enter into a contract
- NO SURPRISES
MATERIAL FACT
WHAT IS IT?
(Something is wrong, but cannot necessarily be seen such as mold / led/ )
(PG 384)
-A MATERIAL FACT (A FACT) is information that is
significant to a person and the person‘s
ability to make an informed decision
– although the required sellers disclosure
statement addresses certain property conditions,
a variety of other information maybe material to
individual buyers, and therefore, must be
disclosed
– example health concerns/allergies.
– The courts however rule that certain matters are
not material regardless of an individual‘s assertion,
including those that violate FAIR HOUSING LAWS
LATENT DEFECT (STRUCTURAL)
** Can also include undisclosed building codes
(PG 384 UNIT 19)
– A LATENT DEFECT is a hidden structural
defect that would not be discovered by
ordinary inspections
– buyers may cancel the sales contract or
receive damages when a seller knows and fails to
reveal a known latent defect
– the courts have also decided in favor of the buyer
when the seller neglected to reveal violations of
zoning or building codes
EX. Problems cannot be simply ignored for example throw rugs over a particularly bad spots and hope buyers won’t look underneath. If the seller refuses to disclose the problem then the broker should refuse the listing.
It is not only the right but also the responsibility of the buyer to discover any MATERIAL problems with the property.
– ___________discovered by the licensee must be disclosed to prospective buyers
– if the licensee should have known about the substantial defect that is detected later by the buyer, the agent may be ________to the buyer for any damages resulting from the defect
- MATERIAL FACTS
- The agent may be LIABLE to the buyer for any damages resulting from the defect
-STIGMATIZED PROPERTIES
??HIV & AIDS related deaths in a property CAN or CANNOT be disclosed?
(PG 385 UNIT 19)
Properties that have found to be undesirable
because of events that occurred there
– the property itself IS intact
(but it has a negative reputation)
– there may have previously been criminal events,
such as homicides, illegal drug manufacturing, or
gang related activity
– properties have been stigmatized by rumors that
they are haunted or that a death and/or a suicide
occurred on that property
-HIV & AIDS CAN NOT BE DISCLOSED
-PENNSYLVANIA LAW REGARDING
STIGMATIZED PARTIES
PENNSYLVANIA DOES OR DOES NOT have laws
regarding stigmatized properties?
-In 2014, in reference to the Milliken
vs.Jacono case, the PENNSYLVANIA SUPREME
COURT affirmed lower court decisions that
_________stigmas on a property are not a _______
_________that reduce the value of the property, and
therefore do not require the seller to disclose.
-buyers are put on _____that they have the _________
to research the infamous history of the house on
which they are making an offer.
(PG 385 UNIT 19)
-PENNSYLVANIA DOES NOT have laws
regarding disclosure of information about
stigmatized properties.
-2014 Milliken vs. Jacono case,
PENNSYLVANIA SUPREME COURT
affirmed that PSYCHOLOGICAL STIGMAS on a
property are not MATERIAL DEFECTS that reduce
the value of the property and therefore do not
require the seller to disclose.
-Buyers are put on NOTICE that they have the
RESPONSIBILITY to research the infamous
history on the house on which they are making an
offer
ESTIMATED STATEMENTS OF CLOSING COSTS
-THE REAL ESTATE COMMISSIONS RULES AND REGULATIONS state that WHAT (4 things(items)
need to be included before the parties ____ an agreement of sale
(PG 385 UNIT 19)
-THE REAL ESTATE COMMISSIONS RULES
AND REGULATIONS state that:
- brokers commissions
– mortgage payments and financing costs
– taxes and assessments
– and settlement expenses
must be included before the parties SIGN an agreement of saleFRAUD
PG 386 UNIT 19
-intentional misrepresentation/LYING about
MATERIAL FACTS in a way that harms or
takes advantage of another person
– includes the false statements about a property
(LYING)
– includes intentionally concealing or failing to
disclose important facts
– if a licensee is fraudulent misstatement results in a
contract to purchase real estate, the contract may
be disaffirm or renounced and the licensee may
lose a commission and be liable for damages as
well.
-licensees face disciplinary action by the
STATE REAL ESTATE COMMISSIONS If
they make representations or give assurances or
advice concerning any aspect of real estate
transactions that is known to be, (or should be
known) to be __________ _____________
____________ (deals with misrepresenting
statements)
-when representations made by the licensee about a
property that is being SOLD, the licensee should
clearly state that the seller is the source of
_______.
-When acting as the seller’s agent, the licensee
should caution seller clients about their liability
for any _______ or _________
(PG 387 UNIT 19)
-……representations or give assurances or advice concerning any aspect of a real estate transaction that is known (or should be known) to be – incorrect
- inaccurate
– improbable
(See example in the above paragraph on page 387)
– A licensee may not knowingly be a party to a material fact or an inaccurate representation.
- When selling a property, the licensee should clearly state that the SELLER IS THE SOURCE OF INFORMATION
- When acting as the seller’s agent, the licensee should caution seller clients about their liability for any MISSTATEMENTS OR OMISSION.
The sales contract is the most \_\_\_\_\_ \_\_\_\_\_\_\_\_
in the sale of real estate
– it establishes legal rights and obligations of the
buyer and seller
– depending on the area the SALES AGREEMENT
CONTRACT maybe called:
-OFFRER TO PURCHASE
-CONTRACT OF PURCHASE AND SALE
-PURCHASE AGREEMENT
-ERNEST MONEY AGREEMENT
-DEPOSIT RECEIPT
(PG 387 UNIT 19)-THE MOST IMPORTANT DOCUMENT IN
THE SALE OF R.E.
- LEGAL RIGHTS AND OBLIGATIONS OF THE SELLER AND THE BUYER
– A real estate sales contract is the ________
agreement between a ______ of a parcel of
real estate and the __________
– as soon as it has been prepared and SIGNED BY
THE BUYER it is an _________ ___ ___________
-IF the document is accepted and SIGNED BY THE
SELLER it then becomes an _______ ___ ______
The agreement of sale creates a ________ _________
___________ _________between the seller and the
buyer
- in effect, the agreement of sale dictates the
contents of the ______
(PG 387 UNIT 19)
-COMPLETE AGREEMENT between a BUYER
of a parcel of real estate and the SELLER
-it is an OFFER TO PURCHASE real estate as soon as
it has been prepared and signed by the. BUYER
- if excepted and signed by the SELLER, it then
becomes an AGREEMENT OF SALE
-The agreement of sale creates a LEGALLY
ENFORCEABLE CONTRACTUAL RELATIONSHIP
between the seller and the buyer
- dictates the contents of the DEED
In addition to essential elements of the sales contract there are several other details that frequently appear in the contract they are:
(PG 387 UNIT 19)
-Sales price and terms
– legal description of the land
– statement of the KIND AND CONDITION of
the TITLE in the FORM OF THE DEED to be
DELIVERED TO THE SELLER
– the kind of title evidence required, who will
provide it, and how many defects in the title will be
eliminated
– a statement of all terms and conditions of the
agreement between the parties and any
contingencies.
If a SALES CONTRACT (OFFER TO
PURCHASE) has any ambiguity, the courts
generally interpret the agreement against the
person who?
(PG 388 UNIT 19)
-The person who PREPARED IT
“It is the INCUMBENT on the licensee to safeguard the interests of all parties when preparing contracts, regardless of whether the licensee is representing a client or providing customer level service, and to ensure that the parties get any necessary professional advice from experts”.
(PG 388 UNIT 19)
-INCUMBENT MEANING RESPONSIBILITY
-an agreement between _____or more parties meet certain basic requirements and form a legally binding contract
– the ESSENTIALS OF A CONTRACT include (5 answers)
(ALSO SEE PG 189-190)
-2 or more parties
-THEN ESSENTIALS OF A CONTRACT
INCLUDE: (WHAT MUST BE IN A
CONTRACT)
- OFFER AND ACCEPTANCE
-CONSIDERATION (LEGAL VALUE OFFERED BY
ONE PARTY
-LEGALLY COMPETENT PARTIES
-LEGALITY OF OBJECT (CAN’T BE ILLEGAL)
-REALITY OF CONSENT (CONSENT/ FREE
VOLUNTARY DECISION WITHOUT INFLUENCE
PG 190)
-IN THE SALES CONTRACTS, WHO LISTS
THE OWNERS R.E. FOR SALE?
-When a perspective buyer is found, who HELPS the
consumer prepare an offer to purchase?
-once the offer is signed by the buyer, who
presents the offer to the seller?
(PG 388 UNIT 19)
-ONLY THE “BROKER” CAN LIST THE R.E.
(THEY LIST, RENT, SELL UNDER THEIR
NAME)
- The licensee HELPS the consumer prepare
an offer to purchase (THE LICENSEES ACT
UNDER THE NAME AND SUPERVISION OF THE
BROKER)
- The offer is signed by the buyer and presented to
the seller by the LICENSEE (ACTING UNDER THE
SUPERVISION OF THE BROKER)
ERNEST MONEY (PG 388-389 UNIT 19)
-WHAT IS ERNEST MONEY?
-IS OR IS NOT ESSENTIAL?
-The earnest deposit is evidence of the
buyers ________to carry out the terms of the
contract in good faith
- WHO HOLDS THE CHECK?
-The amount of the deposit is agreed-upon by the
______
- Under the terms of LISTING AGREEMENTS, the
broker is required to accept a _________as earnest
money
- (in this case) a deposit for purchasing real
estate known as ERNEST MONEY
-customary, but NOT ESSENTIAL for the purchaser
to provide a deposit (**a deposit is different than a
down payment card 23) when making an offer to
purchase real estate - Evidence of the BUYERS INTENTION to carry out
the contract in good faith - The check is given to the BROKER who holds it for
parties in a special account, as required by
licensing laws and real estate commissions
regulations (UNIT 13) - The amount of the deposit is agreed-upon by the
PARTIES - Under the terms of listing agreements, a broker is
REQUIRED to except a REASONABLE AMOUNT
as earnest money
ERNEST MONEY (PG 389) As a rule, the deposit should be an amount sufficient to (3 THINGS)
SUFFICIENT TO:
-discourage the buyer from defaulting
– compensate the seller for taking the property
off the market
- cover any expenses the seller might incur if the
buyer defaults
- ERNEST MONEY (PG 389 UNIT 19)
-The earnest money/deposit cannot be mixed
with brokers personal funds, this is called ______ - if a broker uses earnest money for their personal
use it is called ______
-Separate escrow accounts do not have to be open
for each earnest money deposit received, ALL
DEPOSITS MAY BE KEPT IN ONE ACCOUNT
-COMMINGLING
- Using earnest money funds for their
personal use is called CONVERSION
ERNEST MONEY (PG 389 UNIT 19)
Once the sales person or an associate broker
receives the deposit, the escrow money is
immediately turned over to the employing broker.
The broker must deposit these funds by the end of
the business day following the receipt by the
broker. If the funds are in the form of a check for an
offer to buy or lease real estate then the broker
may __________
- If the offer is excepted, the check must be deposited into the trust accounts by (when?)
-THE BROKER MAY HOLD THE CHECK
UNTIL THE OFFER IS ACCEPTED.
-deposited into the trust account by the end of the
next banking day
ERNEST MONEY (PG 389 UNIT 19) What is the difference between a deposit and a down payment?
-DEPOSIT an earnest money/deposit is given
in good faith to demonstrate the
seriousness of the buyers intend to perform on the
contract
- DOWN PAYMENT Relates to the buyers
financing as the difference between the purchase
price and the amount of the mortgage loan the
buyer will obtain
-What is a BINDER (PG 389 UNIT 19)
-Some states, licensees may prepare a
SHORTER DOCUMENT KNOWN as a
BINDER instead of a complete contract
– the binder states the essential terms of the offer
and acknowledges that the LICENSEE HAS
RECEIVED THE PURCHASERS DEPOSIT
- a MORE FORMAL AND COMPLETE CONTRACT of
sale drawn up by an ATTORNEY once the seller
excepts and signs the binder
– a BINDER might also be used were details of the
transaction are too complex for the standard sales
contract form.
