Unit 6: Real Estate Contracts

Question 0

Voidable contract

Answer 0

One party has the right to void contract

Contract with a minor

Disadvantaged party may take legal action to dis affirm

Question 1

Express contract

Answer 1

Terms have been explicitly declared, verbally or in writing

Question 2

Implied contract

Answer 2

Created by the actions of the parties

Question 3

Gross lease

Answer 3

Tenant pays rent only

Question 4

Net lease

Answer 4

Tenant pays rent plus operating expenses

Question 5

Option

Answer 5

Unilateral contract which the buyer has the right to purchase a property from seller is buyer chooses to do so

Owner: optionor

Buyer: optionee

Includes option fee: non refundable, holds option for buyer

Question 6

Statue of frauds

Answer 6

Party attempting to enforce an oral executory real estate purchase contract would be stopped by thus

Requires real estate contracts be in writing

Question 7

Mutual agreement

Answer 7

there was an offer and acceptance there was no fraud, misrepresentation, or mistake and the consent was genuinely freely given

Question 8

Offeror

Answer 8

Party who makes an offer to another party

Question 9

Communication of acceptance

Answer 9

When an accepted offer becomes binding on the offeror

Question 10

Fraud

Answer 10

Actual knowledge to enter into a contract by intentionally deceiving a party

Question 11

Consideration

Answer 11

Something of value given in exchange for something else :

Promise

Money

NOT earnest money (liquidated damages)

Question 12

Executory contract

Answer 12

Buyer has equitable title

Contract has NOT been fully performed

Question 13

Specific performance

Answer 13

Rights of parties to a contract to sue each other to perform the terms of the contract

Question 14

Liquidated damages

Answer 14

When seller keeps only earnest money or other things of value of a buyer who is in default

Must be stipulated as a remedy

Question 15

Unilateral contract

Answer 15

Exchanges a promise for performance

Question 16

Essential elements of a contract

Answer 16

1) mutual agreement
2) a lawful objective
3) consideration

Question 17

Purchase agreement

Answer 17

Creates conditions for closing

Binding on both parties

Offer becomes executory contract

Essential elements: buyer and seller signatures, property description, price a d terms, in writing and signed

Question 18

Lease

Answer 18

Context that conveys right to quiet enjoyment and possession of property buy does not convey title

Bilateral

Landlord: lessor
Tenant: lessee

Essential elements: names of lessor, lessee and description of the property (street address)

Question 19

Notation

Answer 19

New contract that transfers all rights

Question 20

Offer becomes contract

Answer 20

when acceptance a d communication of acceptance take place

Question 21

2 forms of eviction

Answer 21

Actual

Constructive

Question 22

Bi lateral contract

Answer 22

Contract between 2 parties who each make a promise to perform certain acts

Question 23

Valid contract

Answer 23

Meets all essential elements bad all legal requirements

Binding and enforceable in court by both parties

Question 24

Void

Answer 24

No legal effect Lacks 1 or more of the essential elements

Question 25

Offer

Answer 25

During negotiation period, no contract exists May be countered and new offers made until 'meeting of the minds' Strike-thru changes must be initialed and dated by all parties (becomes counter offer)

Question 26

Termination of offer before acceptance results by any of:

Answer 26

1) revocation or withdrawl 2) rejection by offerer 3) any change to an offer 4) event that destroys property (fire) 5) death of either party 6) use of NCA of realtors Response to Buyer's a Offer form

Question 27

Amendment

Answer 27

Required to name changes to a contract

Question 28

Counter offer

Answer 28

Terminates first offer but carries forward many terms from original offer

Question 29

Contractual Intent

Answer 29

Intent to be bound No fraud or misrepresentation No false statements or omission of material facts

Question 30

Material fact

Answer 30

If known, might change a decision and must be disclosed Does NOT include 'Puffung': act of making a claim that anyone would understand is not literally true

Question 31

Caveat emptor

Answer 31

'Buyer beware'... Not common in most states due to disclosure requirements

Question 32

Addendum

Answer 32

Additional material attached to and made part of an offer

Question 33

Assignment

Answer 33

Transfers contract rights but not necessarily all liability All contracts are assignable unless contract prohibits

Question 34

Mutual rescission

Answer 34

Return of all parties to their original condition before contract

Question 35

Breach of contract

Answer 35

Seller who takes fixtures after closing Earnest money returned for insufficient funds

Question 36

Parties

Answer 36

Seller is vendor and holds legal title Buyer is vendee and holds equitable title

Question 37

Contingency clause

Answer 37

States that a party will not be responsible for completing the purchase under certain conditions

Question 38

Sale leaseback

Answer 38

Owner sells property to investor and leases it back Converts equity to working capital w/o giving up possession

Question 39

Variable leases

Answer 39

Rent increases or decreases at pre determined intervals 1) graduated: increase at predetermined intervals bad amount set in lease 2) index: adjusted based on economic indicator

Question 40

Termination of leases

Answer 40

1) estate for years : expiration date, not death 2) periodic estate: notice - not death 3) Estate at will - notice or death 4) actual eviction- court action brought by landlord bc tenant is breach 5) constructive eviction : lessee must vacate due to Lessor's act or failure to act

Question 41

Leae w/ purchase opinion

Answer 41

Tenant desires to purchase but does not want to fully commit up front May apply part of rent to purchase price

Question 42

Agreement for preemptive rights

Answer 42

Rights to first chance to purchase property Seller/landlord initiates Right of first refusal More flexibility for owner then option bc no sry price Seller's only obligation is to give potential buyer or HOA first right to buy

Question 43

Right of first opportunity

Answer 43

More formal then 'first right of refusal' Requires seller to give holder first opportunity to buy at designated terms If opportunity holder declines, seller may fir a specified time accept an offer from another party based on what has Vern agreed to by the holder of opportunity

Question 44

Uniform Electronic Transaction Act (UETA)

Answer 44

Allows documents to be created and signed electronically Contracts can be created and emailed or faxed Electronic signature is binding Original signatures can be obtained at closing for documents