section 3: real estate contract and agency

Common law

(ordinary english law) unwritten law that takes its force from customs and usage; based not he concept of justice as opposed to inflexible rules

four main categories of leasehold estates

1. for years 2. from year to year 3. at will 4. at sufferance

what is the commission for selling house? (typical but not by law)

6 percent

equitable title

Any present right to acquire legal title to property.

FSBO

For Sale By Owner. A way to sell a house without involving a real estate agent.

competitive market analysis

Prepared in order to best recommend a listing price

Broker Bob takes an open listing on Seller Sara's house. Broker Bob would be entitled to a commission on the sale of the house:

a broker gets paid on an open listing only if the broker was the processing cause of the sale, meaning that the broker found the buyer

why do brokers feel that an exclusive right to sell listing gives the broker the most protection?

a broker who gets an exclusive right to sell listing would be paid the commission regardless of who finds the buyer

Agency relationship

a contractual relationship whereby one person represents another

earnest money

a deposit to show good faith, a down payment

power of attorney

a legal written document in which one person appoints another to be his attorney in fact, and authorizes him to act on his behalf

fiduciary

a person who is placed in a position of trust to a ct for someone else benefit. the license placed in this position must act int he best interests of the client and must do nothing to harm the client. position of trust and confidence

dual agnecy

a real estate broker who represents both the buyer and the seller

convenant

a solemn promise intended as binding. agreement or pledge between two or more parties.

promissory note

a written evidence of debt, together with the promise to repay

commingling

act of mixing o mingling personal funds with funds that should be held in trust for others in a separate escrow account

mistake

an error or misunderstanding

conveyance

an instrument used to transfer title to property from one person to another

freehold

an interest in real property of a life estate or greater

leasehold estate

an interest less than a freehold. held by a lessee

multiple listing service (MLS)

an organization usually affiliation with eh local board of realtors member broker put their listings on it notifies all brokers that the property is for sale and commissions will be shared used to carry an implied offer of subagency- no longer true in most states cooperating brokers can choose to a ct as agent for the seller or agent of the buyer

fraud

any form of deceit by which one party intentionally attempts to gain unfair advantage over another key word: intentional

the doctrine of relation back

as applied to escrow, means that the title passes when the feed is delivered into escrow. the death of the grantor does not terminate the escrow.

paid commission

at closing

riders and addenda

attach it to the lease and addenda- adding something to an exhibit

duties of clients to agents

availability inform compensation idemnification

real estate sales contract

begins as an offer earnest money deposit is customary counteroffer terminates original offer becomes a contract when accepted and communicated then the buyer has equitable title

express characteristics of contract

both parties shave at least talked about their agreement if not put it in writing

payment goes to ...?

broker your broker will then pay a percentage to you

buyer representation client

buyer is the broker client seller usually a customer suaulyl calls for specified percentage commission ( 3 percent) commissions paid by seller would be applied first

option cract

buyer: optionee, pays option premium, choice to buy, equitable title interests seller: option, gets premium, obligation to sell, retains legal title example: subdivider, considering purchase of land for subdivision, subdivider needs tim etc make sure its economically fesiable- at state price for state time

contract ofr deed- installment sales contract

buyer: vendee, holds equitable title, gets deed at end of term seller: vendor, retains legal title, signs deed at end of term

exceptions for do not call registery

client: can call for 18 months inquires: 3 months

valuable consideration

consists of money or property but may also be an enforceable promise

do not call registry

consumers can register their phone numbers

a buyer includes a clause that allows the buyer to rescind the offer to purchase a property if the home inspector finds undisclosed problems with th property. this is an example of

contingency clase

executed contract

contract fully performed

implied

created by actions rather than discussion

Sherman antitrust act

designed to prohibit monopoly prohibits: price fixing, boycotts, market allocation, tie in arrangements

listing contract with seller

employment contract between broker and seller all owners must sign the contract- i.e. husband and wife both sign contract- the other spouse could descend the sale if only one did

in what type of listing would the listing broker be paid the commission if the listing broker or any other broker was the processing cause but not if the seller found the buyer personally

exclusive agency listing

agency relationship may be created in the following ways:

express agreement implies agreement ratification estoppel

misrepresentation

false statement or concealment of a material fact

universal agent

given the legal power to transact matters of all types on behalf of the principal. e..g unlimited power of attorney

puffing

harmless statement of exaggeration that has a reasonable person would be expected to recognize

helen sells her house to fred using a contract for deed. which of the following statements if correct

helen (the seller) is the vendor and holds legal title fred (the buyer_ is the vendee and holds equitable title

a buyer's agent's commission would most likely come from the buyer:

in the case of FSBO traction there is no listing broker so the commission would come form the buyer

estopped certificate

is a legal document that clarifies the exact amount of debt owed by one party to another party and/ or the situation between the parties as of a certain, specified date.

statute of frauds

laws that require certain contracts must be in writing to be enforced. all leases for over a year must be in writing

estoppel

legal doctrine that stops, prevents a person from assertion certain rights or stating certain facts, if such action is judged to be inconsistent with a previous position. you tell aprons yes and that person relies on and acts upon your yes answer. later on you decide to change your mind and tell that sam person no. that person appeals to the court. the court mat rule that you are estopped form saying no.

rescission

legal remedy hat terminates the contract and returns the parties to their original positions.

five primary elements of every contract

legally competent parties clearly identified property description a meeting of the minds as to the essential terms consideration a legal purpose

contract

legally enforceable agreement between competent parties who agree to perform or refrain from performing certain acts for consideration

right of first refusal

less formal than option "first dibs" if owner decides to sell property most often given to else by lessor tenant has first dibs if owner decides to sell propety Gives a person the right to match any valid offers to purchase the property

caveat emptor

let the buyer beware

remedies for breach of real estate sales contract

liquidated damages suit for damages suit for specific performance

exclusive agency listing

listing broker paid if ANY broker finds the buyer exception: no commission if owner finds the buyer

exclusive right to sell listing

listing broker paid no matter who finds the buyer

net listing

listing broker's commission is anything over a target price illegal in most states

agent's duties to the client:

loyalty, obedience, disclosure, confidentiality, reasonable care, due diligence, accounting

time is of the essence

means that time limits are to be enforced

conversion

means the misappropriation of entrusted funds in escrow

commission is what

negotiable, no min or max

open listing

non exclusive amy be given to many brokers only the broker who is the procuring cause gets paid

good consdieration

often used for a gift deed and is frequently love an daffection

void contract

one that has one or more of the five essential elements missing and thus has no legal force or binding effect

buyer agency

one who acts for the buyer's interests

a licensed real estate salesperson an receive compensation for real estate activities from

only their employing broker

executory contract

performance on contract has not yet occurred

termination of contracts

performance, abandonment, lapse of time, permissible revocation, breach, rescission

voidable

remains valid until it i svoided

general agent

represents client as many transactions in one area of practice e..g. property manager

special agent

represents client in one specific transactions e.g. listing broker

sample transactions

seller and listing broker (10,000 commission) listing broker is not the one who found buyer, cooperative broker foudnthe buyer (5000 to him) one of his sales person gets paid half of what the sales person gets paid

a buyers agent commission is most often paid by the

seller in the form of a commission split with the listing broker

CAN SPAM act

sets rules for commerce emails no misleading headers, subject lines recepetiants must be able to opt out fine: 16,000 dollars

escrow agent

special and impartial agent of both parties to the transaction. in many states bikers amy act as screw agents. must feed the funds separate from his own funds

statute of limtiations

state laws that prescribe time limits on legal actions, meaning that lawsuits seeking enforcement of contracts must be started within a specified period of time. this law is intended to protect people against stale claims. after the time limit expires,t eh claim is outlawed and may not be enforced by a court

prior to the late 1980s cooperating brokers were always action as ...?

subagents of the listing broker

subagent

the agent of an agent.

designated agency

the broker could appoint one salesperson torepsrent only the seller and the other to represent only the buyer

processing cause

the broker who actually sells it

Licensee larry works for Broker bob. larry obtains a listing contract from seller steve. this contract is between seller steve and...

the broker who employs the sales person

offeror

the one making the offer

offeree

the one receiving the offer

escrow

the process whereby money and documents related to a real estate transaction are held in safekeeping until all terms of condition have been met.

novation

the substation of a new legal obligation for an old one such as the subsection of a new contract, the usbiton of a new debtor or the subsection of a new creditor.

in house sales

this occurs when one salesperson that works for the firm is representing the seller and another salesperson with the same firm is representing the buyer.

what is the purpose of a liquidated damages cause in an offer to purchase a property?

to specify the damages the seller may collect if the buyer defaults. it is usually limited to the amount of the good faith deposit

assignment

transfer of the right, title or intents of one person to another

T of F- workers must represent all offers until the sale closes

true

idemnification

under this principle,t he client should compensate the licensee if the actions of the client cause financial harm to the licensee

an option contract is a ___ contract until the option is excessed and is then a ____ contract

unlit early contract because only the seller has made a promise to sell the proepty- once it is excersized it becomes a bilateral contract bc the buyer promises to pay the purchase price and the seller promises to deliver title

disbursements of funds 3 lawful ways

upon closing of the transaction by mutual agreement of both parties by court order through interpleader action

buyer's agent

usually, but not always, paid by the seller the commissions are usually paid by the seller for sale by owner- FSBO- if the seller is not ready to pay the commission than the buyer would be responsible for it

bilateral contract

when both part make promises of performance

unilateral contract

when on party obligates to perform without receiving a promise of performance from the other party

earned commission

when producing ready, willing and able buyer on exact terms or other terms accepted by the seller

a listing broker earns his/her commission

when the broker produces a ready, willing and bale buyer on the sellers exact terms or on other terms acceptable to the buyer

receiver

who is appointed to take over management of the account in the case of an escrow account violation, in effect removing the licensees authority to deal with the account