Contracts Ch: 12 retake

The full consideration of a purchase agreement

is the full price for the home in exchange for the ownership title on the property.

Purchase Price, Method of Payment and Closing Expenses

it tells the seller what price we're offering for the purchase, and how we plan to pay for it,

buyers have __________ days to check for lead

10

Unilateral contract

A contract in which consideration (such as a promise) is only given by one party to the other.

What's the purpose of a sales contract?

To document the agreement between a buyer and seller in a real estate sales transaction

Financing Contingency

allows a buyer who is not able to arrange the necessary financing within a certain time period to cancel the contract and recover any earnest money paid without further obligation

When completing the pre-printed sales contract, make certain all_____________________If a specific item doesn't to the property, you should write _________ in the blank.

blanks are filled in & N/A

contract must be entered into as

into as a free and voluntary act, without undue influence or duress.

Which paragraph of the TAR Purchase and Sale Agreement gives notice to the parties that signatures may be provided in a number of formats and will be treated as originals?

method of Execution

fraud occurs when

misrepresentation of a material fact is intentional.

special stipulations

provides a place for the parties to write in terms in the form of contingencies that aren't already accounted for in the sales contract or addenda, or that conflict with preceding paragraphs

executed vs exectory in the sale of real estate

- A contract for the sale of real estate is EXECUTED by the delivery and acceptance of the deed and the payment of the purchase price. (Note that you may also see the term "executed" used to refer a document that's been signed.) - Contracts are EXECUTORY until all of the promises in the contract have been completed. A contract for the sale of real estate is executory until the deed is delivered and accepted.

final inspection

-the final walk-through we'll perform the day before closing. -affords us one more opportunity to inspect the property before we seal the deal. It's also a chance to make sure the sellers have kept the property in the same condition it was at the time we signed the contract, as they're required to do.

If we don't turn in the earnest money in time, or if for some reason the check bounces, you'll have __________day to provide the earnest money, in immediately available funds, or the sellers will have the right to terminate the contract."

1 day

5 additional elements of a valid contact

1. Legally competent parties(has the capacity (legal and mental) to enter into a contract. If the party does not have legal capacity and enters into a contract anyway, the contract is voidable (not automatically void) by the party lacking the capacity.) 2. Offer and acceptance 3.Consent 4.Legal purpose 5. Consideration

Rules and termination of an offer

1. The offeror can revoke the offer at any time before acceptance. 2. An offer can also be terminated if the offeree doesn't accept within the time period stated in the offer.

6 remidies of breach of contract

1. partial performance 2. unilateral recession 3. sue for monetary damages 4. specific performance 5. accept liquidated damages 6. mutually rescind

To meet the statute's requirements, the written agreement must:

1.Identify the contracting parties. 2.Clearly identify the subject matter of the contract. 3.Present the essential terms and conditions of the contract.

You've got _____________ days from the binding agreement date to apply and verify within_________ days that lender deposits have all been paid, and you've got enough money for closing cost

3, 14

TN the statue of limitations is __________ years

6

Bilateral contract

A mutual contract that involves an exchange of promises or other consideration between two parties.

Jasmine just received written notice from her buyers that they have been unable to obtain financing. What option does Jasmine have?

Jasmine can notify the buyer in writing that she is declaring the contract null and void.

If a buyer makes the purchase of the property contingent upon the appraisal, what must occur for the transaction to continue?

The appraised value of the property must meet or exceed the purchase price.

Per the TAR sales contract, when is the buyer required to pay the purchase price?

The full amount, minus any earnest money deposit, is due at closing

According to the Final Inspection paragraph of the TAR Purchase and Sale Agreement, what condition should the property be in for final inspection?

The same or better than it was on the binding agreement date

occurs when one party fails to meet contract obligations.

breach of contract

outlines the scope of our working relationship.

buyers representation agreement

The listing broker is responsible for directing the ________________to pay the selling broker, that is, the buyer's agent, the compensation agreed upon in the buyer representation agreement.

closing agency

also called voluntary agreement

consent

If we offer less than the sellers are willing to accept, they can always

counter our offer

If either party to a sales contract fails to perform or comply with any of the contract's terms and conditions, the party is in ________________.

default

If, for some reason, your loan isn't approved, you may provide a lender letter stating so and cancel the agreement and get your _______________________ back

earnest money

is basically a down payment on the down payment

earnest money

the holder ( typical the broker)deposits the check into an _________________ until settlement, when the funds will be credited against the other closing costs you'll pay.

escrow account

Eric and his wife, Silvia, made an offer on a home and specified in the sales contract the items on the property they wanted the seller to remove prior to their taking possession. These items are commonly referred to as _____________________.

exclusions

A contract for the sale of real estate is _______________by the delivery and acceptance of the deed and the payment of the purchase price.

executed

Contracts are _________________ until all of the promises in the contract have been completed. A contract for the sale of real estate is executory until the deed is delivered and accepted.

executory

Undue influence

exists when an act of persuasion overcomes another individual's free will and judgment. This can include trickery and deception, and usually means that the person doing the influencing is in a position of trust and abuses that trust, such as a guardian and a ward, where the ward relies on, trusts, and obeys the guardian.

The sellers agree to transfer eligible warranties over to you at closing, though if there's a __________ to transfer them, you'd be responsible for that

fee

also a chance to make sure the sellers have kept the property in the same condition it was at the time we signed the contract, as they're required to do."

final inspection

payment of earnest money is not a

full consideration bc Earnest money only demonstrates the buyer's willingness to enter into a purchase agreement

legally competent parties

has the capacity (legal and mental) to enter into a contract. If the party does not have legal capacity and enters into a contract anyway, the contract is voidable (not automatically void) by the party lacking the capacity.

duress

includes the use or threat of force, such as blackmail or bodily harm

The statute of limitations

is a law that states that if legal remedy is sought against a person, the pursuer must bring a court action within a specified period of time. The statute of limitations even applies, in some instances, to the state itself. - TN has 6 years

offer

is a promise made by one party, requesting something in exchange for that promise. The party who makes it is the offeror.

acceptance

is a promise to be bound by the exact terms made in the offer. The party who accepts is the offeree.

A contract is a ____________________All parties to a contract must perform the contract terms or be considered in breach of contract.

legally binding agreement

The seller's closing costs include the

of existing liens, preparation of the deed, and seller's closing fee.

Most states require that the terms and conditions of the contract be in writing; the wording must express the agreed-upon terms and must be clearly understood by the parties.

offer and acceptance

occurs only when there is a meeting of the minds, or when the parties are in complete agreement about the purpose and terms of the contract

offer and acceptance

Responsibility to Cooperate

says that you and the sellers are expected to carry out all of the responsibilities and obligations laid out in the agreement.

An offer isn't a contract until it's

signed (accepted by) the seller and delivered (physically or electronically) to the buyer or the buyer's agent.

survival clause

that any contract terms that, for whatever reason, must be completed after closing will still be in effect after closing. Say, for example, a new refrigerator is supposed to be delivered the day after closing. The sellers can't renege on that promise and cancel the delivery just because closing's over."

notice clause

that describes how contract-related notice may be made and when notice is considered to have been received.

Earnest money only demonstrates

the buyer's willingness to enter into a purchase agreement.

Consideration

is defined as something of value offered by both parties. Consideration can include: 1.Money (or promises of funds in the future) 2.Property (real estate or other personal property) 3. Labor, love or good wishes or physical actions (non-monetary)

Which paragraph in the TAR Purchase and Sale Agreement stipulates that the seller is conveying the property to the buyer with a good and marketable title?

title and conveyance

what applies to association fees?

to homeowners' and condominium associations

time is of the essence

All parties must comply with contract terms in a timely manner

Unenforceable Contract

A contract that will not hold up in court.

enforceable contract

A contract that will stand up in court.

Void

A contract with no legal force or effect.

Offeree

the party who accepts the offer

executory contract

A contract in progress; one or more terms of the contract remain undone.

Executed contract

A contract in which all the parties have met all terms of the contract.

Invalid

A contract in which one or more of the essential elements is missing.

valid contract

A contract that contains all the essential elements.

implied contract

A contract that is based on the actions or behaviors of the parties, not on words.

voidable contract

A contract that may be cancelled by one or more parties for one of several reasons. It may be missing an essential element and thus invalid; it may contain a mistake or a misrepresentation, or it may have been created or executed by a party under duress.

Express contract

A stated (written or oral) agreement between two parties to specific terms.

resolution period

After we make any requests, the sellers will be given a specific number of days, called the resolution period, in which to address the issues. If, for some reason, we can't reach an agreement during the resolution period, the contract is terminated and you can get your earnest money refunded."

Andie doesn't need to take out a loan to purchase the property she wants to buy. How should she indicate this in the financing contingency section of the TAR Purchase and Sale Agreement?

Check the Financing Contingency Waived box

In which section of the TAR sales contract does the buyer specify the closing date?

Closing, Prorations, Special Assessments and Warranties Transfer

the statute of frauds

Contracts conveying the ownership or interest in real property (and other specific contract types) must be written to be legally enforceable

Roger has a buyer client in Lexington who is purchasing a home built before 1978. Which two documents must Roger ensure that his client received prior to signing the TAR Purchase and Sales Agreement related to lead-based paint?

EPA lead-based paint pamphlet & Lead-Based Paint Disclosure form

According to the TAR Purchase and Sale Agreement, the brokers' compensation is identified in which document?

In the parties' respective agency agreements

buyers who are paying all cash

It states that since they wouldn't be subject to financing terms, they're waiving the above-stated timelines and agreeing to provide a proof of funds within five days of the binding agreement date. If they lack the funds at that time, they're in default.

Which one of the following statements is true about a sales contract that's been signed by both parties?

It's a legally binding contract.

Which paragraph of the TAR Purchase and Sale Agreement identifies the transaction closing fees that both the seller and the buyer are responsible for paying?

Purchase Price, Method of Payment and Closing Expenses

In which paragraph of the TAR Purchase and Sale Agreement can the parties add contingencies to the agreement that aren't covered elsewhere or that conflict with other statements made in the contract?

Special Stipulations

What's the purpose of the earnest money deposit?

To show the seller that the buyer is serious and intends to go through with the purchase

A contract for an illegal purpose is

a void contract

isn't a contract at all because it lacks one or more of the requirements for a valid contract. It has no legal force or effect; it's unenforceable.

a void contract

A contract that may be cancelled by one or more parties for one of several reasons. It may be missing an essential element and thus invalid; it may contain a mistake or a misrepresentation, or it may have been created or executed by a party under duress.

a voidable contract

is one that appears valid, but one or both parties have a legal right to disaffirm it. This could be because one of the parties lacks legal competence, or because there was a mistake or misrepresentation, causing a failure of reality in consent. The contract is voidable by the incompetent or misled party but enforceable against the other party.

a voidable contract

Milo just received a copy of the home inspection report and there are significant safety issues with the house he wants to buy. At this point, Milo has several options. Per the TAR Purchase and Sales Agreement, he can terminate the contract, ask the seller to repair the issues, or ______________________________.

accept the property in its current condition

another name for mutual agreement

acceptance

the earnest money will be deposited as soon as the seller ___________

accepts our offer

offeror

the party who makes the offer

After these inspections, you have the right to terminate the contract based on

the report findings, accept the property as-as, or deliver a copy of the report to the sellers with a list of items we'd like for them to repair or replace.

Per the TAR Purchase and Sale Agreement, who in a sales transaction may be subject to tax withholding per the Foreign Investment in Real Property Tax Act (FIRPTA)?

the seller

in general, the law prevents injury from fraudulent conduct in certain types of agreements, including property transfers.

the statute of frauds

t/f it's possible for brokers to receive compensation from more than one party."

true

earnest money is also called

trust money

If the sales contract is assigned, until what point in the transaction are the original buyer and seller obligated to fulfill the terms and conditions of the contract?

until settlement

A contract that contains all the essential elements.

valid contract

If the party does not have legal capacity and enters into a contract anyway, the contract is ___________________by the party lacking the capacity.

voidable

sales price

will be a combination of the amount you put down as a down payment and the amount you finance through a loan with your lende

but if another competing offer came in at full price, or higher, the sellers may choose to

work with the other buyers

the rules with Does it have to be a check? We could give them Linda's engagement ring instead ?

you could do that in Tennessee. But only if we state in the offer that the earnest money will be a diamond ring and also state its value. And we need to clearly communicate this to the seller, too. Sellers need to know this information before signing the offer.