Section 6- 8 Real Estate
contingency
condition that must be met before sales contract is complete and enforceable
In a real estate transaction, which of the following is established when the parties enter into an agreement voluntarily with a full understanding of the contract terms?
consent
Two neighbors got into a disagreement about early-morning noise on the weekends. The two came to an agreement: One neighbor promised to not mow the lawn before 10 a.m., and the other neighbor promised to put bark collars on her dogs in the early morning hours. Their promises represent the ______ in their agreement.
consideration
Which of the following elements is always required for a real estate contract to be valid?
consideration
inspection contingency
contingency based on something found in inspection to be fixed
biggest contingency challenge
contingency on sale of the buyers current home
what does legal purpose mean
contracts must be written for a lawful objective
agreement or promise between two parties
covenant
what does a lease establish between landlord and tenant
covenants
choice of law
describes law under which the contract will be interpreted
example of voidable contract
drunk friends making bet/contract on a piece of paper they sign
examples of things other than price and closing date worth countering over
earnest money amount/date of deposit contingencies
UETA gives
electronic records and signatures the same legal weight as paper versions
purpose of mortgage contingency provision
establish if the sale of property depends on buyer obtaining mortgage financing
holdover tenant (didn't leave when lease expired) has what kind of posession
estate at sufferance
lease without established time period
estate at will
lease that ends on specific date is considered an
estate for years
The Nettles have accepted the Briars' purchase offer, and both parties have signed the sales contract. The funds, and the title, should transfer in a matter of days, but otherwise all elements and terms of the contract have been met. What type of contract do the Nettles and the Briars have?
executory
t/f time of performance clause tells parties timeframe in which a lawsuit related to contract can be filed
false
void contract is one that is
for illegal purposes and cannot be considered in a court of law
purpose of sales contract
identify the terms and conditions under which a seller will transfer a property to the buyer
appraisal contingency
if property does not appraise at or more than sale price, buyer can terminate the contract
Hannah wasn't able to get the financing to open her boutique, so her mother became a silent partner and provided additional cash. Hannah and her mother have an agreement that states Hannah's mother can't be held financially or legally liable if there are any problems with the store. What type of contract clause is this?
indemnification
Which clause in a contract states that one or more parties won't be held liable if there are losses or expenses related to the contract?
indemnification clause
time of performance
indicated deadline by which contract terms must be met
arbitration
indicated legal disputes are to be solved through arbitration
Jolene signs a contract to buy Harvey's home. Before closing, it's discovered that Jolene is only 16 years old. Because she's a minor, she's not considered legally competent to enter into a contract. Which of the parties can void the contract?
jolene
lessor =
landlord
contract that allows tenant to live on property
lease
right of possession for a limited period of time
leasehold estate
actual eviction
legal process to remove tenant including proper notices and enlisting aid of sherriff
inclusion of numerous contingencies makes it
less likely for buyers to accept offer
What type of agreement accounts for commission to be paid and includes the seller's permission for marketing the property?
listing agreement
The sales contract between buyer Milton and seller Tom has been signed. Whose responsibility is it to keep track of all of the buyer contingency deadlines?
milton and his agent
When offer and acceptance has occurred, both parties enter into ______.
mutual agreement
when are you able to determind earnest money amount for your clients
never
alternate names for purchase contract
offer, earnest money agreement, offer to purchase
assignment of contract
one of original parties transfers rights to different party but may still be liable for obligations
breach of contract happens when
one party fails to meet the obligations of the contract
UETA supports the use of electronic documents and leaves the decision whether to use an electronic medium for agreements up to the _______.
parties
time is of the essence can mean
parties held in strict compliance to any timeframes specified in the contract
If a party to a contract lacks legal capacity but enters into a contract anyway, which party may void the contract?
party lacking legal capacity
When a contract has been breached, the wronged party may attempt to sue for punitive damages, which are ______.
payments in excess of any compensatory damages
Because there were no deadlines specified in the contract, Myron didn't think there was a problem if he waited to apply for a loan to help purchase the property. He was therefore a little surprised and not very happy when the seller sued him for breach of contract, stating that the delay was impacting the seller's ability to purchase a new home. What did Myron fail to do?
perform contractual obligations within a reasonable time
lease that ends on date but automatically renewed is a
periodic estate
month to month lease is also known as
periodic estate
If one part of the contract is found to be void or unenforceable, the severability clause
points out that the remainder of the contract isn't affected
if multiple offers are received what should a licensee do
prepare net proceed statements on all offers
mortgage contingency
protects the buyers earnest money in even that buy is unable to obtain financing
if a contract doesn't specify a deadline, is that an example of time is of the essence or reasonable time?
reasonable time
Bob signed a contract to purchase Ingrid's apartment building. Bob decided he didn't want to be a landlord, and Ingrid decided she didn't want to sell and move to Maui. They mutually agreed to cancel the contract, and Ingrid returned Bob's earnest money. This is referred to as ______.
rescission
Rose, represented by Sandy, and Tina, represented by Julie, entered into a sales contract for Rose to purchase Tina's home. Rose intended to ask Tina to repair the water heater, but the inspection deadline came and went. Now Rose has to buy the property as-is. Whose responsibility was is it to keep track of all buyer contingency deadlines?
rose and sandy
consideration is the giving of
something of value in exchange for something of value
statute of limitations
specifies deadline past which lawsuites related to the contract can no longer be filed
severability
states that contracts terms are independent of one another
assignment in regards to rentals
substitution of tenants putting responsibility for lease contract in new tenant hands
DeeAnna thought she purchased an investment property, but the seller refused to deliver the title to her. DeeAnna met all of her obligations per the written contract she and the seller signed. She decided to take the seller to court in an effort to force him to hand over the title. This is an example of ______.
suing for specific performance
constructive eviction
tenants choose to evict because property is not being taken care of by landlord
contracts can become voidable when
terms of the contract are not met
both buyer and seller have to sign agreement to demonstrate
they understand the terms
UETA stands for
uniform electronic transactions act
4 options a wrong party has in breach of contract
-accept partial performance -sue for specific performance -sue for damages -mutually rescind contract
who can terminate breach of contract
-both parties -innocent party -guilty party with innocent party's permission
contingency can include these 3 items
-deadline for removal of condition -responsible party for actions or costs involved -actions necessary to remove condition
elements required for a valid contract of a lease
-offer -acceptance -legal capacity -legal purpose -consideration -mutual assent
5 essential elements of a real estate contract
-offer and acceptance -consideration -legally competent parties -legal purpose -consent
3 provisions of a sales contract
-purchase offer amount -buyer financing contingencies -earnest money deposit amount
examples of consideration in real estate
-sellers promise to sell property to buyer -sellers commitment to transfer the property to the new owner -property itself
a seller and buyer may want to include additional provisions in agreement not specified in sales contract, what is commonly added
-specific closing and settlement instructions -selection of closing agent
Example of rescission
Abbie learns the seller has no legal right to sell the house she's buying because his aunt actually owns it. Abbie cancels the contract.
example of release
Buyer Trina is unexpectedly transferred overseas, so she has to cancel her contract to Lori's house. Lori agrees.
Hannah and Tarik accepted a purchase offer for their large home. The buyer's agent delivered a signed purchase contract to Jon, their listing agent, with an acceptance deadline of September 10, and a delivery deadline of September 15. Hannah signed the contract on September 8, but Tarik was on a business trip and couldn't sign until the 10th. Jon delivered the signed contract to the buyer's agent on September 16. Is this contract binding?
No, the delivery date is what makes the contract binding
leasehold estate is the act of renting a property while lease is
a physical contract
because leases are contracts, the same laws governing other contracts apply to creating
a valid lease
Gloria Meeker can't believe it. She thought she had a buyer for her home, and at the last minute, the buyer bailed. At least Gloria can keep the earnest money. That's some consolation. What remedy is Gloria pursuing to address her breach of contract situation?
accept liquidated damages
additions to contract are called
addendum
The buyer in a transaction has requested a particular closing agent in her offer. What kind of provision would this be considered?
additional provision
description of premises
address, unit, etc
Which of the following is true regarding the definition of agency?
agency describes relationship between real estate professional and person or persons being represented
sublease
agreement for new occupant to live on premises and pay rent to original tenant
liquidated damages
allow aggrieved party to recover damages
if home doesnt sell by agreed upon deadline buyer is not
allowed to remove contingency and proceed with sale
changes to sales contract are also known as an
amendment
specification of rent
amount and due date
a minor has no contractual ability when entering in a contract alone, there must be
an adult to hold the contract legal terms
rescission is like
an annulment, parties return to starting point as if it never happened
offer at 650k with clause that buyer will beat competing offers by 3k up to 675k is an example of whta
an escalator offer
novation
an original party is replaced with a new party and all rights/obligations belong to the new party
Saul was unhappy after he and Janelle liquidated their business. Janelle sold some items for less than he'd initially agreed to, and he wanted the full price to be included in the profit split. He wanted to sue, but he was required to pursue other options. What contract clause kept Saul from being able to sue?
arbitration
What's the key difference between assignment and novation of a contract?
assignment releases the original party from all obligations while novation does not
example of unilateral rescission
bobby makes an offer on a house that doesn't meet appraisal contingency and cancels the sale
performance of a contract
both parties met all terms agreed upon
sales contingency
buyer has made offer to purchase based on buyers current property selling
when contingency deadlines are missed they
cannot be changed
Rick Tynes is tired of waiting for his subcontractor to get his part of the deal done. The agreed-upon deadlines have come and gone, and Rick is losing money waiting for the subcontractor to come through. If the subcontractor isn't going to honor his commitments, neither is Rick. There's no point in throwing good money after bad by suing the subcontractor. He's just going to consult with his attorney and then terminate this contract and be finished with the whole ordeal. What remedy is Rick pursuing to address his breach of contract situation?
unilaterally rescind the contract
Ken signed a contract to purchase Debra's condo. Ken signed the contract two weeks prior to turning 18, which is the age of majority in his state. Debra found out about his age prior to the closing but honored the contract, and they closed on the condo a month after Ken's birthday. What was the status of the contract when Ken and Debra entered into it?
voidable
if party doesnt have legal capacity and enters into contract the contract is
voidable
choice of law clause indicates
which law or laws will be used to interpret the contract provisions
What's the best definition of legal purpose?
written for lawful objective
Robert and Sarah enter into a contract for Sarah to purchase Robert's home. Robert decides he doesn't want to sell, and is elated when he finds out that Sarah's only 17 years old. Can Sarah force Robert to sell?
yes sarah can require that robert fulfill the contract terms