Real Estate Fundamentals - Chapter 8

The 4 real estate contracts that must be in writing.

1. Agency contracts 2. Purchase Sale Contracts 3. Long-Term Leases 4. Independent Contractor Agreement

The 5 ways that a contract can be discharged.

1. Agreement of The Parties 2. Full Performance 3. Impossibility of Performance 4. Operation of Law 5. Breach

The 5 types of Bilateral Contracts in Real Estate.

1. Exclusive Right to Sell Contract 2. Exclusive Agency Contract 3. Purchase Sale Contract 4. Lease 5. Independent Contract Agreement

The 4 major types of Listing Agreements.

1. Exclusive Right to Sell Listing 2. Exclusive Agency Listing 3. Open Listing 4. Net Listing Agreement

What are the 3 aspects that an offer should contain.

1. Must be clear in character 2. Must accurately describe the property 3. Must have an exact price.

The 4 essential elements of a legally enforceable contract.

1. Offer and Acceptance 2. Consideration 3. Legal Capacity 4. Legal Purpose

The 2 important public policy purposes of the statute of frauds.

1. Requires real estate contracts to be in writing. 2. Records the parties' agreement.

The 3 main types of legal objectives that affect the legal purpose of a contract.

1. To commit a crime, a tort or a fraud 2. To promote corruption in public life 3. To harm public safety

When the parties to a contract agree to terminate the contract.

Agreement of the Parties

The person who receives the rights and benefits under contract. Becomes liable for the contract.

Assignee

When you transfer your rights and benefits under a contract to someone else.

Assignment

The process that allows a party of a contract to have someone else sign the contract in their place.

Assignment and Novation

The person in a contract who gives up their rights and benefits to someone else.

Assignor

A contract that places obligations on both parties. Where the seller promises to provide clear and marketable title of the property to the buyer by a certain date, and the buyer agrees to provide a specified sum. The contract requires both parties to perform.

Bilateral Contract

A failure to perform a contract, or when one party believes the other has failed to perform their obligations of the contract.

Breach of Contract

A contract remedy where the court tries to put the parties in the positions they expected to be in if the breach had not occurred.

Compensatory Damages, or Expectations Damages

Anything given or promised by a party to induce another to enter into a contract, such as money, personal services, or a promise not to do something.

Consideration

An agreement to do or not to do a certain thing. A legally enforceable promise.

Contract

A contract in which the parties may be legally required to perform. Ex: Any valid contract that offers a legal remedy in the event that the contract is not fulfilled, such as a typical purchase contract.

Enforceable Contract

A type of listing where the agent receives full exclusivity with the sellers property, but the seller also can sell. If the seller is able to sell it without the agent, the agent does not receives commission.

Exclusive Agency Listing

A type of listing that gives an agent exclusivity when it comes to selling a property for a seller.

Exclusive Right to Sell Listing

An agreement that has been fully performed.

Executed Contract

A contract in which something remains to be done by one or both parties.

Executory Contract

A contract where the parties clearly state all the terms of the agreement, and each party knows what they must do to complete the contract. The contract can be both oral and written.

Express Contract

Clauses that some people include in a contract just in case of any surprises, where different plans are provided in the event of unforeseen events make performance of a contract difficult.

Force Majeure, or "Act of God"

The most common form of contract discharge. An executed contract cannot occur unless the terms of the contract are completely carried out.

Full Performance

An agreement that has not been put into words, but is implied by the actions of the parties. Usually only arise when elements of an express contract are missing.

Implied Contract

A type of contract that exists when failing to find a contract is contrary to law.

Implied- In- Law Contract

Is often used as a defense for breach of contract. It occurs when it becomes impossible for one or more parties to perform their duties of the contract.

Impossibility of Performance

Demonstrates control over the time, manner, and place under which they work. Has control over when they withhold their federal and state taxes.

Independent Contract Agreements

A Contract remedy that is an order directing a party to do something or not to do something.

Injunction

A contract that allows someone to possess and use real property for a specified time.

Lease

A requirement of a contract that tries, in part, to make sure that parties are capable and understand their obligations under the contract freely and willfully.

Legal Capacity

An essential element of a contract where the contract must have a lawful objective.

Legal Purpose

A sum agreed upon by the parties to pay full damages if a certain event occurs.

Liquidated Damages

Creates an agency relationship between an agent and a seller and authorizes an agent to sell a property on the sellers behalf. Determines how, or whether, a real estate agent gets paid.

Listing Agreement

A type of listing that is illegal in many states. The seller specifies how much she wants to receive from the property, and the agent can keep any extra amounts earned from the sale.

Net Listing Agreement

The substitution or exchange of a new obligation or contract for an old one by the mutual agreement of the parties.

Novation

The essential element of a contract where both parties must have a meetings of the minds. This is the heart of a contract.

Offer and Acceptance

A type of listing that allows the seller to make a listing agreement with as many agents as he wishes, and no agent has exclusivity to sell the property on the sellers behalf.

Open Listing

Describes how the rights and liabilities of parties may be changed by the application of law.

Operation of Law

A contract that gives a party a right, not an obligation, to purchase a property at a specified price during a specified time. During this period, the seller can not sell the property anyone else. The Right of First Refusal falls in this category.

Options Contract

A Contract remedy that is an order directing a party to do something or not to do something at the end of a contract dispute case.

Permanent Injunction

A court remedy that is appropriate when the parties have made a contract, but they've done a poor job of writing down what the contract actually requires.

Reformation

The cancellation of a contract and restoration of the parties to the same position they held before the contract was entered into.

Rescission

Prevents a party from being unjustly enriched when a contract is rescinded.

Restitution

An agreement in which one person agrees to sell real property to another person, who, in turn, agrees to buy the property at a specified date.

Sales Contract

A contract remedy that is an action to compel performance of an agreement, e.g., sale of land as an alternative to damages or rescission.

Specific Performance

A state law, based on an old English statute, requiring certain contracts to be in writing and signed before they will be enforceable at law, e.g.. contracts for the sale of real property, contracts that are not performed within one year.

Statute of Frauds

A state law, based on an old English statute, requiring certain contracts to be in writing and signed before they will be enforceable at law.

Statute of Frauds

A law that requires people to bring legal actions and claims within a specified time.

Statute of Limitations

A Contract remedy that is an order directing a party to do something or not to do something early in a contract dispute.

Temporary Injunction

A condition of a contract expressing the essential nature of performance of the contract by a party in a specified period of time. If the parties have not performed by the date set in the clause, they are in breach of contract.

Time is of the Essence

A contract that appears to meet the requirements for validity but would not be enforceable in court. Ex: An oral contract used to purchase a property.

Unenforceable Contract

A contract in which one party promises to do something if the other party performs a certain act, but the other party does not promise to perform it; the contract is formed only if the other party does perform the requested act. Ex: a Flyer of a missing cat, which is a one sided contract. Mostly seen in real estate under an open listing agreement.

Unilateral Contracts

A contract that is legally binding and enforceable. Any contract that includes ALL of the essential elements of a contract.

Valid Contract

A contract that has no legal force or effect. Any contract that is missing ONE or MORE of the essential elements of a contract.

Void Contract

A contract that may be voided by the parties without legal consequences. Ex: mortgage and inspection contingency.

Voidable Contract