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