Chp 4 - Contract of sales & leases

Capacity of contract

- basically says the person who's signing has to be competent and sane and without guardian. 18+

Essentials of a valid contract

- competent prties - mutual agreement - consideration - lawful objective - in writing

Estate at will

- people can cancel this at any time "at will" - just need to give notice.

Data required for contract preparation

- prior deed ( ACRIS to find) - prior title insurance policy (title report) - survey - certificate of occupancy - personal data (names, numbers, SSD, etc) - downpayment

Contract validity

- property written - stated terms - signatures

Mortgage contingencies

- purchase money mortgages - assumed mortgage

Covenant

"promises" - Agreements written into deeds and other instruments promising performance or nonperformance of certain acts, or stipulating certain uses or nonuses of the property 1. Capacity of contract 2. A demising clause - "the demised premises" 3. description of the premises - property address - unit number 4. Clear statement of the "term" (length) 5. Consideration (specification of the rent or sales price) 6. Penalties for late rent 7. Mus t be in writing (applies for leases longer than one year) 8. signatures (not notarized) unless to be recorded 9. "plain language" requirement for residential leases 10. Use provisions - lawful purpose use - common in commercial leases - renewal of lease 11. Rent control and rent stabilization laws Statue of frauds. >> says that it has to be in written if it's over 1 year.

Essentials of a sales contract

- Date - Identification of parties - legal description - personal property provision - consideration -terms of payment - type of deed -closing time and place -broker clause - Apportionments - lien law - condition of property - Merger clause - limit of seller's liability - liquidation of seller's liability - loan contingency clause - possession paragraph -down payment -no survival

Option to renew

A clause in a lease that outlines the terms for renewing or extending an original lease agreement

Express contract

A contract in which all elements of a contract are specifically stated (offer, acceptance, consideration), and the terms are started, as compared to an "implied" contract in which the existence of the contract is assumed by the circumstances

Bilateral contract

A contract involving mutual promises (each party is both promisor and promisee)

Lease

A contract whereby, for a consideration, usually termed rent, one who is entitled to the possession of real property transfer such rights to another for life, for a term of years, or at will

Right of first refusal

A contractual right that gives its hodler the option to enter a business transaction with the owner of something, according to specified terms, before the owner is entitled to enter into the transaction with a third party.

triple net lease

A lease in which tenant or lessee is responsible for paying a portion of or all of the common expenses related to real estate ownership, in addition to base rent

gross lease

A lease of property whereby the lessor is to meet all property changes regularly incurred through ownership

Index lease

A lease tied to an index such as consumer price index

Graduated lease

A lease which provides for a graduated change at stated intervals in the amount of rent to be paid; used largely in long-term leases

Eviction

A legal proceeding by a lessor landlord to recover possession of real property

Implied contract

A legal substitute for a contract, an implied contract is an agreement created by actions of the parties involved, but is not written or spoken. This is a contract assumed to have been drawn

Security deposit

A monetary deposit given to a lender, seller or landlord as proof of intent. Security deposits can be either refundable or nonrefundable, depending on the terms of the transaction

Reformation

A remedy whereby a court orders a change in a written document to reflect what it ought to have said in the first place

Power of attorney

A written instrument duly signed and executed by a person who authorizes an agent ot act on his/her behalf to the extent indicated in the instrument

Rider

AKA addendum. Annexed to an agreemnt

Land lease

Also called ground lease - permits tenant to use a piece of land owned by landlord in exchange for rent

Ground lease

An agreement in which a tenant is permitted to develop a piece of property during the lease period, after which the land and all improvements are turned over to the property owner

Sublease

An arrangement in which the lessee (tenant) in a lease assigns the lease to a third party, thereby making the old lessee the sublessor, and the new lessee the sublessee, or subtenant

Contract practices

Contract delivery - by email sit down contract signings - delivery of down payment NYstate attorney legal advice - attorney review clauses

Estate for years

It's a duration. - like a lease for 1-2 years. Commerical lease is like 5-10 years

Caveat Emptor

Let the buyer beware. The buyer must examine the goods or property and buy at the buyer's own risk

Novation

The act of either: 1. Replacing an obligation to perform with a new obligation; 2. Adding an obligation to perform; or 3. Replacing a party to an agreement with a new party

Actual Eviction

Where one is either by force or by process of law, actually put out of posession

Statue of frauds

state law that says that contracts mus tbe written in order for it to be enforceable.

Periodic Estate

- renews on it's own. - Also known as a tenancy from year to year, month to month, or week to week, is an estate that exists for some period of time determined by the payment of rent

Invalid contract

- unilateral contract (if you sublet but landord didn't agree, it's one party only) - verbal contract

tenancy at sufference

- when the tenant holds over - tenant who remains in possession of the leased property after the expiration of the lease term

Lease requirements

1. Security deposit 2. Possession and habitability (warranty of habitability) 3. Improvement 4. Assignment 5. Sublet 6. Apartment share 7. Termination

Closing steps

1. Seller's broker sends out the deal sheet 2. Seller's attorney drafts the contract 3. Contract handed to buyer's attorney (negotiation) 4. Buyer signs - 10% deposit (sends to seller attorney) 5. Seller signs 6. Seller's attorney gives notice to buyer's attorney - deposit the 10%

Executory Contract

A contract which has not yet been fully performed (fully executed)

Forbearance

A special agreement between the lender and borrower to delay a foreclosure

Uniform commercial code

A standard set of business laws that regulate financial contracts. The uniform commericla code has been adopted by most states in the U.S.

Statue of limitations

A statute barring all right of action after a certain period of time from the time when a cause of action first arises

Holdover tenant

A tenant who remains in possession of leased property after the expiration of the lease term

Executed Contract

An agreement that has been fully performed

Constructive eviction

Any disturbance of the tenant's possession of the leased premises by the landlord whereby the premises and rendered unfit or unsuitable for the purpose for which they were leased

Offer and acceptance

Elements required for the formation of a legally binding contract. The expression of an offer to contract on certain terms by one person ( the offerer) to another person (the oferee) and an indication by the offeree of its acceptance of those terms

Assignment

The method of manner by which a right or contract is transferred from one person to another

CAveat

a latin term that means "let him beware". Caveats have many applications in law and finance, pertainign to all parties involved being aware of all the facts of a transaction. Caveat is usually interpreted as sort of warning or cautionary expression

Proprietary lease

a lease given by a corporation to another. It is often used in a co-op context, where the owner is given a certain number of shares in the co-op, along with a proprietary lease for one of the residences in the building

Percentage lease

a lease of property in which the rental is based upon the percentage of the volume of sales made upon the leased premises, usually provides for minimal rental

"As is"

a legal term used to disclaim some implied warranties for an item being sold. Denotes that the seller is selling, and the buyer is buying a property in whatever condition it presents exists

Liquidated damages

a provision in certain legal contracts that allows for the payment of a specified sum should one of the parties be in breach of contract

Specific performance

an order of court which requires a party to perform a specific act, usually what is stated in a contract

Unilateral Contract

both parties in contract but one isn't really living up to what they're supposed to do, or not giving consideration when thought to be? i think. it's one-sided

Attorney review clause

clause that allow buyers to walk away from an agreed upon sale for any reason

Demising clause

deals with when the property is going to be handed over - when posession happens - when the lease beins? - when rent is due

Earnest money deposit

down payment made by a purchaser of real estate as evidence of good faith

Caveat Emptor

let the buyer beware. The buyer must examine the goods or property and buy at the buyer's own risk

Rescission

right of an individual involved in a contract to return to a state identical to that before they entered into the agreeement, due ot courts not recognizing the contract as legally binding. In many cases, rescission may be an option if there is a mterial error int he contract, among other reasons. - if it's not legally binding, it reverts back to state before.

Lawyer's fund for client protection

setup to protect consumers from dishonest attorneys

Leasehold estate

the interest or estate which a lessee of real estate has therein by virtue of the lessee's lease. 1. Estate for years 2. Periodic estate 3. Estate at will 4. Tenancy at sufference

Quiet enjoyment

the right of an owner or person legally in possession to the use of property without interference of possession