Real Estate Contracts

Exclusive Listing

A written contract that gives a licensed real estate agent the exclusive right to sell a property for a specified time. Only one agent can be hired.

Promissory Note

A written contract with a promise to pay a supplier a specific sum of money at a definite time. The promissory note is the evidence of the debt.

Specific performance

An action brought in a court of equity in special cases to compel a party to carry out the terms of a contract.

A contract which, according to the Statute of Frauds, must be in writing in order to maintain a court action for enforcement is...

Any agreement which is not to be performed within one year.

Any party who fails to take care of their responsibilities in a timely manner is...

Subject to being held in default of the contract

Verbal Contract

Contract this is not in writing or signed but is a real existing contract that lacks the formal requirements that allow it to be enforceable.

Net Listing

A net listing is when an agent agrees to sell an owner's property for a set minimum price. Anything over the minimum price belongs to the agent as commission. If the house sells for the min. price, the agent makes no commission. The agent would have to manipulate the list price in order to earn a commission, making it illegal in most states.

Bilateral Contract

A promise in exchange for a promise supported by consideration

Statute of Frauds

A state statute under which certain types of contracts must be in writing to be enforceable.

Novation

The substitution of a new contract in place of an old one. Also, when one person is substituted for another in a contract

Dual Status of Agent and Purchaser

The broker decides to buy the property, he must inform the seller of any additional offers on the property, disclose any profit he might make, disclose all material facts known to him and to the seller, and obtain written consent from the principal approving the amount of such profit before the broker may exercise the option.

In which of the following situations could a broker receive no commission?

The broker proves that he is the procuring cause of the buyer in a net listing

Janice Riceland is shown a home by her agent, Richard. She makes an offer and gives Richard a check. At what point does her offer become an enforceable contract to buy?

When Janice is notified the seller accepts the offer.

None of the following would automatically terminate an offer to buy real property except...

Rejection of Offer by Offeree terminates an offer.

Four Essentials of a Valid Contract

Offer and Acceptance, Lawful object, Capable parties and Consideration - Some require writing

Quiet Enjoyment and Possession

Possession without disturbance from owner of paramount title

All of the following are essentials of each and every contract, except: A) Capable parties B) Proper writing C) Lawful object D) Mutual consent

Proper writing

Which of the following is an acceptable termination date for an enforceable exclusive listing of residential real property...

90 days after listing agreement is signed

Executed Contract

A contract that has been completely performed by both parties.

Protection Period Clause (safety clause)

Clause in a Listing Agreement that allows a broker to collect a commission for a specified period of time after the term of the Listing has expired.

Option Contract

Keeps an offer open for a specified period of time

The document that defines the relationship between the broker and the seller is the...

Listing agreement

Open Listing (non-exclusive listing)

Listing is not exclusive to anyone. Whoever brings the buyer gets paid for it, as long as they are the principal in the transaction or have an active real estate license. Useful with developer/builders

Doctrine of Estoppels

Prevents a person from adopting a position, which is in conflict with a previous position or a previous action.

The buyer of a home was not informed that the house was on a septic tank system. The buyer has the right to...

Rescind the contract; A Licensee must reveal Material facts in a house, such as a leaky roof or poor insulation

When a counteroffer is made...

The original offer gets terminated and a new offer gets made "the offeree becomes the offeror"

Exclusive Right to Sell Listing

The owner agrees to sell the property through the listing broker, regardless of how a buyer comes to the conclusion that they want to buy the house. This helps avoid any potential conflict between the broker who is trying to solicit a buyer and the seller who hired them to list the property.

Exclusive Agency Listing

The owner employs only one broker but retains the right to personally sell the property, and thereby not pay a commission.

Leasehold Interest

The right to exclusive possession and use of real property for a fixed period of time held by the lessee.

A buyer enters into a verbal contract to purchase a house and immediately gives the broker an earnest money check for $500. Prior to performance under this contract, the verbal contract is considered legally...

Unenforceable.