chapter 13
a seller receiving an offer can:
- accept - reject - reject and make a counteroffer
a selling broker's role in a real estate sale normally is legally complete when the contract is _____. however, prudent business sense dictates that the selling broker be available to facilitate the transaction as needed.
signed
the first part of a form contract for sale typically contains clauses and information that is _____ to the property and transaction.
specific
in case the buyer or seller fails to perform (defaults) on a contract for sale, either party always has the right to _____ for damages.
sue
a fundamental concern with allowing the opposite party to have their attorney draw up a contract for sale, even if at no cost and with good will, is that:
the attorney's duty is to act in the best interest of their client
the closing statement, very likely the CFPB closing disclosure, must be available _____ business days in advance, and should be reviewed for questions or surprises.
three
examples of contracts failing to have lawful intent would be:
- a contract for sale of a controlled sustance - a listing contract explicitly excluding some race - a contract to commit a crime
in addition to steps in arranging a loan, steps for the buyer before closing normally include:
- arrange hazard insurance, utilities, etc. - inspect the property to verify condition and vacancy - verify that seller has met all conditions of the contract, such as required inspections - confirm zoning status and restrictive covenants - have a survey done
in the following proposed simple contract for sale, what are some of the shortcomings? I, Ben Buyer, agree to buy and pay $20,000, and I, Cecil Celler, agree to sell the parcel of real estate at 1013 NE Seventh Road in North Platte, Nebraska. Signed: Ben Buyer Signed: Cecil Celler items needing clarification include:
- assurance of marketable title - provision for inspections - condition of structures - liability for major damage to buildings before closing - marital status of seller - property description - date and place of closing
payments at closing that normally are made by the seller include:
- broker's commission - owner's title policy - seller's attorney fees - property taxes for calendar time before the closing - state documentary tax on deed
disclosures in the CFPB closing disclosure form required for residential closings with a new loan include:
- cash required at closing - whether there is a prepayment penalty - what late fees apply - APR - whether the loan is assumable - all charges related to the loan
required elements of a contract for sale of real estate include:
- competent parties - written form - offer and acceptance - proper description of property - legal object - no defects to mutual assent - consideration
a contract for sale has terms and conditions. the terms would include:
- date of closing - personal property or fixtures - allocation of expenses - price
those who can serve as an escrow agent include:
- financial institutions - attorneys - title companies
contract in real estate subject to the statute of frauds normally include:
- installment sales contracts - contracts for sale - option contracts - leases of more than one year - mortgages
a contract can be repudiated if a person, at the time of signing, was:
- not empowered as a representative for a corporate party to the contract - insane - under the influence of alcohol or drugs - acting for a person without their power of attorney
defects to mutual assent in a contract can be:
- one party commits fraud or misrepresentation against the other - one party is under duress, undue influence or menace - a large error, such as wrong name or erroneous price
in the loan estimate, expenses created by a mortgage loan are sorted into four categories:
- services you can shop for - taxes and other government fees - services you cannot shop for - origination charges
the conditions in a contract for sale would include:
- survey showing no encroachments - evidence of good and marketable title - buyer is to be able to find satisfactory financing, as detailed - physical inspection showing no structural deficiencies
matters of a real estate transaction that are determined in a contract for sale include:
- the property interest and description - any conditions for either party - the price and other terms - the date of transaction - the grantee
in states where the dominant practice in closings is by escrow, entities that can conduct escrow closings are likely to include:
- title companies - banks and thrifts - insurance companies - licensed escrow agents
compute the prorated obligation of the seller for property taxes in this situation. total expected annual property taxes: $1,000 date of sale: february 20th (day of closing belongs to the buyer) prorated taxes are $_____, paid to the _____.
137; buyer
in contrast to personal property transactions, real estate transactions involve at least two events: first the _____ and then the _____.
agreement; closing
in general, a contract for sale that involves personal performance by the buyer, such as a sale with a purchase money mortgage having installment payments from the buyer to the seller, is not _____.
assignable
mutual obligations of the parties are necessary to create a legally _____ _____.
binding contract
unless a contract for sale of a property contains language stating otherwise, the _____ is responsible for any loss in value due to fire of other damage to the property that occurs between signing of the contract and closing.
buyer
because contingency clauses can make or break a transaction they must be written with, and reviewed with, great _____.
care
the lender's attorney often _____ the closing proceedings.
conducts
the truth in lending act (TILA) and the real estate settlement procedures act (RESPA) were placed by the dodd-frank act of 2010 under the oversight of the _____ _____ _____ _____.
consumer financial protection bureau
the responsibility for some expenses at closing is spelled out in the contract for sale. others not spelled out in the contract normally are distributed according to _____. however, responsibility for all of the expenses is _____.
custom; negotiable
contingencies are events on which carrying out of a contract _____.
depends
the buyer virtually always ends up paying property taxes on behalf of the seller because property taxes are paid at the _____ of the year.
end
the second part of the typical form contract for sale contains material sometimes described as routine. relative to the first part of the contract form the clauses in the second part are (less, equally, more) _____ legally binding.
equally
legal title is ownership of a freehold estate. when a contract for sale is fully signed the buyer gains the right to obtain legal title, a right that is called _____ title.
equitable
in the absence of an escrow agent in a real estate sales transaction funds are often handled by the broker. in this case the broker must hold the funds in a(n) _____ account and disburse the funds in accordance with the contract.
escrow
in the CFPB loan estimate, at the bottom of page 1 is a particularly important amount for most home buyers. it is _____ _____ to _____.
estimated cash; close
for an escrow closing a qualified escrow agent is given authority to execute all the necessary steps to the transaction, carrying it through to the creation and final distribution of all signed documents, collection and distribution of _____, and distribution of the closing _____.
funds; statement
defects to mutual assent can _____ a contract.
invalidate
in the CFPB closing disclosure a section that the buyer/borrower will want to examine early, in case questions arise, is at the top of page 3, calculating cash to close. here one can see any "surprise" from the earlier estimate for cash to close in the _____ _____.
loan estimate
consider the following simple proposed contract for sale: I, Ben Buyer, agree to buy and pay $20,000, and I, Cecil Celler, agree to sell the parcel of real estate at 1013 NE Seventh Road in North Platt, Nebraska. Signed: Ben Buyer Signed: Cecil Celler a contract for sale must have seven elements to be valid: competent parties; legal objective; consideration; offer and acceptance; no defect in mutual assent; in writing; unambiguous description of property. does this simple contract meet these requirements? yes, no, or maybe
maybe
an offer an acceptance may be stated differently as a _____ of the _____.
meeting; minds
the second part of a form contract for sale typically contains clauses and specifications relevant to _____ transactions.
most
if buyer or seller in a contract for sale fails to perform, the two parties always have the recourse of agreeing to simply cancel the contract. this is known as _____ of the contract.
rescission
a lender's primary goal in a real estate closing is to assure that all necessary steps are taken to protect the lender's _____ interest in the property.
security
assignment of a contract for sale means that the rights and obligations of the buyer are _____ to a third party, meaning that the third party _____ the buyer's _____.
transferred; takes; place
true or false an inadequate description of property in a contract for sale can destroy the validity of the contract.
true
a contract signed by a person still a minor can be repudiated by that person, making the contract _____.
voidable
loan expenses as stated in the CFPB loan estimate document vary by how much they are allowed to increase above the initial estimate. origination costs can increase by _____ percent. services you cannot shop for are allowed to increase by _____ percent. services you can shop for can increase by an _____ amount.
zero; ten; unlimited
