Chapter 7: Real Estate Contracts, Agreements, and Documents

Chapter 7: Real Estate Contracts, Agreements, and Documents

Flashcards Parol EvidenceEvidence concerning negotiations or oral agreements that were not included in a contract, altering or contradicting the terms of the written contract Void ContractA contract that is not enforceable because it lacks an offer, acceptance, and/or consideration, which are necessary or contract formation, or it defective in some other respect

• Gross Lease2. Net Lease3. Percentage Lease4. Land

Lease What are the four major types of leases?Specific PerformanceA legal remedy in which a court orders the breaching party of a contract to perform as agreed, rather than simply paying monetary damages.NovationWhen one party to a contract withdraws and a new party is substituted, with the consent of all parties, reliving the withdrawing party of liability; the substitution of a new obligation for an older one

• Tyler's signed Agency Disclosure form(In Module 4, you

learned that a licensee working with a buyer must give the seller the buyer's signed Agency Disclosure form before he presents an offer. Of course, if buyer Tyler is a client, both Wendy and Tyler must give informed written consent to dual agency as well. ) After Mike gets Wendy's listing straightened out, his client, Tyler, decides to put an offer on the property. What is the first thing Mike should give Wendy?a. Tyler's earnest money depositb. Tyler's offerc. Tyler's signed Agency Disclosure formd. All of the above should be given to Wendy simultaneously.

• It is the buyer's offer2. It is the receipt for the earnest

money deposit3. It is the contract between the buyer and the seller (in some parts of the state where escrow closings are common, the contract ma also serve as the escrow agent's instructions) What three purposes do Purchase Contracts serve?

• That cannot be performed within one year from the time it

is made- For the sale of goods $500 or more- For the sale of personal property $5,000 or more- Made in exchange for a promise of marriage, a promise to guarantee payment of another'sdebt, and a lease where the term is long than one year In Ohio, the statute of frauds applies to what four types of contracts?Valid ContractA contract that is binding, and legally enforceable

• remains secondarily liable(In an assignment, one party

(the assignor) transfers her rights or interests under a contract to another (the assignee). The assignor, however, remains secondarily liable to the other party and can be sued if the assignee does not perform.) Under an assignment, the original partya. is relieved of liability.b. remains primarily liable.c. remains secondarily liabled. shares liability equally with the new party Undue InfluenceExerting excessive pressure on someone so as to overpower the person's free will and prevent them from

making a rational or prudent decision

When a party agrees to the terms of an offer to enter into a contract

• May be made only by the offeree2. Must be

communicated to the offeror3. Must be made in the manner specified4. Must not vary the terms of the offer VoidableA contract that one of the parties can disaffirm, without liability, because of a lack of legal capacity or negative factor (i.e. fraud, duress); the injured party can choose whether or not to go through with the contract

• unilateral and valid(There's nothing to suggest that the

contract would not be valid. It's unilateral because it's simply an inducement to get Beth back in school. The contract does not require Beth to graduate, but she would have to graduate before Ruth's promise is binding.) Ruth is disappointed when her 21-year-old daughter Beth drops out of college. She and Beth sign a contract that states Beth promises to go back to school and graduate, and in exchange, Ruth will give her a new SUV on the day she gets her diploma. This contract is best described asa.bilateral and valid.b. bilateral and voidable.c. unilateral and valid.d. unilateral and void.SeverableOne part or provision of a contract can be held unenforceable without making the entire contract unenforceable

• Compensatory Damages2. Liquidated Damages3.

Specific Performance4. Rescission The four remedies available through the court system in the

event of a breach of contract are:

AssignmentWhen a person transfers their interests under a contract to another; when a tenant transfers their right of possession, or other interest, in leased property to another person for the remainder of the lease term

Earnest Money Deposit(NOTE: NOT

CONSIDERATION)Can only be released 1 of 3 ways:-

Completion of the sale- Mutual release signed by all parties to the contract- Court order An inducement to have the buyer's offer accepted and a means of showing the seller that the buyer is serious and able to follow through with the financing necessary to buy the property Liquidated DamagesA sum of money that the parties in a contract agree in advance (at the time of entering the contract) will serve as compensation in the event of a breach Statute of FraudsA law that requires certain types of contracts to be in writing and signed in order to be enforceable

• liquidated damages.(In purchase contracts, there's often

a clause for forfeiture of the earnest money deposit to the seller if the buyer breaches. This is an example of a liquidated damages provision) Jim made an earnest money deposit of $8,000 when entering into a contract to buy Allen's house. The contract indicated that the injured party would get the earnest money in the event of a breach. Before closing, Jim backs out of the contract, citing health issues, and Allen gets a check for $8,000. This is an example ofa. compensatory damages.b. consideration.c. liquidated damages.d.novation.What are the four requirements for acceptance of an offer to enter into a contract?

Note: That the Mailbox Rule makes an acceptance

effective as soon as it is sent in the mail but a revocation is only effective when the offeree actually receives it

Bilateral Contract(Ex: In an exclusive right to sell listing

agreement, the seller agrees to pay a commission if the

broker finds a buyer, and the broker agrees to advertise, market the property, and carry out other responsibilities to the seller) Type of contract that occurs when each party makes a binding promise to another.