FL Exam sec 11 - Real Estate Contracts 12 Flashcards

FL Exam sec 11 - Real Estate Contracts 12% Flashcards valid contractcomplies with provisions of contract law. contains 4 essential elements-contractual capacity of the parties-offer and acceptance-legality of object-consideration exclusive agency listinggives exclusive rights to one broker. if seller sells house then broker takes no commission unless broker introduced buyer.power to bind sellerbroker can't sign for buyer or seller. power of attorney is a legal document designating some other person or attorney in fact to act on behalf of the principal in all matters.bilateral contractboth parties to perform in accordance to terms of contract.both parties promise to do something.open listingowner can list with any number of brokers. first broker ready to sell wins contract commission. these are considered unilateral liquidated damages (remedies for breach) usually parties stipulate amount of money in contract to be paid, usually earnest money deposit, in case buyer defaults option contractkeep open for a specified period of time an offer to sell real property. must be in writing and signed because they fall under statute of frauds.impossibility of performanceimpossible to carry on duties, such as death of buyer or seller offer and acceptance (4 essentials of contract) parties must come to:-MEETING OF THE MINDS - parties must reach agreement on all terms in contractofferor makes offer and offeree accepts death or insanitysimply put, death or insanity terminates an offer. offer does not become assignable (transferable) to new party.assignment and novationtransfer of persons rights and duties under contract to another person. contracts are assignable unless specified in that contract.novation is used to substitute a new party for an original one, releasing the original party from their obligations.buyer brokerage agreement (4 types of contract) employment contract with buyer formal contracta negotiable written instrument such as a promissory note.unilateral contractobligates only one party to agreement. one party makes obligation without without receiving performance or promise

from other party.ex: broker promises $1,000 bonus to

associate pulling in highest amnt of listings. broker promised to pay bonus, however associate under no obligation to acquire new listings.What are 5 types of listings?1. open listing2. exclusive-agency listing3. exclusive right of sale listing4. net listing5. multiple list

brokers compensationspecified in listing or buyer broker agreement,computed as flat fee, hourly rate, or percentage of sales price. closing agent can prepare a check for the sales associate. may be given at closing. payment could also come from a referral statute of limitationstime during which terms of contract may be enforced.protects people from being sued after a period of time has expired-written is 5 years-oral (PAROL contracts) is 4 years withdrawal by offerormay revoke the offer at anytime before the agent or offeree gives acceptance.unenforceable contractappears to have all essential elements but cannot be

enforced? why? example: because its not in writing or is

vague specific performence (remedies for breach) if money doesnt provide relief, the wronged may sue to have the other party do as contract states executory contractcontract formed between two parties, but something still remains UNFULFILLED. real estate sale contract between signing and closing the deal is an executory contract performancecontract terminated through completion or fulfillment enforceable contractlegally binding contract that Florida court will recognize rejectionrejection must be communicated by offeree to offeror legality of object (4 essentials of contract) provisions spelled out in contract must be for legal purpose.

example: if contract states that assistant will take

commission, its UNENFORCEABLE because this is illegal.mutual recissionagreement from both parties to terminate the contract good considerationpromise that cannot be measured by money; such as love and affection lead based paint disclosurepre-1978 housing, hazard reduction act requires-disclose to buyers and sellers the presence of known lead based paints in redidential property.-sale contracts and leases include a disclosure about lead based paint.seller allows home buyer a 10 day period to conduct inspection for lead paint What are 6 ways a contract is terminated? 1. performance2. mutual rescission3. impossibility of performance4. lapse of time5. bankruptcy6. breach What 7 disclosures are required in Florida? 1. material defects2. radon gas3. lead-based paint4.energy efficiency brochure5. HOA6. property tax7. building code violation listing contractsan employment agreement between property owner and real estate broker. written oral or implied. longer than one year must be in writing to be enforceable. chapter 475

requireswritten contracts to include:expiration

datedesciption of the propertylisting price and termsbrokers compensationsignatures of all ownerscopy of contract be given to owners within 24 hours

contractual capacity of the parties (4 essentials of contract)not everyone can make a valid contract, they must be COMPETENT (no legal mental defects or insanity and be of legal age) recission (remedies for breach)to cancel or annul contract, to go back before as though the contract never even existed exclusive rght of sale listinggives broker the greatest degree of protection. even if owner sells during contract period, broker is entitled to a commission Authority of real estate licensees to prepare contractsLicensees may not draw lease agreements but fill in blanks on lease instruments on lease periods that dont exceed one year that are preapproved by florida supreme court.Allowed to assist buyers and sellers fill in blanks on four types of standardized contracts drafted by attorney and made available through local realtor boards and

associations :-listing agreement-buyer brokerage

agreement-sale and purchase contract-option contract listing agreement (4 types of contract)is brokers employment contract with seller. typically sales associate that obtains listing executed contractbecomes an executed contract at signing. all parties have performed promises stated in contract.energy efficiency disclosurerequires buyers before signing contract, to receive pamphlet about energy efficiency of the building.depending on the rating, purchaser may qualify for energy saving mortgage implied contractconditions not stated in contract but implied by the acts of parties. person walks into diner and orders lunch, implied contract is created.voidable contracta minors contract is voidable but an adult is bound to honor said contract if the minor chooses to go through with the transaction HOA disclosurethey are responsible for operation of a community or mobile home subdivision. voting membership made up of parcel owners. they may impose liens if unpaid memberships or fines. can even foreclose home.-buyer shouldnt sign contract without reviewing HOA disclosure summary-if disclosure summary not provided to buyer before executing contract, contract is voidable-if buyer decides to void, they have 3 days from disclosure summary or before closing, whichever occurs first.after closing the right to void expires.statute of fraudsrequires that contracts conveying an interest in real property and contracts not to be performed within one year of date created must be in WRITING and SIGNED to be enforceable. contracts covered by Florida's statute of

frauds include:-purchase and sale contracts-options

contracts-deeds and mortgage instruments-lease

agreements longer than a year-listing agreements longer than a year option contract (4 types of contract)agreement to keep an offer open for specified period of time an offer to sell or lease real property. advised to tell buyer or seller to have attorney draw up an options contract.