NJ Real Estate Unit 11: Real Estate Contracts Flashcards

NJ Real Estate Unit 11: Real Estate Contracts Flashcards

Competent Partiesthose legally qualified to enter into contracts Considerationsomething of value given in exchange Executed Contractcontract that has been fulfilled Unenforceable contractseemingly valid contract but neither party can sue to force performance During the period of time after a real estate sales contract is signed but before title actually passes, the status of the contract isA. voidable.B. executory.C. executed.D. implied.

• executory.

An optionA. requires the optionee to complete the purchase.B. gives the optionee an easement on the property.C. keeps an offer open for a specified time.D.makes the seller liable for a commission.

• keeps an offer open for a specified time.

The buyer's offer in writing to purchase a house for $120,000, drapes included, with the offer to expire Saturday at noon. The sellers reply in writing on Thursday, accepting $120,000 but excluding the drapes. On Friday, while the buyers are considering this counteroffer, the sellers decide to accept the original offer, drapes included, and state that in writing. At this point, the buyersA. must buy and have a right to insist on the drapes.B. are not bound to buy and can forget the whole thing.C. must buy but are not entitled to the drapes.D. must buy and can deduct the value of the drapes from the $120,000.

• are not bound to buy and can forget the whole thing.

Contingencycertain happening on which a contract depends Unilateral contractone-sided promise, valid only if the other party acts Earnest Moneybuyer's deposit with purchase contract Consideration given in exchange for a sales contract might take the form ofA. a down payment and note.B. a purchase-money mortgage.C. cash.D. any of the above.

• any of the above.

A meeting of the minds refers toA. agreement on terms.B.creation of counteroffer.C. notification of acceptance.D.creation of good faith.

• agreement on terms.

Express Contractcontract set down in so many words A buyer makes a written offer to buy an apartment building for $900,000, with the closing to be on December 30. The seller, who has income tax concerns, signs his consent to sell for that amount, agreeing to all her terms except that "the sale shall not be closed until January." At this point, who is free to walk away and forget the whole thing?A.Either seller or buyerB. Neither seller nor buyerC. The sellerD. The buyer

• The buyer

Liquidated damagessum agreed on to serve as damages in case of future default Voidable contractcontract that is binding, but one party may disaffirm it If, upon the receipt of an offer to purchase their property under certain conditions, the sellers make a counteroffer, the prospective buyers areA. bound by the original offer.B.bound to accept the counteroffer.C. bound by whichever offer is lower.D. relieved of their original offer.

• relieved of their original offer.

Counterofferoffer returned to buyer with changes by seller A person drives into a filling station and tops off her gas tank. She is obligated to pay for the fuel through what kind of contract?A. ExpressB. ImpliedC. OralD. Voidable

• Implied

A buyer has a contract to buy a commercial building but would rather let his friend buy it instead. If the contract allows, the friend can take over the buyer's obligation by the process known asA. assignment.B. substantial performance.C. subordination.D. mutual consent.

• assignment.

Rescissionreturn to the status quo Equitable Titleinterest acquired by buyer with land contract Escape Clauseprotection for seller when buyer has another house to sell Contractagreement between two parties to perform some legal act(s) A seller gave an open listing to several brokers, specifically promising that if one of the brokers found a buyer for the seller's real estate, the seller then would be obligated to pay a commission to that broker. This offer by the seller is a(n)A. executed agreement.B. discharged agreement.C.implied agreement.D. unilateral agreement.

• unilateral agreement.

Statute of fraudslaw requiring certain contracts to be in writing A 17-year-old New Jersey resident signs a contract to buy a home for himself and his wife. The contract isA.voidable.B. valid.C. executed.D. unilateral.

• valid.

A contract is said to be bilateral ifA. one of the parties is a minor.B. the contract has yet to be fully performed.C. only one party to the agreement is bound to act.D. all parties to the contract are bound to act.

• all parties to the contract are bound to act.

Specific performancecourt action usually asking that the seller be forced to sell as agreed To be legally valid, a contract of sale must beA.accompanied by earnest money.B. witnessed by a notary public.C. acknowledged by the parties to the contract.D.negotiated between competent parties.

• negotiated between competent parties.

Executory Contractcontract that has not yet been performed The seller told the buyer she'd leave the washing machine but instead took it with her. The written contract made no

mention of the washing machine. The buyer has no right to complain because of the rule ofA. partial performance.B.novation.C. undue influence.D. parol evidence.

• parol evidence.

Statute of limitationstime within which one is allowed to assert a legal right Offer and acceptancemeeting of the minds If a real estate sales contract does not state that time is of the essence and the stipulated date of transfer comes and goes without a closing, the contract is thenA. binding for only 30 more days.B. novated.C. still valid.D. automatically void.

• still valid.

Time is of the essencecontract clause requiring punctual performance Void contractcontract that does not meet all legal requirements Buyers have a seven-day period in which they may cancel sales contracts onA. certain condominiums.B. all one- to four-family dwellings.C. any commercial properties.D.leased property.

• certain condominiums.

New Jersey real estate brokers and their salespersons may fill in sales contract forms forA. one- to four-family properties.B. any residential properties.C. residential properties and vacant land.D. residential and industrial property only.

• one- to four-family properties.

A suit for specific performance of a real estate contract asks forA. money damages.B. a new contract.C. a deficiency judgment.D. a forced sale or purchase.

• a forced sale or purchase.

A legally enforceable agreement under which two parties agree to do something for each other is known as a(n)A.escrow agreement.B. legal promise.C. valid contract.D.option agreement.

• valid contract.

Valid contractcontract that meets all legal requirements A broker has found a buyer for a man's home. The buyer has indicated in writing his willingness to buy the property for $1,000 less than the asking price and has deposited $5,000 earnest money with the broker. The buyer is out of town for the weekend and the broker has been unable to inform him of the signed document. At this point the document is a(n)A. voidable contract.B. offer.C. executory agreement.D. implied contract.

• offer.

A broker must deposit funds received as earnest money deposits in a special separate bank account withinA. 3 days.B. 5 business days.C. 7 days.D. 30 days.

• 5 business days.

Novationsubstitution of a new contract for an existing one If the proposed contract contains a contingency for the sale of the buyer's present home, the seller often requires that it also includes anA. option.B. addendum.C. escape clause.D. assignment.

• escape clause.

Assignmenttransfer of interest in a contract to a third party Optioncontract binding one party; other party free to act or not