RE Chapter 5

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RE Chapter 5
2014-09-11 15:09:42

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  1. An agreement to do or not to do a certain thing
  2. A contract in which a promise is given by one party to persuade the other party to do some action
    Unilateral Contract
  3. Under a Unilateral Contract, the party not making the promise is ________, but if he does, the first party must ______
    • Not bound to act
    • Keep his promise
  4. Examples of Unilateral Contracts (2)
    • Open Listing
    • Option Contract
  5. A contract in which the promise of one party is given in exchange for the promise of the other party, and both parties are bound to perform
    Bilateral Contract
  6. Aka "a promise for an act"
    Unilateral Contract
  7. Aka "a promise for a promise"
    Bilateral Contract
  8. Examples of Bilateral Contracts (2)
    • Exclusive listings
    • Deposit receipts
  9. A contract in which something remains to be done by one or both parties
    Executory Contract
  10. A contract in which both parties have completely performed their duties
    Executed Contract
  11. A contract expressed in words, either oral or written
    Express contract
  12. A contract which is valid and enforceable at first glance, but because of some defect, one or more of the parties may reject/void it
    Voidable Contract
  13. A voidable contract is valid (and remains binding on the parties) until ________
    It is voided/rescinded by the injured party
  14. A document that is not actually a contract, because it lacks legal effect, aka it is missing one or more of the 4 essential "contract elements"
    Void Contract
  15. A contract that is valid and enforceable, and thus has all four of the essential elements required by law
    Valid Contract
  16. The date a contract is formed, considered to be so when the final acceptance is communicated to the offeror
    Contract Date
  17. Four Elements of Contracts
    • Capable Parties
    • Mutual Consent
    • Lawful Objective
    • Consideration (anything of value)
  18. A minor may not enter into a contract to hold title to real property unless ____ (3)
    • He is emancipated
    • His is married/divorced
    • He is a veteran
  19. A real estate contract entered into by a minor is _____, whereas most other contracts signed by a minor are _____
    • VOID
    • Voidable (by the minor)
  20. Everyone is capable of contracting, including _____, except for (3):
    • Aliens
    • Minors
    • Mentally incompetent people
    • Convicts in prison
  21. Steps of "Mutual Consent" in real estate contracts (3)
    • 1- Offer by one party
    • 2- Acceptance by the other party (not modified from the original in any way) 
    • 3- Communication of acceptance to the offeror, confirmed by the seller by a fax to the buyer
  22. A contract may also be called a _______
    Deposit receipt
  23. Ways in which Mutual Consent can be prevented (3)
    • Fraud
    • Mistake
    • Duress
  24. A contract involving fraud is usually _____. In order to claim fraud, the buyer or seller must have _______
    • Voidable
    • Relied on misrepresentation
  25. A contract entered into as the result of a mistake is ______ or ______
    • Void
    • Voidable
  26. A contract entered into under duress is _____ by the injured party
  27. A contract must be legal in ______ and ______
    • Formation
    • Operation
  28. A contract entered into for an illegal purpose is ______
  29. Anything of value, required in every executory contract, does not have be money
  30. In a bilateral contract, the "consideration" is usually ________
    The promises made by each party
  31. The words "adequate, valuable, good or sufficient" in a contract refer to ______
  32. Valuable Consideration in a contract consists of (3)
    • Services
    • Whatever the parties consider to be of value
    • Money
  33. This is NOT an essential element to form a contract
  34. Determines which contracts must be in writing to be enforceable
    Statute of Frauds
  35. Contracts that must be in writing to be enforceable (5)
    1) A contract whose terms say it is not to be performed within 1 year of its making

    2) Lease longer than 1 year

    3) Listing to sell real property

    4) Selling real property

     5) Agreement to pay another's debt
  36. If a broker fails to keep an oral promise, a seller may _____
    Sue him!
  37. Examples of ORAL real estate contracts that are enforceable (3)
    1) Lease of less than 1 year

    2) Listing to sell personal property (business opp)

    3) Agreement between brokers to share a commission
  38. Contracts are assignable unless the call for some ________, or expressly or implicitly negate _____ (for example, a ____)
    • Personal quality of the promisor
    • The right to assign
    • Listing contract
  39. The agreement of the parties in a contract to substitute an entirely new contract in place of the existing one
  40. Example of novation
    Broker is replaced in a listing contract
  41. An offer of performance as part of a contract
  42. A unilateral act and its legal consequences, occurs in a contract when one party agrees to give up a right voluntarily
  43. The revocation or repealing of a contract by mutual consent by parties to the contract, or for cause by either party to the contract
    Rescission (Annulment)
  44. When a buyer backs out of a contract to buy a home and the seller exercises his right of rescission, the seller must _______ to the buyer. The seller can also ___ the buyer
    • Return the deposit
    • Sue
  45. Additional document(s) attached to and made part of a contract
  46. A change to an existing contract by mutual agreement of the parties
  47. When there is a conflict between portions of a contract which are handwritten info and preprinted clauses in a contract, the __________ take(s) precedence
    Handwritten information
  48. 2 remedies for a breach of contract
    • Sue for Specific Performance
    • Sue for Damages
  49. Remedy for a breach of contract that is used only when dollar damages will not provide an adequate remedy for the buyer (used often in RE, because property is considered "unique")
    Suit for Specific Performance
  50. When a buyer sues for specific performance, the court will order the seller to ______ IF the buyer can prove that the contracted price _____
    • Sign the deed
    • Is fair/consideration is relative to value of property
  51. A ____ may not sue a buyer or seller for specific performance, but rather must sue for _____
    • Broker
    • Money damages
  52. A clause in a contract fixing the amount of damages, should one of the parties default
    Liquidated Damages Clause
  53. The standard residential deposit receipt (contract) contains a liquidated damages clause, which says "in the event of default, by buyer, seller shall retain as liquidated damages, ____% of the purchase price, or the amount of the deposit, whichever is ____"
    • 3
    • Less
  54. When a buyer defaults, the liquidated damages are usually _________
    Divided equally between the seller and listing agent
  55. The contract used to write an offer; the contract selling real property
    Deposit Receipt
  56. An employment contract between a principal and an agent, that is employing the agent to do certain things for the principal
  57. In good faith, without fraud or deceit, genuine. Having all the elements required by law in the case of contracts
    Bona Fide
  58. A bona fide listing to sell real property must contain ____ (5)
    • Capable parties
    • Mutual consent
    • Lawful objective
    • Consideration
    • In writing
  59. In a listing contract, the "terms of sale" should include _______
    The exact terms the seller is willing to accept
  60. A listing belongs to _____, not ______
    • The broker
    • The salesperson who took the listing
  61. A listing is a ____ party contract, between _____
    • 2
    • The broker and the seller
  62. If a broker for a real estate office dies, the listings in the office _______
    Are cancelled, and must be re-listed by a new broker
  63. Types of listings (3)
    • Open (Non-exclusive)
    • Exclusive Agency
    • Exclusive Right to Sell
  64. A contract given by an owner authorizing a broker to act as his agent, but the broker will only be entitled to commission if he is the "procuring cause" of the transaction
    Open Listing
  65. Responsible for the consummation of a transaction
    Procuring Cause
  66. A contract in which a seller agrees to pay a commission to the listing agent if his property sells through the listing agent or any other agent, but the seller retains the right to sell directly to a buyer and pay no commission
    Exclusive Agency Listing
  67. A seller who gives an exclusive agency to one broker, and an open listing to a second broker, would be liable for _______ if the second broker sold the property
    2 commissions!
  68. A contract in which a seller agrees to sell through the listing broker only. If his property is sold by anyone during the term of the listing, the listing broker has the right to the commission
    Exclusive Authorization & Right to Sell Listing
  69. In an open listing, the broker must be _____ in order to be entitled to a commission
    The procuring cause
  70. In an Exclusive Agency listing, the seller retains the right to ______ and pay no commission
    Sell directly to a buyer that he finds himself
  71. A listing where the agent's commission consists of any money that is left over after the seller receives a fixed amount
    Net Listing
  72. In what type of listing would an agent who was the procuring cause of a sale possibly not earn ANY commission?
    Net Listing
  73. A net listing requires an agent to disclose ___ and ______ to the seller when presenting an offer
    • Selling price
    • Amount of his commission (if any)
  74. A contract in which a buyer agrees to buy through the buyer's agent only, aka a Buyer Listing
    Exclusive Authorization & Right to Locate Property
  75. A listing does not need a _____ as long as it adequately describes the property. It can be the street address as long as the seller ______
    • Legal description
    • Doesn't own any other property with the same address
  76. When a broker takes an exclusive listing, she is obligated to _____ the property and use ____ to procure a buyer
    • Advertise
    • Due diligence
  77. A typical listing authorizes the broker to accept _______ as the seller's agent
    A buyer's deposit
  78. If a broker is NOT authorized to receive a buyer's deposit, but does so anyway, he is treated as ______ for that one act
    The buyer's agent
  79. A clause in a listing which allows a broker to receive a commission if a buyer he introduced to the property buys that property after the listing has expired
    Broker Safety Clause/Broker Protection Clause
  80. A clause in a listing contract designed to protect an agent from liability for false information given by the seller about the condition of the property
    Hold Harmless Clause
  81. Commission may be in the form of ____ (4)
    • Cash
    • Check
    • Assignment of promissory note
    • Anything of value
  82. Any exclusive listing must have a definite _____________
    Termination date
  83. A termination date/length of contract is determined by ______
    Mutual agreement between the seller and agent
  84. Type of listing that does not require a termination date
    Open listing
  85. An owner can ______ an exclusive listing at any time, but may be liable for _______ under the agreement
    • Cancel
    • Payment of damages
  86. Contract used to write an offer, aka the contract used to sell real property
    Residential Purchase Agreement (RPA, Deposit Receipt)
  87. An offer with contingencies is _____
  88. If a contingency fails, the buyer ______
    Is not obligated to perform
  89. 4 ways an offer can be terminated
    • Revocation
    • Rejection
    • Death of buyer
    • Expiration
  90. Termination of an offer in which the buyer revokes it prior to communication of the seller's acceptance, for any reason
  91. When a buyer withdraws an offer, he must receive
    His deposit back
  92. A counter-offer automatically ____ the original offer
  93. Clause found in the RPA that refers to the entire contract and encourages that deadlines be met
    Time is of the essence clause
  94. If a real estate licensee advises buyers about how to take title when preparing an RPA, she may be giving ___ advice, ___ advice, or possibly providing a basis for a claim of _____
    • Tax
    • Legal
    • Discrimination
  95. If a buyer properly notifies the seller of a problem resulting from a home inspection during escrow, and the seller quickly fixes the problem, the buyer is _____
    Bound by the contract
  96. If a buyer's inspector damages a seller's property, _____ must pay for repairs
    The buyer
  97. A clause in a contract in which the parties agree to arbitrate a dispute rather than go to court
    Arbitration clause
  98. If the parties in an RPA did not initial the arbitration clause and the buyer wishes to rescind the contract and get his deposit back, his remedy is to ______
    File a court action
  99. A listing agent who receives multiple offers on one property must present them _________
    All at the same time
  100. The deposit receipt gives the broker the authority to hold a buyer's deposit for ____, or until _____
    • 3 business days
    • The offer is accepted
  101. If a seller requests a buyer's deposit after an offer has been accepted, the broker must obtain _______ before releasing the check to the seller
    Written consent of the buyer
  102. A contract to keep an offer to lease or sell real property open for a set period, during which time the seller agrees NOT to revoke his offer to sell
  103. An Option must be supported by actual _____, and restricts the optionor because it ______ during the option period. An option does not necessarily require a separate _____
    • Monetary consideration
    • Clouds the title to the property
    • Sales contract
  104. Under an option, the optionee ____
    Has no obligation to buy the property
  105. Under an option, the optionee does not hold a _______ in title to the property, and does not have any right to ______
    • Legal interest
    • Use the land
  106. An agent who has an option to buy a property which she also has listed for sale has ______
    A conflict of interest
  107. In order for an AGENT to exercise the option to buy (in an option contract), he must reveal to the seller, in writing, any ______ and the amount of _______, and must also get the ______
    • Offers on the property
    • His profit
    • Written consent of the seller
  108. A broker's desk cost, or upkeep expenses, is calculated by dividing ____ by _____
    • The total operating expenses
    • Number of salespersons
  109. Calculated by subtracting commissions paid to salespersons from the gross income of the brokerage
    Company dollar
  110. Real estate commissions are _____, and must be disclosed as such in 1-4 unit residential listing agreements. Setting fixed commission rates violates _____
    • Negotiable
    • Anti-trust laws