unit 11 real estate exam

What are the classifications of contracts based on how intentions are expressed?

Express and implied.

What is a bilateral contract?

Both parties make promises and are obligated to perform.

What is a unilateral contract?

One party is obligated to perform only if the other party performs a specified act.

What are the four classifications based on enforceability?

Valid, void, voidable, and unenforceable.

What is an executed contract?

A contract that has been fully performed.

What is an executory contract?

A contract in which some performance remains.

What are the essentials of a valid contract?

Competent parties, offer and acceptance, consent, consideration, and legal purpose.

What additional requirement is important for a valid real estate contract?

A description of the property.

What does the Statute of Frauds require?

Certain contracts, including land-sale contracts, to be in writing to be enforceable.

What is an assignment?

Transfer of contractual rights and/or obligations to another party.

What is novation?

Substitution of a new contract or party that releases the original obligation.

What is a default?

Failure to perform a contractual obligation.

What are damages?

Monetary compensation for a loss caused by breach.

What is specific performance?

A court order requiring a party to perform the contract.

What is an option?

The exclusive right, for a specified period, to purchase or lease property.

Who is the optionor?

The person who grants the option.

Who is the optionee?

The person who receives the option.

What is a land contract?

A seller-financing agreement where the buyer pays over time and receives the deed after full payment.

What does the buyer receive under a land contract before full payment?

Equitable title.

What does the Illinois Frauds Act require for land-sale contracts?

They must be in writing to be enforceable.

What happens to contracts entered into by minors?

They are generally voidable.

What makes a contract void?

For example, a contract made by a legally adjudicated insane person.

What makes a contract voidable?

Examples include minority, duress, intoxication, mistake, misrepresentation, or fraud.

What happens to earnest money?

It must be deposited in a special escrow or trust account.

When does earnest money earn interest?

Only when all parties agree in writing.

What are liquidated damages?

A predetermined amount that may go to the seller if the buyer defaults, as provided by the contract.