Real Estate Contracts Review

Comprehensive vocabulary flashcards covering the essential elements, classifications, and termination methods of real estate contracts based on Unit 11.

Contract

A voluntary agreement or promise between legally competent parties, supported by legal consideration, to perform (or refrain from performing) some legal act.

Contract Law

The area of law that governs agreements used by real estate professionals to carry out responsibilities to sellers, buyers, landlords, and tenants.

Express Contract

A contract where the parties state the terms and show their intentions in words, which can be either oral or written.

Implied Contract

A contract where the agreement of the parties is demonstrated by their acts and conduct rather than by words.

Statute of Frauds

A state law requiring certain contracts, such as real estate sales or lease agreements, to be in writing to be enforceable in a court of law.

Bilateral Contract

A contract in which both parties promise to do something, providing one promise in exchange for another.

Unilateral Contract

A one-sided agreement where one party makes a promise to entice a second party to act, but the second party is not legally obligated to do so.

Executed Contract

A contract in which all parties have fulfilled their promises and the agreement has been fully performed.

Executory Contract

A contract that exists when one or both parties still have an act to perform; a sales contract is executory from signing until closing.

Offer and Acceptance

Also known as mutual assent or a "meeting of the minds," requiring complete agreement between parties on all terms and purpose.

Offeror

The person who makes the offer in a contract transaction.

Offeree

The person to whom an offer is made.

Counteroffer

A new offer that varies from the original terms, which effectively rejects the original offer and terminates it.

Consideration

Something of legal value offered by one party and accepted by another as an inducement to perform or refrain from performing some act.

Consent

The requirement that a contract be a free and voluntary act of each party, without undue influence, mistake, misrepresentation, fraud, or duress.

Valid Contract

A contract that meets all essential elements, is legally sufficient and enforceable, and is binding in a court of law.

Void Contract

A contract that has no legal force or effect because it lacks some or all of the essential elements.

Voidable Contract

A contract that appears valid on the surface but may be rescinded or disaffirmed by one or both parties based on a legal principle.

Unenforceable Contract

A contract that may appear valid but cannot be enforced in court, such as an oral agreement for the sale of real estate.

"Time is of the essence"

A contract clause meaning each element of the contract must be performed within a specified time frame; failure to do so constitutes a breach.

Assignment

The transfer of rights or duties under a contract to a third party.

Novation

The substitution of a new contract for an existing one, or the substitution of a new party for one of the original parties.

Breach of Contract

A violation of any of the terms or conditions of a contract without legal excuse.

Suit for Specific Performance

A legal action where the buyer asks the court to force the seller to go through with the sale and transfer property as agreed.

Liquidated Damages

A specific amount of money agreed upon in a contract to compensate the non-breaching party in the event of a default.

Statute of Limitations

The law that limits the time period during which parties may bring a legal action to enforce their rights under a contract.

Rescission

A remedy that returns the parties to their original positions before the contract, requiring the return of all exchanged money or property.

Earnest Money

A deposit, usually a check, provided by a buyer to show good faith intention to carry out the terms of a real estate purchase contract.

Equitable Title

The interest or rights acquired by a buyer after both parties have executed a sales contract but before the legal title is transferred at closing.

Contingencies

Conditions that must be satisfied before a sales contract is fully enforceable, such as mortgage or inspection requirements.

Amendment

A change or modification to the existing content of a contract that must be initialed or signed by all parties.

Addendum

An additional provision added to an existing contract that may add terms or change content by referencing the original agreement.

Option

A unilateral contract where an owner gives a prospective purchaser the right to buy or lease a property at a fixed price within a certain period.

Land Contract

A financing agreement (also known as a contract for deed) where the seller retains legal title while the buyer takes possession and receives equitable title.

Purchase Money Mortgage

An arrangement where the buyer receives title to the property but places a security interest on it in favor of the seller.