Law of contracts

Who established the broker-law committee?

TREC

Broker Law Committee

addresses the problem of the unlawful practice of law

TREC has promulgated sales contract forms for

most RESIDENTIAL properties

Buyers Temporary Residential Lease

Used when buyer occupies property up to 90 days PRIOR to closing

Sellers Temporary Residential Lease

Used when the seller occupies the property for no more than 90 days AFTER closing

Right of refusal

Gives tenant the right to purchase leased property by matching or bettering any offer before it’s sold to anyone else

Services mean

Work, labor, or repair of goods

Brokerage is an example of a

service

Puffing ( puffery) is NOT

misrepresentation

Puffing

uses adjectives and opinions rather than details or fax for marketing purposes

Examples of puffing

-the most beautiful landscaping

-best water in the world

In Paragraph 7.B.(2) of sellers disclosure,

the buyer has not received the notice, and the seller is given a certain number of days to provide it to buyer

Selecting 7.B.(2) makes the contract

voluntary on the part of buyer for a period of time

Common law

Body of law based on “common sense” and local custom

personal property is also known as

Chattel

bill of sale

Used when personal property (chattel) is being transferred along with real property

emblements

Annual crops produced with labor

Emblements are considered

personal property (chattel)

Concern arises with emblements in

landlord-tenant relationships

Who gets to harvest an annual crop?

The tenant

4 economic characteristics of land

1. Scarcity

2. Modification

3. Fixity

4. Situs

Modification refers to

man-made changes to the land

The advantage of ownership in severalty is

total control of the property

If only one signature is required on a deed, conveying full ownership of the property to another, the seller owns

an estate in severalty

Sole proprietorship

A venture that is owned by ONE individual

The primary benefit of a sole proprietorship

The owner has total control of the business

Owners within a cooperative do NOT own

A specific unit… they own stock

Advertising

Describes the property as opposed to describing the occupant or owner

Familial status advertising

“no single parents with children”

Contract

an agreement between two or more parties to do something or to refrain from doing something

Option

An agreement between a buyer and seller or landlord and tenant

-In exchange for some form of consideration(an option fee), a seller gives the buyer the right to purchase the property at some preset price

If the buyer chooses to buy under an option

the seller must sell

Signing a contract under the influence of drugs or alcohol means they are

Not competent

Contracts for the conveyance of an interest in real estate or leases for a term of more than one year must be

In writing

Consideration

Something given in exchange for a promise

When a contract is executed, there must be

signing and communication

A contract is “ fully executed” when

All parties have performed

Fully executed =

Closed

Police power is the right of the government to

regulate and control the way land is used

Buffer zone

Area of land, separating one land use from another such as residential from commercial

The buffer zone is located

between incompatible uses

Eminent domain

The right of the government to take private land for public use

The action of taking private land for public use

Condemnation

When there is no way to access the proper legally, it is considered

Landlocked

Easement

Gives one the right to use or pass over another’s property

Easement created by necessity

The courts may award an easement to a property owner, who has no legal access to the land

Easement by condemnation

The government, under its power of eminent domain, takes an easement

Encumbrance

A claim, lien, charge, or liability attached to and binding real property

Riparian rights

rights an owner has to use water for a river or a stream

littoral rights

rights to use water from a lake, ocean, or sea

Encroachment

The intrusion of one’s property onto another’s property

Use the Lead Paint Disclosure for all properties built before

1978

The buyer or the lender may opt to have an Environmental Site Assessment if

a buyer has concerns about possible contamination of a potential property

Discharged =

Terminated

A contract may be terminated due to

the destruction of property

4 types of leasehold estates

1. Estate for years

2. Periodic tenancy or periodic estate

3. Tenancy at sufferance

4. Tenancy at will or estate at will

Estate for years- a lease with

A definite beginning date and definite ending date

Periodic tenancy or periodic estate- a lease that

Renew itself automatically

Tenancy at sufferance

The holdover tenant (one who has ended and who refused to leave) is occupying the least property against the owners will

• Holdover tenant is not paying rent

Tenancy at Will or estate at Will

Tenant occupies real estate with the permission of the owner for an uncertain or unspecified length of time

A percentage lease is usually used in what environment?

The retail environment

Obligates the tenant to pay a base rent and a percentage of the gross sales

Percentage lease

An assignment of a lease occurs when

A tenants rights and liabilities are transferred to another

The option agreement is an example of a

unilateral contract

Lease option

Allows a tenant to buy the property at a preset price and terms for a given period

A lease option can also be called a

Lease with an option to buy