Chapter 11: Real Estate Sales Contracts

Earnest Money

Money that accompanies an offer to purchase as evidence of good faith; not consideration or required by contract law.

Earnest money is treated as?

Liquid Damages

Can only be used one time for the max of 8 days. Has to be very specific circumstances.

Unilateral Extension

Unless the buyer is paying cash, the closing attorney represents the interests of whom?

The Lender

One of the most complex and important sections of the contract form.

Method of Payment

Allows a buyer who is not able to arrange the necessary financing within a certain time period to cancel the contract and recover any earnest money paid without further obligation

Financing Contingency

Imposes restrictions and limitations on high-cost loans; revises permissible fees and charges on certain loans; prohibits unfair or deceptive practices by lenders.

Predatory Lending Act

The time a buyer has to have property inspected, title examined, and review any leases to determine if the property meets his or her needs.

Due Diligence Period

Georgia License Laws and Rules Include:

1. Withdrawal of an offer

2. Rejection of an offer

3. Closing of the contract

4. Separate written agreement of all parties with interest

5. Court order

6. Filing of an interpleader

7. Reasonable interpleader of the holder of the money

The broker working with the buyer is referred to as?

Selling Broker

The broker working with the seller is known as?

The listing Broker

Would take no special training to recognize.

Patent Defect

Latent Defect

Has to be disclosed.

Once the due diligence period passes, the buyer?

Is accepting the property as is.

True of False?

There is no specific form required although a seller must disclose knowledge of any latent defect.

True

On properties built before 1978, buyers have under federal law?

The right to inspect for lead-based paint.

True or False?

Must have a lead-based paint agreement from both parties before commenting to binding.

True

Provides the rights to the buyer in the event that the title is deemed not marketable.

Marketable Title

The seller would be entitled to the earnest money in the event that?

The buyer defaults

Failure to perform a legal duty, failure to carry out the terms of a contract.

Default

A contract is not a contract unless it has been properly and effectively communicated between the parties.

Notices

5 acceptable delivery Methods

1. In- Person

2. Overnight Delivery

3. Fax

4. Registered or certified U.S mail

5. Email

A contract is not a contract unless?

It has been properly and effectively communicated between the parties.

The notification section of the typical contract requires?

That all notices be in writhing, and stipulates the five acceptable methods.

Notice is not effective until?

Actual receipt, with exception of a fax email.

Most purchase and sale agreement will provide for additional pages called?

Exhibits or Addendums, to complete the agreement.

What is it called when a buyer securing an FHA or VA loan may terminate the contract if the appraisal is significantly below the agreed purchase price?

Amendatory Language Clause

FTC

Federal Trade Commission

FTC requires sellers/builders of new houses to cite the characteristics of insulation installed

Insulation Disclosure

An addition annexed to a document and made a part of the document by reference.

Rider

Rider is usually?

Written, typed, or printed on a separate piece of paper and stapled to the document. There will be a reference in the document that the rider is a part of the document.

Riders.

Also known as Addendums or Attachments

A short purchase contract used to secure a real estate transaction until a more formal contract can be signed.

Binder

A letter that summarizes negotiating progress. ( Commercial Real Estate)

Letter of Intent

Is a letter of intent a contract?

No

Also known as a land contract or a contract for deed.

A method of selling and financing property whereby the seller retains title but the buyer takes possession while making the payments.(laway)

Installment Contract

Who the buyer is considered to be?

Vendee

Who the seller is considered to be?

Vendor

The most important feature of an installment contract is that the seller?

Does not deliver a deed to the buyer at the closing.

The legally assured future interest in legal title.

Equitable Title

During the period beginning with the buyer and seller signing the contract and the seller delivering the deed, the buyer is said to hold what?

Equitable Title

Equitable Title is defined as?

The assured future interest in the legal title.

Equitable title can be?

Sold, given away, or mortgaged: passes to the purchaser's heirs and devisees upon the purchaser's death.

Legal Title

The title held by the party with the deed.

Is a unilateral contract.

A person has a right but no obligation, to perform under agreed upon terms, price, and time period.

Option Contract

Option contract must be?

In writing.

Oral option agreement Not enforceable, but also void.

The buyer is?

optionee

The seller is?

The optionor

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

Lease-Option

The purchase and sale contract is?

Bilateral

The party giving the option

Optionor

The party receiving

Optionee

The right to match or better an offer before the property is sold to someone else.

Right of First Refusal