Understanding Contracts: Terms and Definitions, Quizzes of Real Estate Management

Download Understanding Contracts: Terms and Definitions and more Quizzes Real Estate Management in PDF only on Docsity! TERM 1 contract DEFINITION 1 legally enforceable agreement to do (or to not do) a specific thing TERM 2 express contract DEFINITION 2 the parties to the contract declare their intentions either orally or in writing. TERM 3 implied contract DEFINITION 3 created neither by words nor writing, but rather by the actions of the parties indicating that they intend to create a legally enforceable agreement TERM 4 bilateral contract DEFINITION 4 a promise is exchanged for a promise TERM 5 unilateral contract DEFINITION 5 one party makes a promise in order to induce a second party to perform. The second party is not legally obligated to act.....If the second party does act then the first party is obligated to keep the promise TERM 6 executory contract DEFINITION 6 exists when something remains to be done by one or both parties TERM 7 executed contract DEFINITION 7 one in which both parties have fulfilled their promises and thus performed the contract TERM 8 Forbearance DEFINITION 8 refraining from action TERM 9 Valid contract DEFINITION 9 complies with all the essentials of a contract and is binding and enforceable to both parties. Meets all requirements of the law. TERM 10 Void contract DEFINITION 10 has no legal effect; not a legally enforceable agreement TERM 21 Innocent Misrepresentation DEFINITION 21 no purpose to induce another to part with something of value; still, no mutual agreement exists TERM 22 Mistake DEFINITION 22 not poor judgement, nor is it ignorance. It generally involves a mutual misunderstanding in negotiations between the parties or is a mistake of fact, such as a party being confused as to which property is under consideration TERM 23 contractual intent DEFINITION 23 the parties contemplate that they will be bound by the agreement TERM 24 Duress, Menace, undue influence DEFINITION 24 cannot be used to obtain the signatures of the parties to the contract......Duress=use of force....Menace=threat of violence.....Undue influence=unfair advantage TERM 25 Lawful Objective DEFINITION 25 if contract calls for breaking the law, then it is void TERM 26 Consideration DEFINITION 26 the inducement to a contract. May be money, property, personal services, promise, ect. All parties must offer consideration or the contract is not binding. TERM 27 earnest money DEFINITION 27 given by the buyer with an offer to purchase to show sincerity and an intent to complete the contract if the seller accepts the offer TERM 28 Statute of Frauds DEFINITION 28 law providing that no law suit may be brought with respect to certain classes of contracts unless there is some written evidence of the agreement; most important category for this class is contracts for the sale of real estate TERM 29 parol evidence DEFINITION 29 oral or verbal testimony TERM 30 Parol Evidence Rule DEFINITION 30 can only resort to oral or verbal testimony to clarify ambiguous terms of the contract or fill in holes in the contract; cannot introduce oral evidence to contradict the written contract TERM 31 Assignment DEFINITION 31 transfers the rights, benefits, and obligations under a contract to someone else; allowed unless prohibited by the contract or is "personal" like a brokerage agreement TERM 32 Novation DEFINITION 32 substitution of a new contract between the parties with the intent of extinguishing the old contract TERM 33 Breach of contract DEFINITION 33 failure to perform one or more requirements of the contract. Wronged party has 6 alternatives: 1) accept partial performance 2) rescind the contract unilaterally 3) sue for money damages 4) sue for specific performance 5) accept liquidated money damages 6) mutually rescind the contract TERM 34 partial performance DEFINITION 34 a party does a portion of what is required under the contract, but does not complete the obligation TERM 35 Recission DEFINITION 35 In contract law, rescission has been defined as the unmaking of a contract between parties. TERM 46 survival clause DEFINITION 46 the contract will survive the closing of the transaction and not merge into the deed TERM 47 earnest money deposit DEFINITION 47 not required; usually around 1% +/- of purchase price in VA. Earnest money must be held by a broker in a special trust account called an ESCROW ACCOUNT TERM 48 Closing agent DEFINITION 48 does not have to be an attorney TERM 49 Proration DEFINITION 49 dividing up charges between the parties, usually based upon time of occupancy; In VA, always property taxes; perhaps property owners association dues, utilities TERM 50 Possession DEFINITION 50 if not at date of closing, need rental agreement TERM 51 Closing costs DEFINITION 51 VA association of Realtors form shows how closing costs are usually divided in VA TERM 52 Loan commitment letter DEFINITION 52 written statement from lender stating that the lender will make a loan at closing TERM 53 "Time is of the essence" DEFINITION 53 time deadlines in contract must be adhered to, unless a signed addendum extends the limits TERM 54 addendum DEFINITION 54 addition or amendment to the contract TERM 55 Rider DEFINITION 55 any addition annexed to the document and made part of the document by reference TERM 56 Binder DEFINITION 56 short-form contract; not used in VA TERM 57 letter of intent DEFINITION 57 written statement that the parties wish to work out a deal; not binding TERM 58 Installment contracts DEFINITION 58 also called land contract, conditional sales contract, contract for deed, or agreement of sale.................Buyer gets possession and basically all rights, obligations and privileges of ownership; deed is not delivered at closing; buyer makes payments on the purchase price over time TERM 59 equitable title DEFINITION 59 a right in a party to whom it belongs to have legal title transferred to him OR the beneficial interest of one person whom equity regards as the real owner, although the legal title is vested in another TERM 60 Option DEFINITION 60 contract by which an optionor gives an optionee the right to buy or lease the owner's property at a fixed price within a stated period of time