NC Real Estate Law & Brokerage Practice
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Created by:
Erinh24 on March 31, 2011
Subjects:
nc, north carolina, real estate, nc real estate, north carolina real estate
Description:
my personal flash cards to study law and brokerage practice for the NC real estate license exam.
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224 terms
Terms | Definitions |
|---|---|
 manufactured home | aka mobile home or trailer. personal property that becomes real property when hitch and axles are removed, home is permanently attached and DMV title is canceled. Built to federal HUD building codes. Y3 |
| modular home | never movable by itself; always real property once it has been assembled. Built to NC state building codes. Y3 |
| fructus naturales | "fruits natural" naturally occurring vegetation that does not require annual planting and cultivation (flowering bushes, trees, etc.) Y3 |
| fructus industrialies | "fruits industry" farming; crops that require annual planting and cultivation (corn, wheat, etc). aka emblements Y3 |
| chattel | aka personal property aka personalty; any personal effects that are not real; movable; use a bill of sale to transfer ownership Y3 |
| fixture | an item that used to be personal property but has been permanently attached to real property related: trade fixtures, agricultural fixtures Y3 |
| IRMA | Total Circumstances Test - is it real or personal? Intent of person attaching item (is it supposed to be temp?); Relationship of attaching person (owner or tenant?); Method of attachment (removal causes damage?); Adaptability (has property or item been altered to work together) Y3,4 |
| trade fixtures | items attached to real property by a tenant under a commercial lease; personal property of the tenant ex. refrigeration, sink, shelves if not removed by end of lease, it becomes real property of the owner Y4 |
| agricultural fixture | items attached to real property by a tenant under a farm lease; becomes real property when attached and remain when tenant leaves Y4 |
| UCC | Uniform Commercial Code if personal property is purchased on credit, it remains personal property until paid off (ex. new furnace or kitchen); creditor can still come and remove it if buyer defaults Y4 |
| fee simple | aka fee simple absolute; absolute ownership with no time limit; highest form of estate; only form of real estate that agents are authorized to sell. Y5 |
| freehold estate | ownership that lasts at least a lifetime related: fee states, nonfee estates Y4 |
| nonfreehold estate | possessor does not own the property; possession does not last a lifetime (ex. lease) Y4 |
| estate | an interest in real property that includes a present or future right of possession related: freehold estates, nonfreehold estates Y4 |
| subjacent support | right to have surface property supported from beneath Y9 |
| lateral support | right to have adjacent property support the natural boundaries of the land Y9 |
| subsurface rights | aka mineral rights; right to use the space below ground level and to extract natural resources Y9 |
| air rights | right to air above the land itself Y9 |
| avulsion | sudden loss of land due to force of nature like hurricane or flood Y9 |
| erosion | gradual reduction in land due to water action Y9 |
| reliction | gradual increase in land by permanent recession of body of water Y9 |
| accretion | increase in land due to gradual accumulation of soil Y9 |
| foreshore | strip of land between high and low tide lines; owned by state of NC Y9 |
| water ownership | no tide non-navigable bodies of water - land owner owns to center of body of water no tide navigable bodies of water - land owner owns to water's edge oceans and lakes with tides - landowners owner to water's edge foreshore - state of NC owns Y9 |
| appurtenance | a right or privilege that goes with the ownership of the land B18 |
| riparian rights | the right of landowners on a shore of a river, stream or lake to use the water (swim, boat, fish, etc) Y9 |
| littoral rights | the right of landowners on a shore of an ocean or a large lake with tides to use the water (swim, boat, fish, etc) Y9 |
| real property | land, improvements to the land, improvements on the land, and rights inherent to the land Y3/B619 |
| categories of real property | Residential - housing Commercial - businesses Industrial - factories Agricultural - farming Special Purpose - government, churches, cemeteries, etc B9 |
| provisional broker | a real estate licensee who performs real estate activities under the supervision of a licensed broker-in-charger B618 |
| broker | a licensed agent who negotiates the sale, purchase or rental of property on behalf of others for a fee or commission B604 |
| land | Earth's surface, below the surface to the center of the Earth, above the surface to infinity; immobile, indestructable, and unique (uniqueness=heterogeneity) B2 |
| encumberance | any right or interest in land which normally diminishes the value of the estate Y10 |
| lien | right to collect a debt out of someone else's real property Y10 |
| general lien | a lien against someone's current and future real and personal property Y10 |
| judgment lien | a general lien owed as a result of a judgment imposed by a court of law; becomes valid when judgment is docketed; valid for 10 years; should be attached in the county where the property is located Y10 |
| docketed | when a judgment is entered and indexed in a judgment book at the county courthouse Y10 |
| specific lien | a lien against a specific piece of real estate Y10 |
| mortgage or deed of trust | a specific lien on a piece of real estate used as collateral for a loan Y10 |
| IRS lien | a general lien owed to the federal government Y10 |
| NC Dept of Revenue lien | a general lien owned to the state of NC Y10 |
| personal property tax lien | a general lien owned on personal property Y10 |
| mechanic's lien | a specific lien for failing to pay a contractor or subk for services performed on a property; must be filed within 120 days of the last day that labor/materials were furnished; valid from first day labor/materials were furnished Y10 |
| special assessment lien | a specific lien for failing to pay for a special assessment (improvement) on the land Y10 |
| real property tax lien | aka ad valorem tax lien; a specific lien for taxes to the county and/or city in which property is located Y11 |
| ad valorem | amount of tax varies in accordance with the value of the property being taxed B49 |
| Machinery Act | governs standards for real estate property taxation, tax assessment, tax appraisal and requirements for tax-exempt status B49 |
| octennial reappraisal | real property is reassessed for ad valorem taxes every 8 years |
| horizontal adjustement | every 4 years between octennial reappraisial in which ALL property within a county/city can be adjusted up/down by a percentage. may or may not happen Y11 |
| easement | a right or privilege one entity has in the land of another related: appurtenant easement, easement in gross Y11 |
| appurtenant easement | an easement that runs with the land itself; continues indefinitely, transfers with title Y11 |
| dominant estate | land that receives the benefit of the easement Y11 |
| servient estate | land that has the easement attached to it Y11 |
| easement in gross | an easement granted to a person or entity for a lifetime; is void when entity ceases to exist Y11 |
| prescriptive easement | easement acquired through adverse use. Related: adverse possession Y11 |
| restrictive covenants | aka protective covenants, deed restrictions; a private restriction which limits use of real property; are private land use controls and must be enforced in a civil court Y12 |
| defeasible fee estate | may be lost on the occurrence or nonoccurence of a specified event; aka qualified fee estate; related: fee simple determinable, fee simple subject to a condition subsequent B26 |
| fee simple determinable | requires that a specified activity or land use continue; if owner no longer uses the land for that purpose, ownership reverts automatically back to original owner (ex. Land can only be used for church purposes) Y5 |
| fee simple subject to a condition subsequent | states what action or activity that an owner cannot perform; if owner performs that action, former owner can retake possession through court proceedings (ex. Do not sell alcohol on property) Y5 |
| pur autre vie | estate for the life of another; one person is given the right to use the property as long as another person is alive; can use estovers of the land, must pay ad valorem taxes and interest on pre-existing loans; entitle to all income and property arising during the life tenancy (ex. A daughter-in-law live in a house as long as grandchildren are alive) Y5 |
| life estate | a freehold estate in which a tenant has the right to a certain property for his/her lifetime; at death the property reverts to original owner or passes to a remainder man Y5 |
| estovers | "leftovers" of the land. Life estate tenants live off the land but cannot do anything to waste the life estate (ex. Use wood, but not sell timber rights); Y5 |
| nonfreehold estate | temporarily transfer possession, not ownership. Have a definite end period at some point; aka leasehold estate Y6 |
| estate for years | has a definite term with a beginning and end date; terminates automatically without notice ex. Hotel room, beach house rental Y6 |
| estate from year-to-year | aka periodic tenancy; tenancy of indefinite duration; automatically renewed; notice must be given to terminate this tenancy ex. Renting an apartment Y6 |
| notice required to terminate periodic tenancy | week-to week tenancy - 2 days notice; month-to-month tenancy - 7 days notice; year-to-year tenancy - 30 days notice; leases for longer than 30 days require 30 days notice of termination Y6 |
| estate at will | tenacy at both the pleasure of the landlord and tenant; normally on a friendly basis and either party can terminate at any time without notice Y6 |
| estate at sufferance | tenant entered into the estate lawfully, but now retains possession unlawfully; possession is on a hostile basis and eviction is required to terminate ex. refusing to leave a rented house Y6 |
| severalty | sole ownership; ownership by only one person or entity Y6 |
| concurrent ownership | ownership by more than one person or entity Y6 |
| tenancy by the entireties | exists only between husband and wife; survivorship always exists automatically Y7 |
| tenancy in common | two or more people who are not married; survivorship can not exist; each owner may encumber has part of the property; each owner has the right to force a division of the property by asking for a partition on the property Y7 |
| joint tenancy | owners have equal undivided interest that they acquired at the same time; can be joint tenants with the right of survivorship; normally exists for same-sex couples or couples planning to be married; Y7 |
| NC Condominium Act | in effect for all condos created on or after October 1, 1986; developer records: a) declaration with a description at the register of deeds b)detailed plat giving physical description of the complex c) a set of bylaws to provide for internal management of the unit owners Y8 |
| consumer protection provisions of nc condo act | a) purchaser of a new condo with a copy of a public offering statement before sales contract can be signed b) purchaser of a new condo has the right to cancel within 7 calendar days c) purchasers of a resale condo must be given a resale certificate stating the monthly common expense assessment and any other fees Y8 |
| townhouse ownership | owner owns individual unit, including shared walls and the land underneath; pay monthly dues to the homeowner's association and maintains the common areas Y9 |
| cooperative ownership | owners own shares of stock in a corporation that owns the entire property; have a stock certificate as evidence of your ownership and owners lease units within the cooperative; have a proprietary lease Y9 |
| voluntary alienation | voluntarily transferring title by deed through a sale or gift; deed is tangible evidence of title to real estate Y12 |
| grantor | the seller that gives the deed Y12 |
| grantee | the buyer that receives the deed Y13 |
| devise | when one gives a title to real property in a will Y12 |
| bequeath | when one gives a title to personal property Y12 |
| testate | a person dies with a last will and testament Y12 |
| intestate | a person dies without a last will and testament Y12 |
| intestate succession law | tells how property will be distributed if you die intestate Y12 |
| involuntary alientation | giving up title to real estate involuntarily Y13 |
| lien foreclosure sale | occurs when one defaults on a loan or fails to pay property taxes Y13 |
| adverse possession | occurs when a person occupies another's property for the statutory period (7 years if possessor has color of title; 20 years otherwise) related: OCEAN Y13 |
| OCEAN | Open (well known); Continuous (uninterrupted); Exclusive (not shared with another); Adverse (intent to take land); Notorious (hostile, no permission by owner) B77 |
| escheat | occurs when state takes title to real estate because there are no heirs Y13 |
| eminent domain | the state's power or right to take private property Y13 |
| condemnation | the state uses eminent domain and actually takes title of private property and pays fair compensation Y13 |
| police power | the right of the government to restrict the uses of private property in order to promote the health, safety and welfare of the general public Y13 |
| illegal use | a use that is in direct violation of an existing zoning ordinance. Can be detected and punished at any time Y13 |
| nonconforming use | when existing land use does not conform to a new zoning ordinance but is allowed to continue under a grandfather clause; normally cannot expand, enlarge or improve the use Y13 |
| lis pendens | a recorded notice informing all interested parties that a legal action has begun which may affect the title of a real property Y12 |
| encroachment | an improvement that extends across the boundary lines of a property without authorization and encroaches on an adjacent property; the only encumberance not discovered by a title search Y12 |
| variance | allowing an individual to deviate from normal zoning ordinances if they can prove undue hardship Y14 |
| special use permit | aka conditional-use permit; allows a particular property to be used for a special purpose which is in the public interest ex. church or hospital in a residential area Y14 |
| spot zoning | when a parcel of real estate for special zoning that is inconsistent with zoning in the area; illegal Y14 |
| building codes | specific requirements with respect to the construction of buildings to make them safer; NC codes are less stringent than federal (HUD) codes Y14 |
| bulk regulations | building restrictions that apply to all property in an area (ex. Minimum setback from street) Y14 |
| subdivision ordinances | city and county laws that govern the development of land including streets, water, sewage and parks Y14 |
| street status disclosure | requires sellers to disclose whether neighborhood streets are public or private; a material fact Y14 |
| interstate land sales full disclosure act | a sellor or lessor of 25 or more lots of unimproved land is required to file a statement of record with HUD and to provide each purchaser or lessee with a printed property report disclosing pertinent information at least 3 days before contract creation Y15 |
| deed | a written instrument that transfers an interest in real property from the grantor to the grantee |
| closing | the moment when the deed is actually recorded at the register of deeds Y15 |
| required elements of a deed | 1. must be in writing 2. grantor must be true owner of the real estate 3. both grantor and grantee must be named in the deed 4. property must be adequately described 5. language in deed must be adequate to show conveyance 6. the grantor must sign the deed 7. deed should be delivered by the grantor and voluntarily accepted by the grantee Y15 |
| general warranty deed | grantor promises to defend the title forever against anyone making a claim; includes from original title Y16 |
| special warranty deed | grantor promises to defend the title against anymore making a claim covering the time the seller actually owned the property Y16 |
| quit claim deed | releases the person who signs it from any interest that he/she may have the property; used to remove a cloud on title Y16 |
| trustee's deed | given by trustee at a deed of trust foreclosure sale Y16 |
| sheriff's deed | given at execution sale for a judgment against the property owner Y16 |
| tax deed | given at a tax foreclosure sale Y16 |
| deed of gift | used to give a gift of real property; must be recorded within 2 years to be valid Y16 |
| timber deed | used to transfer timber rights Y16 |
| mineral deed | used to transfer subsurface rights Y16 |
| covenant of seisin | part of a general warranty deed in which grantor warrants that he/she is the legal owner of the property and has the right to convey title B67 |
| devisee | a person who receives real property by will B78 |
| beneficiary | a person receiving personal property by will B78 |
| marketable title | title must be: 1. free from any significant liens and encumberances; 2. disclose no serious defects; 3. be free of doubtful questions regarding validity; 4. protect a purchaser from any threat of quiet enjoyment; 5. convince a reasonably well-informed person that it could be sold or mortgaged at fair market value B78 |
| title search | examination of all public records that might affect a title B78 |
| chain of title | shows the record of ownership of the property over a period of time B78 |
| abstract of title | condensed history of the title B79 |
| marketable title act | provides that if a chain of title can be traced back for 30 years and no other claim has been recorded during that time B79 |
| title insurance | a contract by which a title insurance company agrees to indemnify (compensate) the insured against any losses sustained as a result of defects in a title B79 |
| ALTA | American Land Title Association policy - extended title license insurance policy to cover risks that may be discovered only through inspection of the property B78 |
| Connor Act | state law that provides that many real estate documents are not valid as to third parties unless they are recorded; pure race state - first one to record the deed prevails B82 |
| ETJs | extra-territorial jurisdictions; allows a municipality to regulate development in areas adjacent to, but not within, the corporate limits (1 to up to 3 miles) B89 |
| overlay district | a type of zoning that is superimposed over another type of zoning ex. a residential flood plain B91 |
| historic preservation zoning | to preserve historic buildings and sites that are irreplaceable |
| aesthetic zoning | when an area is zoned strictly for aesthetic or appearance considerations B91 |
| subdivision | all divisions of a tract or parcel of land into two or more lots, building sites or other divisions for the purpose of sale or building development B92 |
| plat map | a map of the subdivision indicating the location and boundaries of individual properties B617 |
| subdivision process | initial planning stage - analyze property for highest and best use; final planning stage - final plans are approved, budgets prepared; start-up stage - carries the subdividing process to a conclusion B95 |
| CO | certificate of occupancy - given by the building inspectors once completed structure has been inspected and found satisfactory B96 |
| flood hazard areas | areas bordering on rivers and streams which are subject to federal regulations concerning improvements and construction in those areas; required to have flood insurance if federally related mortgage is used B96 |
| laches | the loss of a right through undue delay or failure to assert it B98 |
| metes and bounds | a type of property description in which a surveyor begins at a readily identifiable point of beginning and describes the boundaries of a property through a series of calls (direction and distance between landmarks or monuments); must return to POB Y16 |
| townships | aka government survey; a type of property description in which each township contains 36 equal sections of land which are 1 mile long and 1 mile wide; not used in NC Y17 |
| references to a recorded plat | a type of property description uses a subdivision lot number and page number of a map book in the courthouse to describe real estate Y17 |
| reference to a prior recorded deed | a type of property description that makes reference to a deed that has already been recorded for the property (prior deed should have metes & bounds desc) Y17 |
| informal reference | a type of property description that only uses a street address or house number to describe the property; acceptable use for a lease but not to convey ownership; should be combined with a reference to recorded plat Y17 |
| excise tax definition | aka revenue stamps/deed stamps; a deed transfer tax paid by the seller; is required to be noted on a deed by state law B610 |
| MLS | multiple-listing service; when brokers share information about properties they have listed B105 |
| caveot emptor | "let the buyer beware" - sellers do not have to disclose any facts about the property being sold. NC is a caveot emptor state B605 |
| broker-in-charge | the full broker responsible for notifying the NC Real Estate Commission of changes, maintaining the trust account; maintaining all transactions properly and supervising all provisional brokers; required for each brokerage firm and branch office B605 |
| lease | a contract that temporarily transfers possession of real estate but not ownership Y18 |
| gross lease | tenant pays fixed rent; landlord pays taxes, maintenance, insurance, principal and interest on any mortgage loan Y19 |
| net lease | tenant pays fixed rent plus some or all of the taxes, maintenance and insurance; landlord pays interest and principal on any mortgage loan Y19 |
| ground lease | tenant pays ground rent plus taxes, maintenance and insurance and builds his/her own building on the property and pays interest and principal on any building loan Y19 |
| fixed lease | aka flat lease; rent is set at a fixed amount for the life of the lease Y19 |
| graduated lease | rent automatically increases at pre-set intervals Y19 |
| precentage lease | tenant pays a minimum monthly base rent plus percentage of gross sells over a certain amount (often used in commercial leases for shopping centers) Y19 |
| index lease | aka variable lease rent automatically increases or decreases according to some index such as the cost-of-living index Y19 |
| full service lease | rent includes all expenses of the occupancy because landlord provides everything such as utilities, cleaning, etc Y19 |
| actual eviction | aka summary ejectment; landlord evicts tenant for breaching the lease Y19 |
| constructive eviction | when the landlord breaches the contract and the tenant leaves voluntarily; ex. landlord doesn't provide adequate heating Y19 |
| NC residential rental agreement act | 1. landlord must provide fit premises, comply with business codes, keep common areas safe, provide smoke detectors 2. tenant must keep leased premises fit and safe and not damage or remove property 3. tenant cannot be evicted by landlord for up to 12 months in retaliation for asserting legal rights Y20 |
| self help eviction | taking an action to force a tenant out of the property (change the locks, turn off utilities, impound tenant's personal property, etc); is illegal in NC Y20 |
| NC tenant security deposit act | 1. must be placed in trust account in an insured NC bank or landlord must be bonded (if landlord is a licensee, deposit must be in trust acct); 2. can only be used for non-payment of rent, damages, unpaid bills; cost of rerenting or court costs; 3. tenant must be given itemized statement within 30 days Y20 |
| maximum security deposit amounts | week-to-week - 2 weeks rent month-to-month - 1.5 months rent leases longer than month-to-month - 2 months rent Y21 |
| pet fees | can be non-refundable and must be "reasonable". service animals (ex. seeing-eye dogs) cannot be charged pet fees Y21 |
| NC vacation rental act | applies to short-term recreational rents for less than 90 days when the primary residence is somewhere else; provides for expedited evictions and addresses mandatory evacuations; if property is sold, new owner must honor rentals scheduled for next 180 days Y21 |
| law of agency | aka common law; body of law that governs the relationship that exists between agents and principals Y21 |
| agent | party who represents and acts on behalf of the principal in a real estate transaction under a brokerage contract; it is always the firm, not the individual licensee Y21 |
| fiduciary | one in whom trust and confidence is placed; reference to a principal-agent relationship B610 |
| principal | aka client; person who hires agent to represent him/her in a real estate transaction Y22 |
| customer | aka third party; persons in real estate transaction who does not contract with and is not represented by the agent Y22 |
| subagent | one who is employed by a person already acting as an agent; has the same duties to the client as the agent (ex. all individuals working for the same firm); unless contracted as buyer's agent, agents are subagents of the seller Y22 |
| brokerage (agency) contract | it creates the agency relationship and establishes the scope of the agent's authority to work on client's behalf; every agreement except certain buyer agency agreements must be in writing from the time of the formation; must be for a definite period and terminate without notice Y22 |
| buyer agency agreement | can be oral if there is no time limit on the agreement; must be in writing with a time limit if it is an exclusive agreement or no later than presentation of the first offer Y22 |
| universal agency | agent is authorized to handle all of the principal's business under a power of attorney; real estate firm will rarely be one Y23 |
| general agency | agent is authorized to perform a broad range of acts in connection with the principal's business; many property managers are general agents Y23 |
| special agency | agent is authorized by a principal to do one or more specific acts according to detailed instructions; does not have the authority to bind the client; typical real estate contracts are this Y23 |
| seller agency | the firm and employees represent only sellers in real estate transactions Y23 |
| buyer agency | the firm and employees represent only buyers in real estate transactions Y23 |
| single agency | when firm and employees represent only the buyer or only the seller in a particular transaction Y23 |
| dual agency | when firm and employees resent both the buyer and seller in the same real estate transaction; need informed written consent of the seller and informed written consent of buyer before offer is presented; agent owes fiduciary duties to both buyer and seller equally; undisclosed dual agency is always illegal Y24 |
| designated agency | a type of dual agency in which the BIC appoints one licensee to represent only the seller in a particular transaction and appoints another licensee to represent only the buyer; cannot share confidential information; each principal gets better representation Y24 |
| working with real estate agents brochure | a brochure to be presented to consumer at first substantial contact explaining agency options (buyer/seller); ask consumer to sign and agent must keep on file for at least 3 years; if FSC is over phone, mail to consumer within 3 days Y25 |
| first substantial contact | the time when the licensee's discussion with a buyer begins to focus on the buyer's specific property needs and desires or on his/her financial ability; anything that can be used against the buyer during negotiations; auctioneers are exempt Y25 |
| LOADS | agent's duties to the principal: Loyalty - agent must represent the best interests of the principal Obedience - agent must obey the lawful instructions of the principal in accordance with the contract Accounting - agent must maintain accurate records of all funds that relate to the principal Disclosure - full and prompt disclosure of all material facts to the transaction and may affect the rights and interests of the principal Skill, Care and Diligence - agent should have higher than average skill and expertise in real estate matters and use the skill on the principal's behalf Y26 |
| agent's duties to 3rd party | Honesty and fairness - must be honest with all parties in the transaction Material statement of fact - must disclose all material facts to all parties in the transaction Y27 |
| willful misrepresentation | agent has actual knowledge of a material fact and intentionally lies about it B126 |
| willful omission | agent has actual knowledge of a material fact and intentionally keeps his/her mouth shut regarding it B128 |
| negligent misrepresentation | agent unintentionally misinforms regarding a material fact because they have no actual knowledge or have incorrect information B127 |
| negligent omission | agent has no actual knowledge of a material fact but should reasonably have known of such a fact B128 |
| puffing | opinion statements that exaggerate a property's benefits B125 |
| principal's duties to agent | good faith - principal must cooperate with the firm compensation - principal must assure compensation Y28 |
| material facts in NC | presence of leaking polybutylene pipes even if repaired or replaced; use of synthetic stucco siding even if replaced; use of property as a meth lab; structural defects, pending zone changes, inoperative appliances, issues with: wiring, plumbing, drainage, percolation Y27 |
| non-material facts in NC | stigmatized properties - death or crime that occurred on property; haunted house; sexual predator in the neighborhood; mere presence of mold Y27 |
| tort | a wrongful act, injury or violation of legal right to a person or property of another; references when an agent does this while acting for the principal B623 |
| contract | an agreement between two or more competent parties to perform or abstain from performing an act that is supported by legal consideration (something of value, usually money) Y29 |
| classes of contracts (9) | express; implied; unilateral; bilateral; executed; executory; valid; void; voidable Y29 |
| express contract | a contract that is stated in words, oral or written Y29 |
| implied contract | a contract that is suggested from the conduct of the parties showing intent of contract (ex. neighbor paints a fence for another neighbor, implies payment/consideration) Y29 |
| unilateral contract | a contract involving a promise on the part of one party if another party does something. only one party is obligated to act. ex. a real estate firm promises to pay a $5,000 bonus to all agents who close at least 4 sales in one month Y29 |
| bilateral contract | a contract in which a promise is made by one party in exchange for a promise by another party. both parties must act. most real estate contracts are bilateral Y29 |
| executed contract | a contract that has been performed in full. executed may also mean that a contract has been signed Y29 |
| executory contract | a contract that has not been fully performed ex. a signed real estate contract in which the transaction has not been closed Y30 |
| valid contract | a contract that satisfies all legal requirements and is fully enforceable in a court of law Y30 |
| void contract | a contract that is not enforceable in a court of law. one of the parties must disaffirm the contract to make it void. ex. selling a home orally is legal, but is unenforceable as it's not in writing Y30 |
| voidable contract | a contract in which performance can be voided by one of the parties based on some legal principal ex. a minor and adult make a contract and the minor can get the contract voided Y30 |
| essential elements of a contract (5) | mutual assent - offer and acceptance, meeting of the minds, mutual agreement consideration - anything bargained for and given in exchange for a promise capacity of the parties - parties must be adults, sane and in their right minds lawful objective - no illegal or immoral performance certain contracts must be in writing; see statute of frauds Y31 |
| mail box rule | the postmark date is considered to be the date that the contract is actually communicated if the addressee is the other party in the transaction Y30 |
| offer termination conditions (7) | revocation or withdrawal by the offeror rejection by the offeree seller's response to buyer's offer form (rejection of offer) a counteroffer lapse of an unreasonable time period an event that destroys the property death of either principal Y31 |
| statutes of fraud (definition) | states that certain contracts must be in writing in NC to be valid and enforceable Y31 |
| statutes of fraud (required contracts) | any contract for the sale or conveyance of real property any contract lasting longer than 3 years from the making any contract not to compete in a certain business any contract promising to pay debts for someone else any contract promising to repay debts after bankruptcy options to purchase real estate Y31 |
| UETA | Uniform Electronic Transaction Act (UETA). contracts can be created electronically and an electronic signature is binding; no court case has tried to test the enforceability of this act Y32 |
| legal remedies for contract breach (3) | money damages, specific performance, rescission Y33-34 |
| money damages (3) | compensatory damages - money to make injured party whole consequential damages - punitive damages, damages for possible gains liquidated damages - a specific amount determined in advance (ex. earnest money, tenant security deposit) Y33 |
| specific performance | injured party can sue based on the uniqueness of the land Y34 |
| rescission | returns the injured party to his/her original positions prior to signing the contract; usually granted when it can be proved there is no 'reality of consent' Y34 |
| types of listing contracts (3) | exclusive right to sell - one firm is guaranteed to receive a commission, regardless of who brings in a buyer exclusive agency listing - firm gets commission if they find buyer; owner can sell house him/herself open listing - whoever brings in a buyer, gets a commission Y35 |
| heated living space | adequate heated by permanently installed heating system, finished to generally acceptable standards, directly accessible from other living areas; stairs count on both levels and you can walk on it Y37 |
| termination of listing contracts | death or insanity of owner; dissolution of the brokerage firm; death or insanity of individual broker working alone; destruction of the property; breach of the contract; property is sold and transaction is closed Y37 |
| offer to purchase | an offer by a prospective buyer of real estate Y38 |
| sales contract | aka purchase contract; an offer to purchase that has been accepted by the offeree Y38 |
| due diligence period | allows the buyer to fully investigate the property, negotiate any repairs, apply for necessary funding, order an appraisal and survey, etc. buyer may pay seller a non-refundable due diligence period fee Y39 |
| cash sale | means seller will receive the full price as stated in the sales contract less his/her closing expenses even if the buyer needs a loan for the financing Y40 |
| installment land contract | a property is sold with seller financing; seller retains legal title and the deed to the property until all of the purchase price is paid; buyer doesn't receive deed until the property is paid for; if buyer defaults, buyer loses property, seller has cloud on title Y41 |
| option to purchase | a contract that gives one person the right to buy or lease a specific property at a specific price for a specified period of time from the owner Y41 |
| property management limitations (4) | 1. cannot make capital improvements to the property 2. cannot pay owner's income taxes 3. cannot establish the depreciation schedule to be used 4. cannot reinvest profits for the owner Y43 |
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