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KW Contracts 4
Terms in this set (18)
is the owner of the property, the one who gives an option to someone.
is the person who receives an option to buy someone else's property
The option contract requires payment of
valuable consideration by the optionee
When an option contract is exercised
a binding sales contract must be created
In the case of an option contract for real property
a broker normally earns commission when the option is exercised
during the option period, the interest in the property held by the optionee is
no legal interest
When an option is exercised by a sales contract but the sale has not closed, the interest held by the optionee is
The innocent party may accept partial completion of the contract as satisfactory.
The innocent party may rescind (cancel) the contract unilaterally, or the parties may mutually agree to rescind.
Sue for specific performance
The innocent party may sue the other party in court to carry out the requirements of the contract.
Sue for damages
The innocent party may go to court to sue for monetary damages.
The parties may determine in advance a sum to be paid to the innocent party in the event of a breach.
The innocent party must take action to remedy the breach of contract within a specific time period set by the Statute of Limitations. This is an example of the principle of
several specific types of contracts commonly used in real estate practice
contract of sale,
deed of trust,
Contract of Sale
A contract of sale is a written agreement wherein a seller agrees to sell and a buyer agrees to buy real estate on the terms and conditions set forth therein.
A contract of sale is commonly called a "sales contract."
It is the contract that is signed when a buyer offers to buy a house from a seller.
When both seller and buyer sign a sales contract, a binding agreement on the sale has been reached, but the actual transfer of the property does not occur at that point.
is money that is paid by the buyer at the time the sales contract is signed.
It is not legally necessary, but is a good business practice.
It shows "good faith" on the part of the buyer and increases the likelihood that the buyer will perform his/her obligations under the contract.
It is NOT the "consideration" in the contract. (The consideration is the promise to pay the purchase price for the property.)
a short purchase contract used in some states to secure a real estate transaction until a more formal contract can be prepared by an attorney.
An installment contract may also be known as a:
contract for deed
contract for title
An installment contract is a contract of sale under which:
the SELLER retains TITLE
the PURCHASER takes POSSESSION while installment payments are being made. If the buyer defaults, he/she forfeits all payments and can be evicted like a rental tenant.
In some states, an installment contract is used most commonly for resort-type property.
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