© 2010 by cengage learning chapter 8 ________________ real estate sales contracts
TRANSCRIPT
© 2010 by Cengage Learning
Chapter 8
________________Real Estate Sales Contracts
© 2010 by Cengage Learning
The purpose of the real estate sales contract
is to allow time to ascertain that the parties can each perform the terms of the agreement which are written and signed promises to perform.
© 2010 by Cengage Learning
Earnest Money Deposit Shows buyer’s “good faith” No law governs the amount Earnest money is not consideration Not required for valid contract
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Purchase Contracts
Provision for buyer’s earnest money deposit Buyer’s offer to purchase Acceptance of the offer by seller Provisions for payment of broker fees Instructions to closing agent Possession
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“Time is of the essence”
This is a legal term which means the time limits set by the contract must be faithfully observed or the contract is voidable by the nondefaulting party.
Due to the legal nature of this term, it should
not be used by the real estate agent!
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Letter of Intent
Used to express the mutual intention to buy, sell, lease, develop, or invest
Outlines agreement of terms No obligation is created
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Other types of Contracts Installment Contracts Option Contracts Lease with Option to Buy Right of First Refusal Exchange Agreements
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LEAD-BASED PAINT IN HOUSING
Approximately three-quarters of the nation's housing built before 1978 contains some lead-based paint. Federal law requires that before a buyer or tenant becomes obligated under a contract for sale or lease the seller or landlord must disclose the possibility of lead-based paint and lead-based paint hazards and provide available reports along with the pamphlet “Protect Your Family From Lead in Your Home.”
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TYPE OF HOUSING NOT COVERED
Housing built after 1977 (Congress chose not to cover post-1977 housing because the CPSC banned the use of lead-based paint for residential use in 1978).
Zero-bedroom units such as efficiencies. Leases for less than 100 days or short-term rentals. Housing for the elderly (unless children live there). Housing for the handicapped (unless children live there). Rentals free of lead & inspected by a certified inspector. Foreclosure sales.
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Practicing Law
The job of the real estate agent is to determine the business details of the transaction and not to practice law!
A real estate license is not a license to practice law.
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Deed and Installment Contract Compared
Deed Installment Contract
Buyer SellerDeed
Buyer Seller
Buyer Seller
Buyer Seller
Buyer Seller
Deed
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Possible Trading Combinations
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Binder Counteroffer Default Earnest money
deposit Equitable title Installment
contract
Lease-option Right of first
refusal Tax-deferred
exchange “Time is of the
essence”
Key Terms