Here we are on the eve of Real Property. Really Real Real-Estate Contracts

Real estate sales contracts are long.

Dealing in business transaction is dealing in contracts. And dealing in contracts is dealing in promises.

promise |ˈpräməs|
noun
a declaration or assurance that one will do a particular thing or that a particular thing will happen.

And not Andain "Promises"
but assurances to each other.

The real estate promise is I will pay you if you convey the title to me. Entering a contract puts the law on your side. You enter a legal relationship and your rights and duties are defined in a contract. You know what is where and who is where. Negotiating is involved with contract.

negotiate |nəˈgōSHēˌāt|
verb
1 [ no obj. ] try to reach an agreement or compromise by discussion with others:

Words to remember:
Assignment: an act of making a legal transfer of a right, property, or liability. "an assignment of a leasehold property."
Bilateral contract: legally binding.
Buyer brokerage agreement: if buyer is working with broker other than brokerage listing property he or she may enter a buyer-brokerage agreement to be represented. Whereas, dual agency is permitted by law evening the listing broker can rep the buyer. Without entering into a buyer brokerage agreement he or she remains a customer of the broker who is then the sub-agent of seller's broker.
Community development district: CDD: UN defined as the process where community members come together to take collective action and generate solutions to common problems. Given to civic leaders, activists, involved citizens and professionals to improve various aspects of communities, typically aiming to build stronger and more resilient local communities.
Competent: having the necessary ability, knowledge, or skill to do something successfully. "a highly competent surgeon" "make sure the firm is competent to carry out the work"; efficient and capable -- the mental capacity of an individual to participate in legal proceedings
Contract: an agreement having a lawful object entered into voluntarily by two or more parties, each of whom intends to create on or more legal obligations between them. Element of a contract is offer and acceptance by competent persons having legal capacity who exchange consideration to create a mutuality of obligation. Aka. a written or spoken agreement, esp. one concerning employment, sales, or tenancy that is intended to be enforceable by law -- the branch of law concerned with the making and observation of such agreement. -- enter into a formal and legally binding agreement. "the local authority with contract with a wide range of agency to provide services."
Enforceable contract:  An enforceable contract is any legal contract which carries the force of law behind it. It is a legal agreement between two parties which is legal binding. An enforceable contract is any legal agreement between two parties which is not restricted by any laws.

Unlike an unenforceable contract, a party which has agreed to be bound by a legal contract can and will be compelled to act to fulfill the terms to which it has agreed. 

A legal contract is never a void contract, though it may be a voidable contract. What was previously an enforceable contract may become unenforceable in the event laws that make the contracted act illegal are passed after the contract has been created.

Exclusive agency listing: lol
An "exclusive agency" listing allows an agent to list and market your home, guaranteeing them a commission if the house sells through any real estate agent or company. It also allows sellers to seek out buyers on their own.
This is not a popular type of listing agreement.
The reason an "exclusive agency" listing is unpopular is because there is no incentive for your agent and their company to pend money and time marketing your home. If you come up with your own buyer, they have spent money (and time) that cannot be earned back through the real estate commission.
Plus, it is too easy for greed and a lack of ethics to enter the picture. Some unethical buyers or sellers will try to cut out the agent, even though it was an agent's efforts that brought the buyer to the home.
If you find an agent willing to accept such a listing, do not expect too much from them. They will probably just place it in the Multiple Listing Service and sit around to see if something happens.
Exclusive right of sale listing:
Good consideration: that was easy.
Consideration is a legal concept which means something of value that is given in exchange for something else.  People often think of consideration as the money exchanged by the parties.  Legally, however consideration is the obligation that each party makes to the other to make the contract enforceable.   Each party to the contract must obligate himself/herself by placing some consideration in the agreement.
There are two types of considerations:

1. Valuable consideration is the money or a promise of something that can be measured in terms of money.
2. Good consideration is a promise that cannot be measured in terms of money, such as love and affection.

Either type of consideration is sufficient to enforce a contract.  The law typically does not concern itself with the fairness of consideration.  What is exchanged need not have the same measurable value.   The law will accept that the parties thought the consideration to be fair because they freely agreed to the exchange.
A common misconception is that the good-faith deposit in a real estate contract is the consideration.  The good-faith deposit is made by a buyer to assure the seller that the buyer is serious about the transaction and the buyer intends to purchase the property.
Liquidated damages: contract law: ascertained damages: damages whose amount the parties designate during the formation of contract for the injured party to collect as compensation upon specific breach. When damages are not assessed in advance, then the amount recoverable is aid to be at large -- to be agreed or determined by a court or tribunal in the event of a breach.
Meeting of the minds: mutual agreement, mutual assent is a phrase in contract law used to describe the intentions of the parties forming the contract. This condition is often considered necessary to the formation of a contract. There must be evidence that the parties had each engaged in conduct manifesting their assent and a contract will be formed when the parties have met such a requirement.
Mutual assent: agreement by both parties to a contract. Must be proven objectively and is often established by presenting an offer and accepting -- meeting of the minds.
Net listing: Net Listing. You list your property for sale at a specified net amount to be paid to you, and you authorize the broker to retain as commission the difference between the price at which your property is sold and the specified net amount to be received by you. In some states such agreements have been prohibited in order to prevent unfair dealing on the part of the broker. Cool.
Novation: the substitution of a new contract in place of an old one -- add a new obligation, replacing a party to an agreement with a new party -- replacing an obligation to perform with a new obligation. Contrasts with assignment which states it is valid as long as the obligee is given notice, a novation is valid only with the consent of all parties to the original agreement: the obligee must consent to the replacement of the original obligor with the new obligor.
Open listing: The broker has the right to bring prospective buyers to see your home. If the buyer purchases your home, the broker gets a commission. You can give an open listing to as many brokers as you wish. However, this arrangement isn't popular with brokers, and your home won't get the same market exposure as other homes.
Option contract: option: a promise which meets the requirements for the formation of a contract and limits the the promisor's power to revoke an offer -- a type of contract that protects an offeree from an offeror's ability to revoke the contract.
Parol contract: a contract made by oral or written but not under a seal -- a contract partly or entirely oral and therefore unenforceable under the statute of frauds :  contract originally under seal but modified by an agreement not under seal
Procuring cause: "The interactions between a prospective client and a real estate agent that entitles the agent to a commission percentage upon the purchase of a home. If a client has worked with multiple agents over the course of her search, it may be difficult to determine which agent is ultimately responsible for helping the client get the home. Disputes usually occur between the agent that wrote the offer and another that may have helped the client see homes in the past, so there's an investigation to find out which agent had first contact with the client and showed them the home they eventually bought. Real estate brokerages typically avoid procuring cause disputes by requiring clients to sign a buyer's agency agreement once they decide to work with an agent and their brokerage. The agreement commits clients to working with that agent to buy a home. The length of the agreement varies, but usually lasts three to 12 months"
Statute of frauds: refers to the requirements that certain kinds of contracts be memorialized in a writing signed by the party to be charged, with sufficient content to evidence the contract. You need the contract signed in these circumstances -- contracts in consideration of marriage, provision cover pre-nups -- contracts that can't be performed in a year -- and more.
Statute of limitations: a statute prescribing a period of limitation for the bringing of certain kinds of legal action. Written laws passed by legislative body in common law systems to restrict max time after an event that legal proceedings may be initiated.
Unenforceable contract: a valid contract that can't be enforced. if parties perform agreement then contract is valid but the court will not compel them. (void and voidable)
Unilateral contract:
"A contract in which only one party makes an express promise, or undertakes a performance without first securing a reciprocal agreement from the other party.
In a unilateral, or one-sided, contract, one party, known as the offeror, makes a promise in exchange for an act (or abstention from acting) by another party, known as the offeree. If the offeree acts on the offeror's promise, the offeror is legally obligated to fulfill the contract, but an offeree cannot be forced to act (or not act), because no return promise has been made to the offeror. After an offeree has performed, only one enforceable promise exists, that of the offeror."
Valid: valid |ˈvalid|
adjective
(of an argument or point) having a sound basis in logic or fact; reasonable or cogent: a valid criticism.
• legally binding due to having been executed in compliance with the law: a valid contract.
• legally or officially acceptable: the visas are valid for thirty days | a valid password.
Valuable consideration: legal consideration having some economic value, which is necessary for a contract to be enforceable. "Consideration is the concept of legal value in connection with contracts. It is anything of value promised to another when making a contract. It can take the form of money, physical objects, services, promised actions, abstinence from a future action, and much more."
Vendee:
Buyer or purchaser; an individual to whom anything is transferred by a sale.
The term vendee is ordinarily used in reference to a buyer of real property.
Vendor: "Seller; an individual who transfers property for sale; merchant; retail dealer; supplier.
The term vendor is frequently used in reference to an individual who sells real property."
Void: void |void|
adjective
1 not valid or legally binding: the contract was void.
• (of speech or action) ineffectual; useless: all the stratagems you've worked out are rendered void.
Voidable: "A voidable contract can be legally rejected by one party and is said to have a defect. If the party with the power to reject the contract chooses not to reject the contract despite the defect, the contract becomes valid and enforceable. It is usually only one of the two parties who would be adversely affected by agreeing to a voidable contract if they had recognized the misrepresentation or fraud made by the other party. For example, the first party would not have agreed to the contract originally and has the opportunity to reject it after the fact. In contrast, a void contract is inherently unenforceable. An example would be a contract that violates the law, such as a murder for hire contract."

Something to learn: a buyer brokerage or buyer agency represents buyers not just sellers. Brokers used to represent only sellers but in the 90's buyer agencies formed. Buyer agencies exist exclusively whereas brokerage firm reps only buyers and never sellers. You can be a full service buyer agency offering buyers to become clients and sellers to become clients. Buyer has to agree to dual agency. Dual agency is never fiduciary. What you owe a buyer for contacting with you to seek property nowhere else: loyalty, confidentiality, disclosure -- principal fiduciary relationship. Negotiate price and terms on his or her behalf and prepare a standard contract form.

Jurisdiction just for fun. jurisdiction |ˌjo͝orisˈdikSHən|
noun
the official power to make legal decisions and judgments: federal courts had no jurisdiction over the case | the District of Columbia was placed under the jurisdiction of Congress.
• the extent of this power: the claim will be within the jurisdiction of the industrial tribunal.
• a system of law courts; a judicature: in some jurisdictions there is a mandatory death sentence for murder.
• the territory or sphere of activity over which the legal authority of a court or other institution extends: several different tax jurisdictions.

From the Internet Lawyers: thanks:

If you are going to sell your home and you want to hire a real estate broker/agent to help you, you should know what a listing or brokerage agreement is and what it should contain. A real estate brokerage contract or listing agreement is a contract between a real estate broker and a seller which covers the broker's efforts to find a buyer for the seller's real estate. It contains items such as price, terms of sale, and specific responsibilities of the broker.
Multiple Listing. This is an arrangement whereby individual real estate brokers in a particular area pool their exclusive listings. Your broker provides certain listing information to the local Multiple Listing Service (MLS) office, where it is coordinated with listings from other members. The listings are then published to all MLS members, any of whom may sell any listed property. If a sale of property is made by someone other than the broker who took the listing initially, the commission is divided between the listing and selling broker. Your property will probably sell faster with this kind of listing than with other kinds.
One-Time Show Listing. The broker can show the home to one potential buyer, listed by name, and is guaranteed a commission if the house sells to that buyer.
Exclusive Right to Sell Listing. With this most commonly-used listing, the broker gets a commission no matter who the buyer is, even if you find the buyer yourself.
Exclusive Agency Listing. The broker lists and markets your home, and gets a commission if your home sells through any broker or real estate company. You can also look for buyers on your own, in which case you won't owe the broker a commission.
Open Listing. The broker has the right to bring prospective buyers to see your home. If the buyer purchases your home, the broker gets a commission. You can give an open listing to as many brokers as you wish. However, this arrangement isn't popular with brokers, and your home won't get the same market exposure as other homes.

People go to brokers to find a home. People go to brokers to buy a home.

There are 4 types of contracts you can help your buyers and sellers out with in real estate:

As we know, business transactions are based on contracts and contracts are based on promises. Buyer says, "I promise to pay the purchase price." - contract - Seller says, "I promise to convey the title." - a contract is enforceable by law if it meets the requirements: which are? Spelling out parties rights and legal duties. Establishing the party relationship.
Drafting documents and legal instruments is an attorney's job, so a real estate broker cannot prepare deeds, mortgages, promisory notes, or most other legal documents -- performing someone else's job is illegal. Writing up a lease agreement is illegal for a real estate licensee. You can fill in the blanks on a less than 1 year lease agreement that has been approved by the Supreme Court of FL. Here's what we're allowed to do:
1) A contract for the listing agreement. Broker says, "I will let you employ me to sell your property for you." Seller signs contract and says, "I agree. We just entered a listing agreement." Broker files away with listing agreements.
2) Contract for the buyer brokerage agreement. Broker says, "I will help you find the property of your dreams -- just what you are looking for." Buyer says, "Here sis my checklist. Go out and find my property!" Then they sign the buyer brokerage agreement and the broker can look for that one property.
3) Contract for the buyer and seller called the sale and purchase contract. This contract is facilitated by the broker for agreement between the buyer and seller of a property. The buyer says, "I really want your building. I will give you $200,000, $5,000 less than your asking price." Seller says, "Agreed." And extends his hand. The broker can now contract the sale called the sale and purchase contract, establishing the party relationship and the property being conveyed and the price being paid.
4) Establish the risks and benefits for all aspects of the contract is the option contract. Buyer and seller agree on a fixed price and fixed period, but the sale price can change after that agreement, might fluctuate with the market. (call-buy, put-sell). Right to exercise the option but not obligated. Seller says, "I will keep the option of taking offers on this property for 5 months." School recommends an attorney to provide option contract.

You can find standard forms of contracts: listing agreement, buyer brokerage agreement, sale and purchase agreement, and option contract at brokerage offices from REALTORS. Standardized forms reduce mistakes.

Review: Unless they are also attorneys, brokers and sales associates who prepare such legal documents could jeopardize their real estate licenses. A buyer brokerage agreement is an employment contract with a buyer.

What do the statute of frauds and the statute of limitations have to do with real estate?
Frauds video link: https://www.youtube.com/watch?v=C5azqSAGGiQ 
Main points: an agreement does not need to be in writing to be legally enforceable because most oral agreements, once proven, are ever bit as enforceable as a written contract. The law does recommend memorializing the agreement in some written way -- not a full blown contract necessarily. This memorial page enforces the agreement law. Statutes of frauds are the laws states make to prevent fraud.
Limitations video link: https://www.youtube.com/watch?v=iq8gfaFqFpI and https://www.youtube.com/watch?v=q1rGZk5AjWI
Main point: deigned to make sure a person does not wait to make a claim for damages or other reliefs. File within a certain period of time. Once the statute of limitations expires, your access to the courts for justice can be forever barred.

The statute of frauds and statute of limitation impact real estate contracts.
So a contract is an agreement to do a certain thing. What you say you are going to do is supported by considerations (anything given or promised by one party in exchange for the promise of undertaking another). A valid contract has 4 essential elements:
-competent parties
--all there in the head people on each side, no one is committed
-offer and acceptance (mutual assent), (assent: the expression of approval or agreement/mutual: held in common by two or more parties; experienced or done by each of two or more parties toward the other).
-legal purpose
--legal: rec. by common or statutory law, as distinct from equity/purpose: the reason something is done or created
-consideration
--contractual agreement, anything given or promised or forborne by one party in exchange for the promise or undertaking of another.
Video: https://www.youtube.com/watch?v=qFSfxZ-90Dk
A contract may be in writing or oral but the transfer of real property must be in writing in contract. An oral contract can contain all the essentials CLOC (competence, legal purpose, offer, and consideration) but is not enforceable in the court of law unless it's in writing. An unenforceable contract is not considered in the eyes of the law. Just because essentials present, does not mean contract enforceable.. as in not in writing because statute of limitations and statute of frauds requires writing and property may have been destroyed.

unenforceable contract

A contract would not stand up in a court of law because it does not meet the requirements of the statute of frauds or it runs beyond the statute of limitations.

Why you are incompetent to make an enforceable and valid contract:

Too young, too insane, or too intoxicated. A minor making a contract is void unless adult finishes contract.

competent

The parties have the legal capacity to contract, no mental defects, and are of legal age to contract. "A sane person contracting with an insane person or an adult contracting with a minor produces a voidable contract." Both parties have to be of age, sober, and competent to enforce a valid contract. A contract signed between a minor and drunkard is super voidable. Mutual assent is making and accepting the offer - both parties agree to the contract. (being competent, making offer and accepting, legal purpose, and consideration).

mutual assent

The making and acceptance of an offer (agreement). Parties agreeing on all terms of the contract reach a meeting of the minds.

meeting of the minds

The contracting parties reach an agreement on all terms in a contract. One party makes an offer and one party accept that offer. Offeror offeree. A complete and mutual understanding must exist to produce a meeting of the minds. The moment of acceptance of the offer is the moment the contract is formed. 

OFFEROR: DO YOU ACCEPT? OFFEREE: YES! CONTRACT FORMED. Haha. check the BAL before contract of broker and seller and buyer. Check the I.D. D.L. or passport.

"Two heads are better than one."

Legal Purpose

The provisions (conditions) in a contract (legal document) must not be prohibited (forbidden) by law. You want to pay an unlicensed person a commission, that is illegal. Contract not enforceable by court of law. You want to assassinate someone? No. Hit man contract legally enforceable? No. Does the contract break the law? Yes. Then it's not enforceable.
Video: https://www.youtube.com/watch?v=OntcD8klP1k

Consideration

What is given in exchange for something else. Consideration is not the money, consideration is the obligation parties are making to perform. You obligate yourself by placing some consideration (asset) in the agreement. Pinky promise.haha. written with essential - enforceable. A deposit it not a consideration. The consideration is paying the full price for the property and conveying the property - a consideration is a two-way street. An earnest deposit or good faith deposit is simply saying, "Hey. I intend to purchase your property. I am serious here." A valuable consideration can be measured in terms of money. A good consideration can be measured in terms of intangibles (love and affection).

valuable consideration

The money or a promise of something that can be measured in terms of money.

good consideration

A promise that cannot be measured in terms of money, such as love and affection.

Good consideration and valuable consideration are sufficient to enforce a contract. "Either type of consideration is sufficient to enforce a contract. The law generally does not concern itself with the relative fairness of consideration. What is exchanged need not have the same measurable value. The law will accept that the parties thought the consideration to be fair because they freely agreed to the exchange." Law: fairness is agreeness.

Void and Voidable
Void doesn't meet the requirements and has no legal effects.

void

A contract that does not meet all of the required elements of a valid contract and has no legal effect. Voidable is a contract but some aspect is invalid and now void.

voidable

A contract that allows one party to avoid contractual duties, such as when one party is a minor or a party is mentally incompetent.

statute of frauds

A law that requires that certain contracts must be in writing and signed to be enforceable (contracts conveying an interest in real property). Contracts conveying interest in real property and contracts not to be performed for a year must be in writing to be enforceable by law. Florida Statute of Frauds recognized these contracts:

1) Purchase and sale contracts

2) Option contracts

3) Deeds and mortgage instruments (by attorney)

4) Lease agreements for term longer than a year

5) Listing agreement for term longer than a year

Oral contracts are not illegal: oral contracts are not seen in court. Verbal agreements are difficult to prove. (An oral estate contract might be valid). "A contract in which the owner of land agrees to create or convey a legal estate in the land; for example, he may contract to grant a lease or to sell or he may grant a valid option to purchase. The contract confers on the purchaser an equitable interest that is enforceable against third parties if registered." However, it is possible that an oral real estate contract is a valid contract. For example, if a buyer and a seller verbally agree to a purchase and sale of real estate, and the buyer pays part of the purchase price and takes possession of the property or has made improvements to the property, the courts will recognize the contract. Proof.

Statute of Limitations

Period of time in which a contract can be enforced. Protects people from forced performance or suing after a long period of time. Time table for statute of limitations:

1) Written - 5 years

2) Oral - 4 years

3) 1/2 Written 1/2 Oral - 5 years written 4 years oral

Enforceable by law:
Competenent parties. offer and acceptance, legal purpose, consideration - contract signed by parties bound -- contract written displays COLC and signatures. Your signature is your word. Sign in ink not in blood. Contract - agreement. Real estate contract not required witness or notary. No set format. There should be one interpretation and one interpretation alone of a contract; no window of opportunity for more than one interpretation. "Because a contract is an agreement designed to spell out clearly the meeting of the minds between parties on a particular subject, it creates certain enforceable rights. It also provides remedies for the affected parties if the contract is breached."

BOOM

To remember the elements of a valid and enforceable real estate contract, remember COLIC:

• Competent parties
• Offer and acceptance (meeting of the minds)
• Legal purpose
• In writing and signed (statute of frauds)
• Consideration (valuable or good) 

Categories of contracts:
Formal and informal.
Bilateral and unilateral.
Express or implied.
Executory or executed.
Method of formation: form of procedure for accomplishing something, process of being formed
Content: things that are held or included in something
Legal effect:  recognized by common or statutory law, as distinct from equity
Formal was written under now, now is LS. LS: the place of the seal. LS appears after party signatures. Formal depends on particular form. A promissory note is a formal contract. promissory note |ˈprɑːmɪsərinoʊt|
noun
a signed document containing a written promise to pay a stated sum to a specified person or the bearer at a specified date or on demand. Seal unneeded to make contract valid.
Informal oral agreement is a parol contract.

parol contract

An oral agreement. Some parol contracts are legally enforceable (says the Statute of Frauds).  Arrangement, requirement, and type of parties bound depends on contract classification.

Either bilateral or unilateral
Bilateral says both parties must perform in accordance with the contract - sale is bilateral because both parties must perform. (BI = 2)
Unilateral says only one party has to perform. (UNI = 1)
A bi starts as a uni. A (optionee) asks for an option from B (optionor). B'or cannot sell to anyone other than Aee, but Aee can buy from anyone else. B'or is bound to honor option of Aee to exercise option. When Aee promises to exercise option offer to B'or, bilateral contract emerges.

Either expressed or implied
Expressed says terms have been spelled out and a meeting of the minds has occurred. Agreement is mutual. Express: to say what one thinks and means. Expressed can be written or paroled (oral) or combo'd. Requirements for expression are understanding and agreement.
Implied means that terms have not been vocally expressed but are understood to be in agreement, like sitting in a restaurant and paying later or hiring a broker and then paying later. Implied are not professional (showing skill appropriate to professional person).

A contact can be parol, bilateral and expressed. A contract can be formal unilateral and implied. A contract can be parol bilateral and expressed.    

Executory or Executed
Executory means performances still need to be made. So between a signing the contract and closing the sales contract is executory. Executory: carried out.
Executed means that all the duties and responsibilities have been performed. Signed contract, closed and all then executed. Once all promises from buyer, and all promises from seller are fulfilled, then contract executed.

Review
A bilateral contract obligates both parties to perform in accordance with the terms of the contract. A sale contract is a bilateral contract because both the seller and the buyer are obligated to perform. With an implied contract, the obligations or conditions of the contract may be reasonably implied by the acts of the parties or by the nature of the transaction. 

WILD CARD

Contracts can be negotiated:
Offers and contracts are terminated:
Forming a contract:
1) 1 party makes offer. A offers $50,000 for B's property. A is offeror. B is offeree. B can counteroffer. B counteroffers $55,000 with all closing costs. Counteroffer kills original offer. Offeree becomes offeror because counteroffer is out. Counteroffers change the terms and conditions, and "who wears the hat." Many offers and counteroffers can take place before a meeting of the minds and mutual agreement. Once the offers are accepted from both sides the contract starts. Then A & B must perform their duties as in the contract. An offer can be terminated.




Termination of offer:
termination |ˌtərməˈnāSHən|
noun
1 the action of bringing something or coming to an end: the termination of a contract.
• an act of dismissing someone from employment.
• an induced abortion.
• an assassination, esp. of an intelligence agent.
2 an ending or final point of something, in particular:
• the final letter or letters or syllable of a word, esp. when constituting an element in inflection or derivation.
• [ with adj. ] archaic an ending or result of a specified kind: a good result and a happy termination.
Counteroffer: willing to contract but changes terms, price, and conditions of contract. Once counteroffer is made original offer is completely rejected and cannot be made again. And a counteroffer is not an acceptance because the counteroffer turns into the second offer and the original offeror has to accept the counteroffer before a meeting of the minds and contract can be made.
Acceptance: communication of acceptance of offer creates a contract. Acceptance must comply with stated terms in the contract and a letter or telegraphic comms. can be part of valid sales contract.
Rejection: communicated by offeree to offeror. Rejection is termination of offer.
Withdrawal by offeror: may withdrawal an offer at any point before acceptance. Counteroffer can withdrawal an offer too.
Lapse of time: expires after offer passes with no response after a length of time.
Death of insanity: one party dies or is committed
Destruction of property: property is destroyed.

WILD CARD

• Withdrawal by offeror
• Insanity
• Lapse of time
• Death
• Counteroffer
• Acceptance
• Rejection
• Destruction of the property

 

 

 


Termination of contracts:
Performance: rights and duties on both sides have been performed
Mutual rescission: rescission |riˈsiZHən|
noun formal
the revocation, cancellation, or repeal of a law, order, or agreement. Both parties mutually agreed to discontinue duties in contract.
Impossibility of performance: cannot perform promised duties: destruction of physical improvements. Dying would make it impossible to perform duties.
Lapse of time: reached statute of limitations
Bankruptcy: seller becomes bankrupt then property becomes control of court in which court appointed trustee responsible for liquidation. seller becomes bankrupt does not mean terminated contract.
Breach: one party fails to perform and other party sues. Failing party tells the court why shirked and court denies excuse.

FREC does not control breach of contract. The remedies for breach of contract are:
1) Specific performance: if money is not enough, sue. Make the court make the party act as contract.  "This action is termed a relief in equity because such judgments are awarded in a court of equity."
equity |ˈekwitē|
noun ( pl. equities )
1 the quality of being fair and impartial: equity of treatment.
• Law a branch of law that developed alongside common law in order to remedy some of its defects in fairness and justice, formerly administered in special courts.
2) Liquidated damages: contract states amount $$ to be paid if one party defaults:

liquidated damages

The amount specified in the contract (usually the earnest money deposit) to be paid to the seller in case of default by the buyer.

3) Rescission. To rescind is to cancel or annul the contract. The court orders the parties placed back to their original positions as though the contract had never existed. This relieves both parties from their respective obligations under the contract. An injured buyer is entitled to the return of any earnest money, and the seller is obligated to return any earnest money or payment received.

haha

4) Compensatory damages. Another remedy for breach of contract is a suit for damages. Usually the party bringing suit seeks an amount of money equal to the extent of loss suffered (compensatory damages). A wronged party may find that a certain property was misrepresented but decide to accept the property and, in addition, sue for damages. On the other hand, the buyer may decide to refuse the property and still sue for damages. Don't mess up.

Assignment
A transfer of rights and duties under a contract.

assignment

A transfer of rights and duties under a contract.
Assignor: person transferring legal rights. Assignee: person receiving legal rights. "
An assignor does not escape the obligation to perform the terms and conditions of the contract or to see that they are performed by the person to whom it was assigned, unless given a release from the other party to the original contract. If an assignor either accidentally or intentionally assigns the same thing(s) to two or more assignees, the first assignee to notify the other party to the contract prevails over all other assignees." 1st wins. You can substitute your obligations with someone. This substitution is called novation.

novation

The substitution of a new party for the original one. Effectively discharges the original party.

So since my head is in the clouds:

Specific performance: wrong party sues to force another party to perform

Rescission: wrong party may sue for cancellation of contract

Liquidated damages: penalty money specified in a contract for default

Compensatory damages: wronged party sues for total amount suffered.

Today was brutal most of the day. How am I still getting 100% on tests?

More
The effect of novation is to discharge the original party from the obligation. Specific performance is when an injured party sues to have the courts enforce the terms of a contract. A suit for compensatory damages is a suit that seeks money damages. 

There are specific contracts important to real estate. I am guessing all of them are in a file folder in a file cabinet (maybe separated by type of contract) from REALTORs.

Real estate brokers and real estate sales associates share the importance of these real estate contracts because the contract is the promise and the contract is also the negotiation leading to agreement or rejection.
 1) listing contracts
2) buyer brokerage agreements
3) option contracts
4) sale and purchase contracts

Listing contracts

Can be written oral or implied. If implied then not to serious. So a listing contract that is written must include the following:
Definite expiration date, identification of the property, price and terms, fee or commission, signature(s) of the owners. Make a copy of this filled out contract and give it to the owners within 24 hours of execution. execution |ˌeksiˈkyo͞oSHən|
noun
1 the carrying out or putting into effect of a plan, order, or course of action. Chapter 475 forbids an automatic renewal. Negotiate with the seller before operating after the first listing expiration date. FL law accepts verbal listing contracts but since in effect the listing contract is the broker's employment contract, the broker and seller benefit from a contract in writing that expires, identifies, states price and terms, states commission or listing fee, and includes signatures. a person's name written in a distinctive way as a form of identification in authorizing a check or document or concluding a letter.
• the action of signing a document.If a breach, default, or misunderstanding arises, it is easier to prove with a written contract than speak about an oral agreement in litigation. litigation |ˌlitəˈgāSHən|
noun
the process of taking legal action. A listing contract expiring in less than a year is not covered by the statute of frauds. An oral listing contract is enforceable in court with the proper amount of evidence and testimony. A broker has no power to sign for a seller or buyer. A broker has no power to bind a seller or buyer, unless binding is specifically stated. Bind 4 formal impose a legal or contractual obligation on. (a binder holds pages together). A power of attorney is a document stating an attorney-in-fact, and an attorney-in-fact can bargain and sign for the power of attorney person in this single specific power. You may see a general power of attorney one day or you may see a special power of attorney one day. General attorney-in-fact can act in general in all matters as a principal. A special attorney-in-fact acts in one specific way for the power of attorney, like signing a single document or purchasing a designated policy. Specific attorney-in-facts are limited. If a power of attorney person is signing a real estate title then the instrument must be witnessed, acknowledged, and recorded in public records. intrument 4 a formal document, esp. a legal one: witness |ˈwitnis|
noun
1 a person who sees an event, typically a crime or accident, take place: record 1 set down in writing or some other permanent form for later reference, esp. officially. You can usually assume in a listing agreement that the seller has not given power of attorney to the broker. The signature of the seller and agent may create a special situation. An exclusive right of sale listing and an exclusive-agency listing contract  are usually bi-lateral because both parties on both sides have to perform. obligation |ˌäbliˈgāSHən|
noun
an act or course of action to which a person is morally or legally bound; a duty or commitment. An open listing agreement is usually unilateral because the agreement is one sided from the seller who promises to pay a commission if the broker causes a transaction to be consummated (• complete (a transaction or attempt); make perfect). The licensee is responsible for finding a purchaser or effecting the sale. The licensee must:
1) Produce a buyer who is ready, willing, and able to buy at the terms specified by the seller.
2) Take to the seller a buyer's offer that substantially/essentially becomes a contract.
*A licensee performed acts 1 and 2 then qualified for a commission. Agent is the facilitator, even if buyer and seller settle on different terms. You made the match. You make the dollar. If licensee required to effect the sale then licensee finds a buyer ready willing and able and accepts seller terms and ensure transaction closes.
 

Listings in the real estate business:
1) Open listings
2) Exclusive-agency listings
3) Exclusive-right-of-sale listings
The above three can be net listings.
Prospecting video link: https://www.youtube.com/watch?v=dmfKPL17v_c
1) Open Listings: Very few brokers accept the open listing method because a seller can sell on his own, get another broker to sell, and a seller can find his own buyer. A seller is not obligated to pay a commission. The broker who procures a buyer and gets the transaction completed gets the commission but there is no guarantee the seller will not find a buyer first, and is not obliged to share the news with brokers. So in this way the seller and buyer benefit but not many else.

open listing

A listing given to any number of brokers (least preferred by brokers).

2) Exclusive-agency listing: one broker gets the listing but the owner can still sell the property and give the broker no commission, unless the broker introduces the buyer to the seller. Also, if the associates for the broker find a buyer then the broker gets a commission anyway.

exclusive-agency listing

A listing that is given to one broker, but the seller reserves the right to sell the property without paying a commission.

3) Exclusive right-of-agency listing/exclusive right-of-sale listing:

exclusive-right-of-sale listing

A listing that is given to one broker who is assured of a commission no matter who sells (best from broker's standpoint). Most advantageous for broker because he is only one to list property and represent property for the seller and even if the seller finds the buyer the broker still gets a commission. Hard work pays off right?

Net Listing

An open, exclusive right of sale can be a net listing.

net listing

An agreement or contract to sell or rent a property for a specified minimum net amount for the owner. So the seller sets an amount he want to receive for the prop. Then the broker estimates closing costs and adds that to the net for the listing. Then the broker adds commission of 5%. So the seller wants $95,000 and the closing costs are $4,000. So the seller wants $99,000. And the commission wants 5% of $99,000. So 100% - 5% is 95%. So the $99,000 gets divided into the 95% decimal (.95) to reach the total listing price of $104,210. In a net listing the seller would collect the asked and accepts $99,000 and the broker would collect the commission amount $5,210. Net listings are legal in FL but the broker cannot misrepresent the listing price by increasing the value of the property in selfish favor. Fair is fair. To keep broker in check the seller and broker discuss fair listing price. the broker retains all proceeds after the listing price and closing costs are met. I guess the broker takes a hit if the price is negotiated downward by a buyer. Like if the buyer wants to pay $103,210 then the broker's commission is $4,210. Bad bad bad.

Multiple Listing

MLS. A multiple listing is a service provided to brokers but not a service provided to specific listing types. It's in an exclusive right of sale and exclusive listing agreement contract that states that the broker is allowed to convey listing information in the MLS -- the clause states this broker's allowance, and the seller signs the contract, and therefore agrees. MLS is shared by REALTOR member brokers who share properties with other members. REALTORs is like the exclusive club of licensed real estate sales associates and brokers. Any MLS REALTOR can show potential buyers properties and receive commission for doing so if the buyer purchases property. http://www.realtor.org/ (national association of realtors)

Broker's Compensation

Broker's compensation is specified in the listing or buyer brokerage agreement as a commission or brokerage fee that can be a percentage of the total sale, flat fee or hourly rate, and the broker's commission amount is negotiable. Once the broker earns the commission, the commission is shared with a cooperative broker and/or sales associate. An associate can only get a check from an employing broker -- a check from a buyer, other broker, or seller to an associate is illegal. You can do a broker 100% commission plan where the associate pays a monthly office use, telephone, and clerical fee and keeps all the commission. So broker would know exact amount every month. Criteria for earning a commission: hold a current and active real estate license, be employed by the seller or buyer through a listing contract or buyer broker agreement, or be the procuring cause for the completed transaction such as the broker as the referrer

procuring cause

The chain of events that results in a sale. The procuring cause is the transaction starter. Who brought the buyer? Procuring cause goes to who brought the buyer to the seller.  Not always is the broker the procuring cause just because the broker and seller are in a listing agreement. The procuring cause broker may be entitled to a fee if that broker brings the buyer to the other broker listing agreement. If licensees are arguing over a procuring cause then the matter is handled in arbitration. If the broker and buyer or seller are arguing then the courts hear the case. 

The buyer brokerage agreement is between the buyer and the broker stating that the buyer is hiring the broker -- so the broker is hired as the buyer's transaction broker. If the broker is hired as the single agent or no brokerage relationship is formed then the broker must give this written disclosure to the buyer:

1) the parties to and terms of the agreement (beginning and ending dates)

2) general characteristics of the property being sought by the buyer (property type, location, and price range)

3) broker obligations

4) buyer obligations

5) retainer and compensation (dollar amount or percentage of purchase price)

6) protection period

7) early termination of the agreement and dispute resolution (buyer and broker to meditate first)

8) authorized brokerage relationship

http://www.rebac.net/ National Association of REALTORS® Real Estate Buyer's Agent Council's website

http://naeba.org/ National Association of Exclusive Buyer Agents 

Relocating article: http://naeba.org/type/relocating

First time home buyer article: http://naeba.org/type/first-time-homebuyer

Buying a retirement home article: http://naeba.org/type/retirement-living

Buying a vacation home article: http://naeba.org/type/vacation-home

Changing homes article: http://naeba.org/type/changing-homes

Option Contract

Agreement to keep open a selling listing or leasing listing for a specified time period.

option contract

A unilateral contract (only optionor must perform) to keep open for a specified period of time an offer to sell or lease real property. The optionor (seller) gives the optionee (buyer) a set price, set terms, and time frame in which the property can be purchased. The option contact must be written, signed, and falls under the statue of frauds. The optionee can turn the option contract into a sales contract by exercising the sale.

The major difference between a sales contract and an options contract is that the optionor must perform on the option contract but the optionee does not have to and that the sales contract requires optioner and optionee to perform (bilateral). The optionee can walk away in a unilateral option contract because the option to buy is there but the obligation to buy is not there for the optionee. So it's like, here it is, take it or leave it. Option contracts are unilateral contracts. If either party fails to perform in a transaction then the offending party is rightful to sue for breach of contract damages.

Consideration

Optionee pays a fee (valuable consideration) for the right to purchase the property for a specified price within a specified time period, so the option contract may state that the valuable consideration goes towards the purchase price if the optionee exercises the right to purchase power from the optionor. The optionor usually retains the valuable consideration fee if the optionee backs out. Cool. Options must contain all the terms and provisions to be a valid contract: names of contracting parties, price of property, complete legal description, and the terms of fee paid. Unless prohibited in the terms of the agreement, an option contract is transferable/assignable. 

A licensee may draw up an option contract with the options specified. There is case law on licensees with sales contracts but no case law on licensees with option contracts therefore the DBPR allows licensees to construct option contracts. It's responsible to use a standardized form or hire a real estate attorney to draft the options contract."Licensees who are really interested in obtaining an option on a property as a true optionee must first divest themselves of their role as licensees. The licensee must give a valuable consideration (substantial and not nominal) for the option contract. They must inform the property owners that they are not functioning as real estate brokers or sales associates but are personally interested in acquiring an option on the property." Duh. Be honest.

Sale and Purchase Contract aka. purchase and sale agreement aka. contract for sale and purchase

Parties are the buyer and seller. Seller is the vendor and buyer is the vendee. Sales purchase contract is a bilateral contract because both parties have to perform. A sales contract must be in writing and signed. A valid written contract is enforceable but sometimes an oral sales contract is enforceable. Florida Statute of Frauds says a sales contract must be in writing but can be verbal. A letter or telegraphic communication can be a valid sales contract. To be valid this but be spelled out:

1) Names of the vendor and vendee (legal representative)

2) Legal description (preferred) or street address of property

3) Consideration 

4) Purchase price

5) Financing or cash terms

6) Type of deed the seller will deliver (general warranty deed, unless agreed otherwise) 

7) Title evidence required and type of estate (fee simple estate, unless otherwise stated)

8) Terms of expenses and any prorations to be paid

9) Personal property to be left with the real property

10) Date, time, and place of closing

11) When the possession of the property will occur

Considerations are promises the buyer and seller want to make to each other. It's good to include a provision for an earnest money binder deposit and when it is to be paid. Earnest money is not required to make a contract valid. Earnest money is not required to make a contract valid. State in the contract that the vendor has the right to keep the earnest deposit if the contract is breached. The money kept is liquidated damages. Seller must provide a clear and merchantable title.  Licensee may be subject to fraud and disciplinary action if there is a title problem and the knowledge of such is kept from the buyer. Most sale contracts provide the seller provide an up-to-date abstract and title insurance policy. If those requirements aren't included in the contract, then don't do it. Only do what the contract says. And include everything. When a property is co owned by a married couple or if it is a homestead property in which in one spouse's name (severalty) both have to sign the sales contract. If seller's spouse signs the sale contract spouse indicates willingness to convey ownership rights and relinquish homestead when time comes to sign the deed and transfer the title. If the buyer's spouse signs a sales contract that spouse also becomes bound to purchase the property. In the event of failure to perform, either party can be sued. If one spouse signs a contract to purchase, only that spouse is accountable.

Hello. Florida has enacted mandatory disclosure laws! Florida consumers can now make informed decisions. Most contract disclosures are in the contract or separate.

Disclose material defects

Residential defects disclosed. As is does not circumvent the disclosure of known material defects. Yup. The Florida Supreme Court found in favor of the Davises and stated, "We hold that where the seller of a home knows of facts materially affecting the value of the property which are not readily observable and are not known to the buyer, the seller is under a duty to disclose them to the buyer." The case is considered important because prior to the Johnson v. Davis decision, the courts had favored the seller under the philosophy of caveat emptor (buyer beware). This court decision makes sellers accountable to truthfully disclose the condition of the property. A later case (Rayner v. Wise Realty Co. of Tallahassee) extended the duty to disclose material defects to real estate licensees. Although Johnson v. Davis concerned residential property, licensees are cautioned to always use sound ethical standards when dealing in all types of real property.

just state the facts and be better off. caveat emptor is a thing of the past. know what you know and speak your truth quietly and clearly. exercise wisdom. think about the future. test your limits and know your boundaries. be cautious. strive to be happy.

Radon gas disclosure statement. A radon gas disclosure statement is required on at least one document at time of or before executing a document for sale on an agreement or a lease contract. The disclosure says what radon is but does not require testing for radon gas and applies to purchase and lease of property. EPA RADON PAGE http://www.epa.gov/radon/pubs/consguid.html

Lead based paint disclosure: purchasing or renting a pre-1978 house falls under the Residential Lead-based Paint Hazard Reduction Act that says that sellers and agents must disclose to buyers the known existence of lead based paint, sales contract must include a disclosure about lead based paint, an EPA pamphlet about lead based paint for property prior to 1978 given to buyers and tenants, and sellers must allow buyers 10 days to inspect for lead based paint in pre-1978 homes. "Renovations and demolitions of properties built before 1978 can create harmful lead dust and chips. Because of this hazard and to prevent possible lead contamination, the Environmental Protection Agency (EPA) issued a rule that became effective in April 2010. The rule requires contractors who disturb paint in these properties to be certified and follow specific work practices. To become certified, a renovator must successfully complete an eight-hour training course offered by an accredited training provider." It is the responsibility of the licensee to arm the buyer with lead-based paint info, it's not a federal responsibility. Protect your family from lead here http://www2.epa.gov/lead/protect-your-family. EPA pollution and toxin prevention: http://www2.epa.gov/lead 

Energy efficiency brochure: the Florida Building Energy Efficiency Act requires buyers, before signing a contract, receive an information brochure notifying the purchaser of the option for an energy efficiency rating on the building. Notice to residential purchasers: energy efficiency rating may qualify the purchaser for an energy efficient mortgage from a lending institution. "The act also created a uniform, statewide energy-efficiency rating system for rating new and existing residential, commercial, and public buildings." Florida Solar Energy Center: http://www.fsec.ucf.edu/en/

HOA Disclosure: supplied by the current owner or developer that states restrictive covenants, and any assessments the hoa imposes such as being a member of the hoa, paying assessments to HOA, failure to pay results in lien, recreational use fee, right to amend restrictive covenants, matter of public record. The HOA disclosure must be in the sales contract and the contract is voidable if the buyer doesn't read it before signing, and the buyer has 3 days after receiving the late HOA disclosure to cancel the contract, the right to void the contract terminates at closing.

Property tax disclosure: Buyers must be presented with a  disclosure summary concerning ad valorem taxes (An ad valorem tax (Latin for "according to value") is a tax based on the value of real estate or personal property. It is typically imposed at the time of a transaction, as in the case of a sales tax or value-added tax (VAT).) before or at the time of execution of the sales contract.

Property tax

Main article: Property tax

A property tax, millage tax is an ad valorem tax that an owner of real estate or other property pays on the value of the property being taxed. There are three species or types of property: Land, Improvements to Land (immovable man made things), and Personal (movable man made things). Real estate, real property or realty are all terms for the combination of land and improvements. The taxing authority requires and/or performs an appraisal of the monetary value of the property, and tax is assessed in proportion to that value. Forms of property tax used vary between countries and jurisdictions. You can insert the wording into the contract or attach it separately. If the disclosure is not in the wording then the disclosure must state the disclosure is separate. "
http://www.leg.state.fl.us/welcome/index.cfm You can download the property tax disclosure summary contained in the Florida statute. Under the Senate seal, select "Florida Statutes," then "Title XL Real and Personal Property," and then "Chapter 689." The summary is in section 689.261, F.S.

Building code violation disclosure: if you have a building code violation you must disclose this in writing to your buyer including: the nature and existence of the violation and proceedings, a copy of the pleadings, notice, and other documents received by the seller, and notice that the buyer will be in compliance with the applicable code and orders issued in the county court proceedings. Liability costs should be negotiated between the buyer and seller in the contract for sale and purchase. The code enforcement agency should get the name and address of the new owner and copy of the signed disclosure within 5 days after the title transfer. "A seller who violates this provision creates a rebuttable (i.e., disputable with evidence) presumption of fraud and may become the subject of a civil case."

rebut |riˈbət|
verb ( rebuts, rebutting , rebutted ) [ with obj. ]
1 claim or prove that (evidence or an accusation) is false:

Community development district

community development district (CDD)

An independent special district created pursuant to Florida law, to service the long-term specific needs of its community. A CDD constructs, operates, and maintains community-wide infrastructure and services for the benefit of its residents. CDDs provide an alternative way to fund and construct capital infrastructure to service projected growth. A CDD protects the long term needs of community. CDD constructs, operates, and maintains community wide infrastructure

infrastructure |ˈinfrəˌstrəkCHər|
noun
the basic physical and organizational structures and facilities (e.g., buildings, roads, and power supplies) needed for the operation of a society or enterprise.

for the benefit of residents. CDDs provide alternative ways to fund construction without overburdening government and taxpayers. Developer finances construction through bonds and home owners repay the bonds. CDD tax assessments are in addition to county and city property taxes.

Parcels and real property that is CDD is required in the contract in the following disclosure: The [name of district] community development district may impose and levy taxes or assessments, or both taxes and assessments, on this property. These taxes and assessments pay the construction, operation, and maintenance costs of certain public facilities and services of the district and are set annually by the governing board of the district. These taxes and assessments are in addition to county and other local governmental taxes and assessments and all other taxes and assessments provided for by law. This statement must appear directly before the purchaser's signature space and be written in bold face conspicuous type that is larger than the type on the rest of the contract.

RECAP
An open listing involves one or more brokers with the commission going to the broker who sells the property.
An exclusive-right-of-sale listing involves one broker with the commission going to the listing broker no matter who sells the property.
An exclusive-agency listing involves one broker with the commission going to the listing broker if not sold be the owner.

Update
Real estate licensees prepare: listing contracts, buyer brokerage agreements, option contracts, and sale and purchase contracts.
Statute of frauds that a contract must be in writing and signed to be enforceable. Statute of frauds protection applies to purchase and sale contracts, option contracts, and lease agreements and listing agreements more than 1 year.
Statute of limitations designates that written contracts are enforceable for 5 years and oral contracts enforceable for 4 years. A valid contract complies with the provisions of contract law and contains these elements: contractual capacity of parties, offer and acceptance, legality, and consideration. 
Real estate contracts must be in writing and signed by all parties who are bound in the agreement. Real estate contracts are not required to be witnessed or notarized.
A valuable consideration is the money or promise of something that can be measured in terms of money. Good consideration is a term that cannot be measured in money.  
Bilateral contract obligates both parties to perform. Unilateral contract obligates one party to perform.
The offeror makes the offer (buyer) and the offeree receives the offer (seller). 
Reasons for termination of contract: performance, mutual rescission, impossibility of performance, lapse of time, bankruptcy, breach. 
Legal remedies for a breach of contract are specific performance, liquidated damages, rescission, compensatory damages. 
Assignment refers to transfer (from assignor to new assignee) of rights and duties under a contract.
Novation is the substitution of one party for the original one. 
Written listing contracts must include: a definite expiration date, identification of the property, price and terms, fee or commission, and signature of the owner. A copy of the contract must be given to the owner within 24 hours. Listing contracts may not feature an automatic renewal cause.  
Power of attorney is a document that designates an attorney in fact who can act on behalf in general or in special. 
An open listing is given to one or more brokers. The seller reserves the right to sell with other brokers and sell by owner. Only selling broker gets commission.
Exclusive agency listing is given to one broker. Seller reserves right to sell property. Listing broker entitled to commission unless sold by owner.
Exclusive right of sale contract which one broker is ensured commission no matter who sells the property.
Net listing is seller retaining a certain amount plus closing costs and broker keeping the extra collected. Net listing seller and broker determine asking price.
Buyer brokerage agreement is employment contract between broker and buyer.
Option contract is unilateral contract to keep open an offer to sell or lease a property for a period of time. Optionor grants optionee right to buy. Buyer doesn't have to buy. 
Sale and purchase contract are vendor and vendee. Purchase and sale contracts are bi-lateral.
Seller must disclose all material known facts to buyer and just saying as is doesn't cut it.
Disclosures:
Pending building code violations
Ad valorem taxes
HOA info.
Info. brochure on energy efficiency and right to energy efficiency rating
Info. brochure on radon gas but no test
EPA pamphlet with lead based paint pre-1978 with 10 day inspection by buyer