| A | B |
|---|
| Necessary Elements of a Contract | Offer & Acceptance, Consideration, Capacity of Parties, Lawful Purpose, No defects to mutual assent, writing requirement |
| Sales Contracts | Description of property and fixtures, purchase price and assumed method of payment, title, escrow, property destruction, miscellaneous provisions, brokers commission and agency disclosure |
| Components of a Form Sales Contract | Part 1: Points particular to the deal. Part 2: Items that must be clear |
| Handling of Funds | Broker normally handles funds for a transaction by putting them in an escrow account |
| Contingent contract | obligation of a party to perform depends on one or more conditions being met |
| Assignment | One party's contractual rights and obligations are transferred to someone else (Walmart might do this to buy RE) |
| Escrow Agent | Third party who hold moneys or documents on behalf of contract parties |
| Real Estate Settlement Procedures Act (RESPA) | Applies to virtually every home loan. Outlines the procedures for closing |
| Seller's Obligations | Prepare the deed. remove all encumbrances. Prepare papers with respect to seller's loan. Order termite inspection. Discontinue insurance and utilities. Meet conditions of contract |
| Buyer's Obligations | Obtain financing. Order lender's title insurance. 2nd opinion on title. Survey for encroachment. Buy property insurance (fire, homeowners). Utilities transfer. Inspect appliance and utilities. Verify that the seller has performed tasks |
| Preclosing steps of closing agent (lender) | prepare general warranty deed. Prepare mortgage note. Prepare check from lender to seller. Prepare HUD-1 closing statement. Obtain satisfaction of mortgage from sellers' mortagagee confirming balance |
| Suit for damages | Option to buyer and seller |
| Specific Performance | buyer can force seller to convey title |
| Liquidated Damages (seller) | seller can retain escrow deposit if buyer backs out |
| Rescission | Mutual agreement to cancel |
| Closing costs for buyer | 2-6% of loan |
| Prorated Items | Property taxes (Buyer receives credit) Insurance (Seller gets credit) |
