Contracts for Sale and Closing

Succes of the transfer depends on a well-formed ____ for ____

Contract, sale

Contract terms

Refers to the arrangements agreed to by the parties, such as price and date of closing

Contract conditions

Refers to the circumstances that must prevail, such as mechanical equipment being in good condition and title being unencumbered

Real estate transactions involve a two-step process

1. Agreement
2. Closing

The conditions in a contract for sale would include:

- Evidence of good and marketable title
- Survey showing no encroachments
- Physical inspection showing no structural deficiencies
- Buyer is to be able to find satisfactory financing, as detailed

Matter of a real estate transaction that are determined in a contract for sale include:

- The grantee
- The date of transaction
- Any conditions for either party
- The property interest and description
- The price and other terms

In contrast to personal property transactions, real estate transactions involve at least two events; first the ____ and then the ____

Agreement, closing

A ____ for ____ is the most important document in a real estate transaction

Contract, sale

Elements contain in any contract:

1. Competent parties
2. Legal objective
3. Offer and acceptance
4. Consideration
5. No defects to mutual assent

Two additional requirements must be part of any contract for the sale of real estate:

1. Written form
2. Proper description of the property

A contract can be repudiated if a person, at the time of signing, was:

- Under the influence of alcohol and drugs
- Insane
- Not empowered as a representative fopr a corporate party to the contract
- Acting for a person without their power of attorney

Examples of contracts failing to have lawful intent would be:

- A contract for sale of a controlled
- A contract to commit a crime
- A listing contract explicitly excluding some race

An offer and acceptance may be stated differently as a ____ of the ___

Meeting, minds

Mutual obligations of the parties are neccesary to create a legally ____ ____

Binding contract

What kind of title does a seller implicitly agree to deliver in a contract for sale?



The value given up, or promise made, by each party to a contract

Defects to mutual assent include:

1. One party attemps to perpetrate a fraud on the other party or makes a misrepresentation
2. A substantial error is made
3. One of the parties in under duress, undue influence, or menace

Defects to mutual ssent can ____ a contract


Contracts conveying an interest in real property generally must be in writing to be enforceable as required by the ____ of ____

Statute, Frauds

Both parties to a contract generally must offer consideration. The seller offers ____ while the buyer usually offers ____

Property, money

Legal title

Ownership of a freehold estate

Equitable Title

The right to obtain legal title

Equitable title is a ____ property interest, leaving the seller with a ____ property interest in the property, and the ____ to hold the risk of changing value of the property before closing

Real, personal, buyer

Legal title is ownership of a freehold estate. When a contract for sale is fully signed the buyer gains the right to obtain a legal title, a right that is called ____ title


A contract for sale needs to be carefully reviewed:

Before signing

The second part of the typical form contract for sale contains material sometimes described as routine. relative to the first part of the contract form the clauses in the second part are ____ legally binding


The first part of a form contract for sale typically contains clauses and information that is ____ to the property and transaction


Contracts with contingencies

An agreement for sale that makes the sale conditional on the buyer's obtaining something such as financing or a favorable engineering report.


One party's contractual rights and obligations are transferred to someone else

Because contigency clauses can make or break a transaction they must be written with, and reviewed with, great ___


In general, a contract for sale that involves personal performance by the buyer, such as a sale with a purchase money mortgage having installment payments from the buyer to the seller, is not ____


Contingencies are events on which carrying out a contract



The termination of a contract by cancellation

When a party fails to perform, an aggrieved seller may:

1. Sue for damages
2. Retain the earnest money deposit as liquidated damages
3. Agree to recission

When a party fails to perform, an aggrieved buyer may:

1. Sue for damages
2. Agree to rescission of the contract
3. Sue for specific performance

In some states, if the property is destroyed between signing of a contract for sale and closing, the buyer is automatically granted the right of ____


To lessen the chances for nonperformance, real estate contracts are often placed in ____


Escrow Agent

A third party who is instructed to carry out the provisions of the contract by means of a separate escrow agreement

In the absence of an escrow agent in a real estate sales transaction funds are often handled by the broker. In this case the broker must hold the fund in a ____ account and disburse the funds in accordance with the contract


Once the contract is signed, the selling broker has no further ___ role


A listing broker's responsabilities in a real estate transaction usually has two phases: They have a legal role until a contract is fully ____. Then they arguably have an obligaton of ____ under their listing contract to assure that logistical problems do

Signed, diligence

A lender's primary goal in a real estate closing is to assure that all necessary steps are taken to protect the lender's ____ interest in the property


Two federal laws that shape home mortgage lending

1. Real Estate Settlement Procedures (RESPA)
2. Federal Truth-in-Lending of 1968 (TILA)

When a new home loan is involved in a home sale a closing statement for the transaction must be provided by the lender using the CFPB form known as the ____ ____. This document must be made available to the borrower/buyer ____ business days before the dat

Closing disclosure, 3

Earnest money

A cash deposit by a buyer at the time of the offer to establish credibility of the offer, and to provide recourse to the seller if the buyer reneges.

The lender's attorney often ____ the closing procedures


Payments at closing that normally are made by the seller include:

- Owner's title policy
- State documentary tax on deed
- Property taxes for calendar time before the closing
- Seller's attorney fees
- Broker's commision

Payments at closing that normally are made by the buyer include:

- Escrow deposits for any new mortgage loan
- Buyer's attorney fees
- Recording of any new mortgage
- Recording of deed
- State taxes on any new mortgage
- Lender's title policy

Total expected annual property taxes: $1,000
Date of sale: Feb. 20th (Belongs to buyer)
Proacted taxes are $____, paid to the ____

137, buyer

Estimated closing costs

An estimate of all the costs to be incurred at a real estate closing. Most commonly, the estimate is provided by a lender, in accordance with the requirements of the Real Estate Settlement Procedures Act.

The ____ ____ must be provided when the borrower applies for a loan or within ____ business days

Loan estimate, 3

In the Loan estimate, expenses created by a mortgage loan are sorted into four categories

1. Origination charges
2. Service you cannopt shop for
3. Service you can shop for
4. Taxes and other goverment fees

In addition to steps in arranging a loan, steps for the buyer before closing normally include:

- Verify that seller has met all conditions of the contract, such as required inspections
- Confirm zoning status restrictive covenants
- Arrange hazard insurance, utilities, etc
- Have a survey done
- Inspect the property to verify condition and vacancy

The closing statement, very likely the CFPB Closing Disclosure, must be available ____ businees


For an escrow closing qualified escrow agent is given authority to execute all the neccessary steps to the transaction, carrying it through to the creation and final distribution of all sighed documents, colletion and distribution of ____, and distributio

Funds, statement