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If there are delay on presentation or offer negotiations are lengthy, where Earnest Money Deposit check will be deposited?
- in a Broker’s Escrow or Trust Account until offer to purchase is accepted or rejected
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If offer not accepted what happened to Earnest Money Deposit?
- deposit is immediately returned to the buyer
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If offer is accepted what happened to Earnest Money Deposit?
- funds are delivered to the escrow holder
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Equitable Title
... is a document that buyer will acquires after buyer and seller executed a sales contract
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When Title to the land will be transferred to the buyer?
- Title to the land transfers only upon delivery and acceptance of a deed
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Interest In The Land
- - is Equitable Title
- - Document that buyer will acquires after buyer and seller executed a sales contract
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Who assumed the risk of destruction of premises after contract is signed by both parties?
- - in some states
- - buyer assumes the risk of any damage of property that may occur before closing of contract
- - in other states
- - Uniform Vendor and Purchases Risk Act
- - provides that the seller bears any loss or destruction of premises that occurs before title passes or the buyer takes possession
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Uniform Vendor and Purchases Risk Act
- provides that the seller bears any loss that occurs before title passes or the buyer takes possession
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The parties may agree on a certain amount of money (___) that will compensate the nonbreaching party
Liquidated Damages
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Can Earnest Money Deposit be to serve as Liquidated Damages?
- - the Sales Contract may specify that Earnest Money Deposit is to serve as Liquidated Damages
- - in buyer’s default, seller keeps the deposit
- - seller may NOT sue for any farther damages
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Provisions of a Sales Contract (19)
- 1) Purchaser Name
- 2) Description of the property
- 3) Seller’s Name
- 4) Purchase Price
- 5) - Identification of closing or settlement agent
- - Closing or settlement instruction
- 6) Date of the closing
- 7) Title evidence that will be satisfactory to the buyer
- 8) Method by which expenses will be prorated
- 9) Outcome of the contract should the property be damaged of destroyed b/w signing and closing dates
- 10) Liquidated Damages
- 11) Contingencies or conditions of the sale
- 12) Personal property to be left with the premises for purchaser
- - appliances, garden equipment
- 13) Fixtures or other items that could be considered part of the real
- property that are not removed by the seller before the closing
- - chandeliers, storage shed
- 14) Transfer of any applicable warranties on items
- - warranties of heating and cooling systems
- 15) Identification of any leased equipment that must be transferred to the purchaser or returned to lessor
- - security system, cable TV
- 16) Transfer or payment of any outstanding special assessments
- 17) Purchase’s right to inspect the property shortly before the closing of settlement
- 18) Documents to be provided by each party
- 19) Dated signatures of all parties
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Contingencies
- conditions included in the contract that must be satisfied before the sales contract is fully enforceable
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Elements of the contract clause that provides contingency (3)
- 1) Action necessary to satisfy the contingency
- 2) Time frame w/i which the action must be performed
- 3) Party who is responsible for any costs involved
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Most common contingencies (4)
- 1) Mortgage Contingency
- 2) Inspection Contingency
- 3) Property Sale Contingency
- 4) Lienholder Approval
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Mortgage Contingency
- protects the buyer’s Earnest Money if buyer is unable to secure a mortgage of the property
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Contingency that protects the buyer’s Earnest Money if buyer is unable to secure a mortgage of the property
Mortgage Contingency
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Inspection Contingency
- - provides that buyer may
- 1) obtain inspection of the property
- 2) cancel the contract if the inspection an unsatisfactory or unsafe property condition
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Inspection Contingency may include
- - wood-boring insects
- - lead-based paint
- - structural and mechanical system
- - sewage (су'идж - нечистоты) facilities
- - radon or other toxic material
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Property Sale Contingency
- - protects a buyer who has to sell a home in order to buy the seller property
- - protects a buyer from owning 2 homes at the same time
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Contingency that protects a buyer who has to sell a home in order to buy the seller property (from owning 2 homes at the same time)
Property Sale Contingency
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5) Lienholder Approval
- - is contingency
- - if contract in a short sale
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If contract in a short sale what contingency is used?
Lienholder Approval
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Escape Clause
- permits the seller to continue to market the property until all the buyer’s contingencies have been satisfied or removed
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What clause permits the seller to continue to market the property until all the buyer’s contingencies have been satisfied or removed?
Escape Clause
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Can REP recommend sources for any inspection or testing services
- - REP should AVOID recommendation sources for any inspection or testing services
- - better practice to give the client the names of several professionals
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Can REP receive compensation form attorney of a lander?
- REP must NEVER receive compensation form attorney of a lander
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What REP should do if they receive reward from a source (inspection or testing) they recommended?
- if REP receive reward from a source they recommended, they MUST disclose that to a client
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Amendment
- - change or modification to an existing content or words of provisions of a contract
- - amendments must be
- - separately initialed or signed by all parties in the margin prior to (or at) the time contract is signed
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If contract is signed, but there a need to change one of the Contract Provision, what can be done?
- separate agreement can be executed by the parties
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What is the change or modification to an existing content of a contract?
Amendment
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Addendum
- - any provision added to an existing contract
- - must be signed by all parties
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If any provision added to an existing contract, we have ...
Addendum
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Condition Disclosure Law
- - Disclosure of Property Conditions
- - helps consumers make informed decision
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Optionee
- purchaser or tenant
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Options
- - is a contract by which an optionor (owner) gives an optionee (purchaser or tenant) the right to buy or lease the owner’s property at a fixed price w/i a certain time
- - Unilateral Contract
- enforceable by optionee ONLY - - Optionee
- - pays a fee as consideration of the option right
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Contract by which an owner gives an purchaser or tenant the right to buy or lease the owner’s property at a fixed price w/i a certain time
Options
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Vendor
- - Owner/Seller
- - in Owner Financing Contract (Land Contract)
- - retains legal title
- - not obligated to deliver a deed to the buyer until terns of the contract has been satisfied (all payments has been made)
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Vendee
- - Buyer
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- in Owner Financing Contract (Land Contract) - - takes possession
- - gets Equitable Title to the property
- - agrees to
- - give the seller a down payment
- - pay regular monthly installment of principal and interest over a number of years
- - pay RE taxes, insurance, premiums, repairs
- - upkeep no the property
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Owner Financing Contracts or
- - or Land Contract- or Installment Contract
- - or Contract for Deed
- - or Contract of Sale
- - or Bound of Title
- - or Articles of Agreement for Warrant Deed
- - seller provides credit for all of part of the funds
- - allows buyer move forward with the transaction
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Contract for Deed
- - Owner Financing Contracts
- - seller provides credit for all of part of the funds
- - allows buyer move forward with the transaction
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Contract of Sale
- - Owner Financing Contracts
- - seller provides credit for all of part of the funds
- - allows buyer move forward with the transaction
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Bound of Title
- - Owner Financing Contracts
- - seller provides credit for all of part of the funds
- - allows buyer move forward with the transaction
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Installment Contract
- - Owner Financing Contracts
- - seller provides credit for all of part of the funds
- - allows buyer move forward with the transaction
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Land Sales Contract
- - Owner Financing Contracts
- - seller provides credit for all of part of the funds
- - allows buyer move forward with the transaction
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Articles of Agreement for Warrant Deed
- - Owner Financing Contracts
- - seller provides credit for all of part of the funds
- - allows buyer move forward with the transaction
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Land Contract
- - Owner Financing Contracts
- - seller provides credit for all of part of the funds
- - allows buyer move forward with the transaction
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What is another way to help a buyer to complete a transaction if the buyer has insufficient down payment?
- - “take back a second"
- - seller is holding part of the debt as a second mortgage
- - in the event of buyer default
- - lender will still have a priority interest on the property
- - seller will have a secondary interest
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“take back a second"
- - another way to help a buyer complete a transaction
- - useful if the buyer has insufficient down payment
- - seller is holding part of the debt as a second mortgage
- - in the event of buyer default
- - lender will still have a priority interest on the property
- - seller will have a secondary interest
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Purchase Money Mortgage
- seller who finances a sale can make use of a Purchase Money Mortgage
- - buyer
- - receives title to the property immediately
- - but
- - places a security interest on the property – the mortgage – in favor of the seller interest
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Contract may be discharged by... (10)
- 1) Performance
- 2) Partial Performance
- 3) Substantial Performance
- 4) Novation
- 5) Breach
- 6) Failure to enforce contract w/i Statute of Limitations
- 7) Mutual Agreement
- 8) Operation of Law
- 9) Rescission
- 10) Cancellation
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