NATIONAL INTERACTIVE STUDY GROUP UNIT 5 QUESTIONS

Transcription

1 NATIONAL INTERACTIVE STUDY GROUP UNIT 5 QUESTIONS

2 National Interactive Study Group 2 SESSION 5 JOHN MATHIS

3 Notes for Tonight 1. PLEASE USE MUTE *6 TO SILENCE YOUR PHONE # 6 TO UNMUTE Chat is the best way to communicate questions.

4 Notes for Tonight If you are a new student please send an to nationalleadinstructor@kaplan.com with New Student in the subject line. 4

5 Notes for Tonight 5 Subject for tonight Contract review

6 QUESTION All of the following are required for a valid contract EXCEPT A. Mutual agreement B. Competent parties C. A legal description D. Consideration 6

7 QUESTION All of the following would make a contract voidable EXCEPT A. A minor is selling a property to her Aunt. B. The seller told the buyer the house has no issues in spite of known environmental issues C. The buyer s can not decide how to take title 7 D. The seller will have to file bankruptcy if the contract does not close.

8 REVIEW 8 Voidable contracts are created when one party is bound by the terms of the contract but the other party is not bound, but the other is (because one party is a minor, or because of fraud, duress, or misrepresentation)

9 Key Points: Contracts Valid Real Estate Contracts must have five essential elements: 1. Competent parties-18, sane and sober 2. Meeting of the minds- mutual agreement 3. Lawful Objective a legal purpose 4. Consideration - money, promise or something of value 5. In writing and signed- unless it is a lease of less than 1 year. Void contracts lack one of the above elements. 9

10 Key Points: Contracts Unilateral only one party bound like an option Bilateral both parties are bound like purchase contract Valid = binding and enforceable Void = not binding and enforceable 10 Voidable = one party is bound but the other party is not bound due to Minor, Fraud, Duress and Misrepresentation.

11 QUESTION The buyer has made an offer which the seller has accepted. The offer is now considered to be A. An executed contract B. A contract as soon as the earnest money is deposited. C. A counter proposal D. An executory contract. 11

12 PHASES OF A CONTRACT Offer Contract Deed Offeree Offeror Close

13 PHASES OF A CONTRACT Offer Contract Deed Offeree Offeror Vendor/Seller Vendee/Buyer Legal title Equitable title Executory Executed Close

14 PHASES OF A CONTRACT Offer Contract Vendor/Seller Legal title Deed Grantor Title Policy Offeree Vendee/Buyer Equitable title Grantee Offeror Executory Executed Close

15 PHASES OF A CONTRACT Offer Contract Vendor/Seller Legal title Deed Grantor Title Policy Offeree Vendee/Buyer Equitable title Grantee Offeror Addenda Executory Executed Attachments Amendments Close

16 PHASES OF A CONTRACT Offer Contract Vendor/Seller Legal title Deed Grantor Title Policy Offeree Vendee/Buyer Equitable title Grantee Offeror Addenda Attachments In the car EM Executory Amendments In the bank Close Executed Buyer gets a credit for EM

17 PRACTICE QUESTION 17 The MLS and all the property advertising lists the installed spa as an exclusion to the sale of a home. The buyer s first contract requests the spa be included, the seller counters to increase the price and remove the spa. After a number of back and forth verbal negotiations the buyer s broker writes a new offer which is accepted. The new contract fails to mention the spa. In this case at closing what will happen to the spa? A. The seller may take it since the buyer was given notice. B. The spa must be left with the property since it is a fixture and was not excluded in the purchase agreement. C. The spa maybe taken since it is personal property and was not included in the purchase agreement D. The seller may take the spa but will need to pay the buyer the cost to replace.

18 PRACTICE QUESTION First determine what the question is asking. THE MLS and all the brokers advertising lists the installed spa as an exclusion to the sale of a home. This tells you it is a fixture the seller wishes to keep The buyer s first contract requests the spa be included, the seller counters to increase the price and remove the spa. Don t need this information After a number of back and forth verbal negotiations the buyer s broker writes a new offer which is accepted. The new contract fails to mention the spa. Key point- a fixture must be excluded if the seller wants to keep it. Since it was not excluded it is the buyers. In this case at closing what will happen to the spa? 18

19 PRACTICE ANSWERS 19 A. The seller may take it since the buyer was given notice. The only notice that counts is in the contract where is not mentioned. B. The spa must be left with the property since it is a fixture and was not excluded in the purchase agreement. Correct answer C. The spa maybe taken since it is personal property and was not included in the purchase agreement Installed, in the question stem, tells you it is fixture so this is incorrect. D. The seller may take the spa but will need to pay the buyer the cost to replace. The seller would have to have some form of written agreement for this to happen.

20 QUESTION A neighbor has approached a owner about the possibility of buying the owner s property in the future. The property owner agrees to give the neighbor a future right. Which document would be in the best interest of the property owner? A. An option B. A lease purchase contract C. A first right of refusal D. A purchase contract dated to close in 5 years. 20

21 OPTION AND FIRST RIGHT REVIEW 21 Sets sales price in the document OPTION YES FIRST RIGHT Actual contract form used YES NO not typically Potential buyer typically pays a fee for the right YES NO NO Greatest benefits goes to Buyer Seller

22 QUESTION 22 A buyer has a liquidated damages contract to purchase a property. All contingencies have been met. The buyer s her agent stating that she has decided not to purchase the property. In this case A. The seller may sue the buyer to buy B. The buyer must close on the property since all contingencies have been met. C. The seller may keep the earnest money and sue the buyer D. The seller may only keep the earnest money.

23 PURCHASE CONTRACT CONTINGENCY REVIEW Contingencies allow the buyer, or sometimes the seller, to complete some action and determine if they will move forward with the purchase or terminate the contract. The buyer must give written notice to terminate before the contract deadline in order have the earnest money returned. The most typical contingencies in purchase contracts are: #1. Financing- requires the buyer to qualify for a loan #2. Inspection- buyer has the right to inspect the property. 23 #3. Appraisal- the property must appraise for the asking price #4. Title work- all property documents pertaining to title are complete and the title appears to be marketable.

24 Notes for Tonight Any questions I missed or that you still have? 24 Remember if you think of something after class you can reach me at : nationalleadinstructor@kaplan.com

25 Notes for Tonight If you are a new student please send an to nationalleadinstructor@kaplan.com 25 with New Student in the subject line.