© OnCourse Learning Chapter 8 : Real Estate Sales Contracts

 to allow time to ascertain that the parties can each perform the terms of the agreement which are written and signed promises to perform. THE PURPOSE SALES CONTRACT © OnCourse Learning

 Shows buyer’s “good faith”  No law governs the amount  Earnest money is not consideration  Not required for valid contract EARNEST MONEY DEPOSIT © OnCourse Learning

 Provision for buyer’s earnest money deposit  Buyer’s offer to purchase  Acceptance of the offer by seller  Provisions for payment of broker fees  Instructions to closing agent  Possession PURCHASE CONTRACTS © OnCourse Learning

 Closing Agent  Prorating  Inspections  Loan Conditions  Property damage  Buyer default  Time limits © OnCourse Learning CONTRACT TERMS

 This is a legal term which means the time limits set by the contract must be faithfully observed or the contract is voidable by the non-defaulting party.  Due to the legal nature of this term, it should not be used by the real estate agent! “TIME IS OF THE ESSENCE” © OnCourse Learning

 Signatures  Acceptance  Notification  Federal Clauses  Preprinted Clauses  Riders  Negotiation © OnCourse Learning ADDITIONAL CONTRACT TERMS

LEAD-BASED PAINT IN HOUSING Approximately three-quarters of the nation's housing built before 1978 contains some lead- based paint. Federal law requires that before a buyer or tenant becomes obligated under a contract for sale or lease the seller or landlord must disclose the possibility of lead-based paint and lead-based paint hazards and provide available reports along with the pamphlet “Protect Your Family From Lead in Your Home.” © OnCourse Learning

 A short purchase contract used to secure a real estate transaction until a more formal contract can be signed. © OnCourse Learning BINDER

 Used to express the mutual intention to buy, sell, lease, develop, or invest  Outlines agreement of terms  No obligation is created LETTER OF INTENT © OnCourse Learning

 If the preprinted form requires extensive cross-outs, changes, and riders, the contract should be drafted by a lawyer.  A real estate license is not a license to practice law. © OnCourse Learning PRACTICING LAW

 Installment Contracts  Option Contracts  Lease with Option to Buy  Right of First Refusal  Exchange Agreements OTHER TYPES OF CONTRACTS © OnCourse Learning

Deed and Installment Contract Compared DeedInstallment Contract BuyerSeller Deed BuyerSeller BuyerSeller BuyerSeller BuyerSeller Deed © OnCourse Learning

Possible Trading Combinations © OnCourse Learning

 The job of the real estate agent is to determine the business details of the transaction and not to practice law!  A real estate license is not a license to practice law. © OnCourse Learning

 Binder  Default  Earnest money deposit  Equitable title  Installment contract  Lease-option  Qualified intermediary  Right of first refusal  Tax-deferred exchange  “Time is of the essence” Key Terms © OnCourse Learning