Term
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Definition
| A legal agreement between two or more parties. This agreement can be in writing, verbal or implied. |
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Term
| Requirements of a Contract |
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Definition
To be enforceable contracts of any type must have ALL of the following requirements:
1. Offer = Proposal
2. Acceptance
3. Consideration
4. Legal Purpose
5. Competent Parties |
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Term
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Definition
| A person who GIVES an offer. Either seller or buyer. |
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Term
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Definition
| A person who RECEIVES an offer. Either the seller or buyer |
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Term
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Definition
An offer made by the offeree to the offeror that contains the same subject matter as the original offer but differs in its terms.
It is a: 1. Rejection of the original offer & 2. a New offer
It is essential to consider:
1. Are you putting the client's interests first?
2. Is this the hill your client is willing to die on? |
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Term
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Definition
| When the offeree refuses to accept the exact terms of the proposal by the offeror AND communicates the rejection to the offeror. |
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Term
| RE Transaction Offer Requirements* |
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Definition
An offer must:
1. Identify the land (usually prop address +TMK)
2. State the price terms
3. Be in writing
An offer can be revoked anytime before acceptance (except for an irrevocable offer ie. Option contract)
Once an offer is rejected, it cannot be accepted. Either party though, can make a new offer. |
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Term
| Terms for Termination of an offer |
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Definition
An offer is terminated if:
-the offer is rejected and the rejection is communicated to the offeror
-the offeree gives a counteroffer
-if either parties die or declared incompetent prior to acceptance of the offer
-the subject matter is destroyed |
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Term
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Definition
| A proposal presented to another party in anticipation of acceptance. |
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Term
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Definition
| When the offeree agrees to the EXACT terms and conditions of the proposed offer. Once an offer is accepted, the terms of the contract are certain and definite. |
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Term
| Terms for Revocation of an offer |
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Definition
| When the offeror withdraws an offer PRIOR TO ACCEPTANCE. Once accepted, a contract is formed and it cannot be revoked. |
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Term
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Definition
| Consists of an offer and acceptance. The occurs when the offeree agrees to the exact terms of the proposed offer, a "meeting of the minds." |
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Term
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Definition
| What a party is willing to give up, in that which he is not legally obligated to give up. i.e) seller=>real prop/buyer=>purchase price. The bargained-for-exchange provided by both parties. |
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Term
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Definition
| A deposit on the property you want to buy. It’s used to show sellers that you are earnest, or very serious, about buying their home. Though it makes an offer stronger, it has no affect on the validity of a contract. |
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Term
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Definition
| A contract must have a legal (law abiding) purpose to be enforceable in court. |
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Term
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Definition
| Parties to a contract must: possess adequate ability to engage in a contract. If a party is under 18 or under the influence, by law, he is incompetent. |
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Term
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Definition
| The Sales Contract (Sales Agreement, RE Contract or Purchase Contract) is used to purchase Real Property. In addition to standard contract requirements, a Sales Contract is required to be in writing. |
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Term
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Definition
| Once a contract is formed (all the legal requirements are met), the contract is enforceable. |
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Term
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Definition
| Occurs when a party defaults under the terms of the contract. If a party breaches a contract, the opposing party has legal remedy. |
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Term
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Definition
| A legal redress which allows a wrong to be corrected. The intent of the remedy is to put the non-breaching party in the same position as if the contract had been fulfilled. A non-breaching party always has the right to seek damages, if he chooses. Even if entitled to an equitable remedy, he cannot seek both. |
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Term
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Definition
| "Title" the buyer receives upon the signing of the sales contracts. "Equitable" means that the buyer has rights and interest in the property, even though the property is not legally titled to the buyer. These rights allow the buyer to seek a remedy should the seller breach contract. |
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Term
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Definition
| Monetary compensation that is awarded by a court in a civil action to an individual who has been injured through the wrongful conduct of another party. |
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Term
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Definition
| Specifically enforcing the contract. As a general rule, applied in breach of contract actions where monetary damages are inadequate, primarily where the contract involves land or a unique chattel (Personal Property). |
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Term
| Breach of Contract: Remedies for the Buyer if the Seller breaches contract |
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Definition
1. Action for Damages: monetary and incidental
2. Specific performance: a court order requiring the contract be carried out according to its terms. |
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Term
| Breach of Contract: Remedies for the Seller if the Buyer breaches contract |
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Definition
1. Action for damages
2. Retaining the deposits AS liquidated damages: by signing the purchase contract the parties agree that the seller can retain all deposit monies if the buyer defaults. |
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Term
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Definition
| Cancelling a contract, by mutual agreement, or by one of the parties having legally sufficient grounds to rescind. The contract is considered void from the beginning, as if there never was a contract. |
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Term
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Definition
A real estate agent must ensure that his client is ALWAYS under a valid and enforceable contract.
There are many ways to terminate a contract:
-By mutual agreement
-When 1 party defaults or doesn't meet a condition of the contract.
-If the subject matter is destroyed
-When the contract expires. |
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Term
| Contract Defenses (against Breach of Contract) |
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Definition
| Ways in which a party can legally avoid an obligation to be contractually bound. |
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Term
| Contract Defense: Statute of Limitations |
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Definition
| The statute of limitations is the time allowed to bring a lawsuit. In Hawaii = 6 yrs. |
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Term
| Contract Defense: Mutual Mistake |
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Definition
| Occurs when both parties entering into a contract are mistaken about facts relating to the agreement. Mutual mistake voids a contract. ex.) Both parties are mistaken about a boundary line |
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Term
| Contract Defense: Misrepresentation* |
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Definition
| Misrepresentation is an untrue statement of fact or a false representation, which is material to the contract. ex.)"Looks like hard wood." |
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Term
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Definition
| An unlawful threat or coercion to induce another person to act. |
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Term
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Definition
| An intentional misstatement of truth or a false representation that the innocent party relied upon and was damaged because of it. |
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Term
| Contract Defense: Incapacity |
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Definition
| Lacking capacity to enter contract. ie.) a minor, intoxicted |
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Term
| Contract Defense: Legally impossible |
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Definition
| When a contract can't be legally enforced |
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Term
| Contract Defense: Statute of Frauds (HRS 656-1)* |
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Definition
| In Hawaii the following must be in writing: 1. Sales Contract (real prop.) 2. Any contract for 1yr+ 3. Listing Agreeement 4. Buyer Representation Agreement 5. Property management agreements & financial obligations regarding real estate transactions |
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Term
| Types of Contracts: Bilateral |
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Definition
| A "Promise for a Promise." ex. I agree to sell my prop to you for $800,00 and you agree to purchase it at that price. |
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Term
| Types of Contracts: Unilateral |
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Definition
| A promise is exchanged for a performance. ex.)$500 reward to find a lost cat. |
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Term
| Types of Contracts: Unilateral:Option Contract |
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Definition
| A person is buying time. The seller (optionor) gives up his right to sell for a time, in exchange the buyer (optionee) promises $. This contract is irrevocable because the basis of the bargain is time. |
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Term
| Types of Contracts: Unilateral:Right of First Refusal |
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Definition
| A written agreement between a person who is wishing to buy real property that is not currently for sale and the prop owner is currently not ready to sell it. The owner grants the prospective buyer an option to buy in the future after the seller receives a bonafide offer from a 3rd party. |
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Term
| Types of Contracts: Void Contract |
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Definition
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Term
| Types of Contracts: Voidable Contract |
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Definition
| A contract that is valid unless voided by one of the parties. That party must have the legal right (defense) to void the contract. |
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Term
| Types of Contracts: Voidable Contract: Hawaii Condominium Statute |
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Definition
| This Hawaii law states that a sale is voidable by the purchaser within 2yrs of the date of sale if false statements or misinformation was made by anyone involved in the sale. |
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Term
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Definition
A contract in which one or both parties has yet to perform.
ex.) A sales contract. When signing a sales contract the buyer does not receive the title to the real property and the seller does not receive the sales price until closing. |
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Term
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Definition
| Implies a written contract |
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Term
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Definition
| A contract that is inferred by conduct of the parties, verbal or by actions. |
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Term
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Definition
| Used to purchase income-producing properties. Commercial contracts are usually more detailed than resid. contracts. |
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Term
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Definition
| A written employment agreement wherby the seller employs the real estate brokerage firm (PB) to represent him. All listing agreements are bilateral since both parties are exchanging promises. Upon signing the listing agreement, the PB attempts to find a buyer willing to pay the highest price for the seller's property on the best terms for the seller. If a sales contract is signed the broker has earned a commission. |
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Term
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Definition
| The seller promises to pay a commission to whatever PB finds a buyer. This is a unilateral contract. The property is not exclusive to any one brokerage firm therefore it is not found in the MLS. (Not lucrative option for firm.) |
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Term
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Definition
| The brokerage firm represents the seller for just 1 day. |
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Term
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Definition
| The seller has a specific price in mind. Anything over the net amount is the commission. A net listing may be construed as a breach of the fiduciary duty to the seller if the broker brings in an offer much higher than the asking price. |
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Term
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Definition
| Gives exclusive rights to a brokerage firm to sell the seller's property. The seller retains the right to also find a buyer without paying commission. |
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Term
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Definition
| Mainly used in Residential Sales. This allows the brokerage firm to receive the commission no matter who finds the buyer, including the seller, himself. This is the most common in Hawaii since the broker is guaranteed a commission. |
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Term
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Definition
| A term that is used to indicate that a listing agreement is never advertised, nor entered into the MLS. In residential listings this is rare (and slightly unethical) since the listing is required to be entered into the MLS within a specified time period. |
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Term
| Listing Contracts: Agreement Clauses |
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Definition
In Hawaii, the Hawaii Exclusive Right-to-Sell agreement, as well as most listing contracts contain terms such as:
1. Seller's agreement to dual agency (if they agree)
2. The listing period
3. The protection period = the agent's safety period. If the property is sold to a buyer within a specific time period after the listing expiration, the agent is owed a commission.
...18. Indemnification to the brokerage firm from the seller if the seller provides false information |
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Term
| Listing Contracts: Termination of Listing agreements |
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Definition
| In the exclusive right-to-sell listing agreement, there is no termination provision besides the expiration date. Other ways to terminate a listing agreement: 1. Fulfillment 2. Mutual agreement 3. Either party defaults 4. Contract cannot be fulfilled 5. Foreclosure 6. Bankruptcy |
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Term
| Contracts: Assignment of rights |
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Definition
| Occurs when a party to a transaction (assignor) gives all of her rights AND interest to a 3rd Party (assignee.) Both the assignor and assignee are liable should the assignee default under contract. |
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Term
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Definition
| Novation is the act of replacing a party to an agreement with a new party. This completely releases the discharged party from any obligation/liability in the original contract. (Mostly used in government.) Requires consent of all parties to the original agreement. |
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Term
Novation: Online Definition
http://legal-dictionary.thefreedictionary.com/novation |
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Definition
The substitution of a new contract for an old one. The new agreement extinguishes the rights and obligations that were in effect under the old agreement.
A novation ordinarily arises when a new individual assumes an obligation to pay that was incurred by the original party to the contract. It is distinguishable from the situation that occurs when another individual makes a guarantee that a debtor will pay what he or she owes to a creditor. In the case of a novation, the original debtor is totally released from the obligation, which is transferred to someone else. The nature of the transaction is dependent upon the agreement between the parties. |
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Term
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Definition
1. In HAWAII it refers to Seller financing with Seller retaining legal title
2. In other states (GENERAL) it refers to the contract used purchase real properts (Purchase contract) |
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