Print Objectives 1.Explain the legal status and classification of contracts. 2.Discuss the elements of a valid contract and how a contract may be terminated. 3. Identify the primary and secondary provisions of a sales contract. 4. Discuss the Texas promulgated forms, including a broker’s authority to prepare contracts and the specifics of the Texas residential sales contract. 5.Explain option agreements, contracts for deed, and escrow agreements. 1 . Section 9- Real Estate Contracts: Real Estate Contracts 2 . Introduction
Real estate contracts are the legal agreements that underlie the transfer and financing of real estate, as well as the real estate brokerage business. Sale and lease contracts and option agreements are used to transfer real estate interests from one party to another. Mortgage contracts and promissory agreements are part of financing real estate. Listing and representation contracts establish client relationships and provide for compensation. In order to work with real estate contracts, it is essential first to understand the basic concepts that apply to all contracts in general. These concepts provide a foundation for understanding the specifics of particular types of real estate contract. Definition A contract is an agreement between two or more parties who, in a "meeting of the minds," have pledged to perform or refrain from performing some act. A valid contract is one that is legally enforceable by virtue of meeting certain requirements of contract law. If a contract does not meet the requirements, it is not valid and the parties to it cannot resort to a court of law to enforce its provisions. Note that a contract is not a legal form or a prescribed set of words in a document, but rather the intangible agreement that was made in "the meeting of the minds" of the parties to the contract. End of Page In terms of validity and enforceability, a court may construe the legal status of a contract in one of four ways: • Valid • Valid but unenforceable • Void • Voidable Valid A valid contract is one which meets the legal requirements for validity. We’ll talk about the essentials of a valid contract on upcoming screens.
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- Fall '16