Chapter 11

Slide 1Copyright – David A. McGowan

All rights reserved.Revised 7-30-08

Chapter 11 REAL ESTATE CONTRACTS(Page

195)

Voluntary Agreement

Made by legally competent parties

Supported by consideration

To perform a legal act

Chapter 11

Slide 2Copyright – David A. McGowan

All rights reserved.Revised 7-30-08

CONTRACTUAL TERMS (Page 195)

Express contract – specifically stated

Implied contract – created by actions

Bilateral – promise for a promise

Unilateral – promise for an action

Chapter 11

Slide 3Copyright – David A. McGowan

All rights reserved.Revised 7-30-08

CONTRACTUAL TERMS (Page 196)

Seller Seller Buyer

Executory

Contract

Closing

Executed

Equitable TitleFuture Rights to the Title

(Page 215)

Chapter 11

Slide 4Copyright – David A. McGowan

All rights reserved.Revised 7-30-08

CONTRACTUAL TERMS

Earnest Money (Page 205)

Liquidated Damages (Page 215)

Contingencies (Page 215)

Amendments (change)

Addendums (addition) (Page 216)

Chapter 11

Slide 5Copyright – David A. McGowan

All rights reserved.Revised 7-30-08

CONTRACTUAL TERMS (Page 199)

Valid – has all the legal elements

Void – lacks one or more of the legal elements

Unenforceable – has the legal essentials enforceable only between the parties

Voidable – has all the legal elements; may be rescinded by the injured party

Chapter 11

Slide 6Copyright – David A. McGowan

All rights reserved.Revised 7-30-08

Offer & Acceptance

(Mutual Assent or Mutual Consent)(Page 196)Seller is asking $450,000

BuyerOfferor

SellerOfferee$420,000

Seller options

Accept RejectCounter

John Smith

ESSENTIAL ELEMENTS

Buyer

Chapter 11

Slide 7Copyright – David A. McGowan

All rights reserved.Revised 7-30-08

Offer & Acceptance(Mutual Assent or Mutual Consent)

BuyerOfferor

SellerOfferee

Buyer offers$420,000

Buyer options

Accept RejectCounter

Harold DoeJohn Smith

HD$435,000 OfferorOfferee JS

ESSENTIAL ELEMENTS

Buyer Seller

Chapter 11

Slide 8Copyright – David A. McGowan

All rights reserved.Revised 7-30-08

ESSENTIAL ELEMENTS

Consideration

Valuable

Good (Page 197)

Lawful Intent – legal purpose

Chapter 11

Slide 9Copyright – David A. McGowan

All rights reserved.Revised 7-30-08

Competent Parties (Page 198)

Ability to make a rational decision

ESSENTIAL ELEMENTS

Chapter 11

Slide 10Copyright – David A. McGowan

All rights reserved.Revised 7-30-08

DISCHARGE OF CONTRACTS

Performance of a Contract (Page 200)

Assignment (Page 200)

Novation (Page 201)

Chapter 11

Slide 11Copyright – David A. McGowan

All rights reserved.Revised 7-30-08

BREACH OF CONTRACT (Page 201)

RemediesRights of the Seller

Buyer is in Default

Recession

Liquidated Damages

Additional Damages

Specific Performance

Rights of the Buyer

Seller is in Default

Recession

Additional Damages

Specific Performance

Chapter 11

Slide 12Copyright – David A. McGowan

All rights reserved.Revised 7-30-08

DISCHARGE OF CONTRACTS (Page

202)

Impossibility of performance

Mutual agreement

Operation of law

Rescission

Partial performance

Substantial performance

Chapter 11

Slide 13Copyright – David A. McGowan

All rights reserved.Revised 7-30-08

QUINLAN TYSON DECISION

(Page 203)

1966 Illinois Supreme Court decision

Real Estate Licensees are marketing specialists

Complete the blanks in pre-printed contractual forms with factual information

Licensee can cross off a line but never add a line

Chapter 11

Slide 14Copyright – David A. McGowan

All rights reserved.Revised 7-30-08

SPECIALIZED CONTRACTS

Option contract (Page 216)

Grants the purchaser the right to purchase the property at a given price within a certain period of time

Installment contract (Page 217)

Seller financing with buyer receiving possession while the seller holds the legal title until the seller is paid off