Law of Contracts COURSE WORKBOOK
After completing this Chapter, you will be able to:
1) Describe at least two requirements under TRELA.
2) Identify at least two actions that would be considered as
unauthorized practice of law.
3) Describe at least two duties of the broker-lawyer committee.
4) List at least three promulgated contract forms and explain when the
forms are used.
5) Describe the main purpose of the DTPA, and give at least one
example of a violation.
NOTES
1.0 Chapter 01 Learning Objectives
Law of Contracts COURSE WORKBOOK
0:00 - Texas Real Estate License Act (TRELA)
5:00 - TRELA and contracts
NOTES
1.2 Texas Real Estate License Act
Law of Contracts COURSE WORKBOOK
Link to TREC:
https://www.trec.state.tx.us/index.asp
NOTES
1.2.2 Link to TREC
Law of Contracts COURSE WORKBOOK
Link to TRELA:
https://www.trec.state.tx.us/formslawscontracts/rules_codes/rela.asp
NOTES
1.2.3 Link to TRELA
Law of Contracts COURSE WORKBOOK
0:00 - Unauthorized practice of law
7:00 - Realtor code of ethics
12:15 - Factual statements vs unauthorized practice of law
Ethics - Moral principles that govern a person’s or group’s behavior.
NOTES
1.3 Unauthorized Practice of Law
Key Terms to Know
Law of Contracts COURSE WORKBOOK
0:00 - The broker/lawyer committee
NOTES
1.4 The Broker / Lawyer Committee
Law of Contracts COURSE WORKBOOK
0:00 - Using the promulgated contract forms
0:40 - Exceptions to using promulgated contract forms
2:40 - Transactions involving the federal government
4:25 - Buyer or seller provides the contract
8:20 - Broker/lawyer committee contracts for special cases
10:00 - Attorney contracts
11:25 - Summary of exceptions regarding the promulgated contract forms
NOTES
1.5 Use of Promulgated Contract Forms
Law of Contracts COURSE WORKBOOK
Link to TREC promulgated forms:
https://www.trec.state.tx.us/formslawscontracts/forms/forms-contracts.asp
NOTES
1.5.2 Link to TREC Promulgated Forms
Law of Contracts COURSE WORKBOOK
0:00 - Seller disclosures
2:00 - Form OP-H (Optional Seller Disclosure form)
9:00 - When sellers do not have to provide notice (11 exemptions)
NOTES
1.6 Seller Disclosures
Law of Contracts COURSE WORKBOOK
Please refer to page 3 of the Law of Contracts – Supporting Documents
booklet.
NOTES
1.6.2 Seller’s Disclosure of Property
Condition
Law of Contracts COURSE WORKBOOK
0:00 - Deceptive Trade Practices Consumer Protection Act (DTPA)
Punitive Damages - Damages simply for the purpose of punishment.
NOTES
1.7 Deceptive Trade Practices Consumer
Protection Act (DTPA)
Key Terms to Know
Law of Contracts COURSE WORKBOOK
0:00 - Key Terms
1:00 - Broker/lawyer committee
4:00 - Unauthorized practice of law
5:10 - Promulgated contract forms
6:20 - Texas Real Estate License Act (TRELA)
8:00 - Texas Real Estate Commission (TREC)
8:40 - DTPA
NOTES
1.8 Study Info – Part 1
Law of Contracts COURSE WORKBOOK
0:00 - Real estate law
2:10 - Broker/lawyer committee
2:50 - TREC and promulgated forms
3:25 - TREC rules regarding promulgated contract forms
4:00 - Seller disclosures
5:30 - DTPA
NOTES
1.9 Study Info – Part 2
Law of Contracts COURSE WORKBOOK
After completing this Chapter, you will be able to:
1) Discuss the difference between land, real estate, and real property,
and provide at least one example of each.
2) List at least two physical and economic characteristics of real
property.
3) Describe at least three forms of ownership in real property, and
provide an example of each.
4) List at least three forms of businesses that can own real property.
5) List at least four types of subdivisions.
NOTES
2.0 Chapter 02 Learning Objectives
Law of Contracts COURSE WORKBOOK
0:00 - Introduction
2:10 - Key terms to know
NOTES
2.1 Real Property and the Law
Law of Contracts COURSE WORKBOOK
0:00 - Land
2:25 - Real estate
4:00 - Real property and the bundle of rights
8:00 - Title and deeds
10:30 - Sub-surface, surface, and air rights
Land – The material of the earth, whatever may be the ingredients of which
it is composed, whether soil, rock, or other substance, and includes free or
unoccupied space for an indefinite distance upwards as well as downwards.
Real Estate - Land and everything permanently attached to land.
Real Property – Real estate plus the bundle of rights.
Bundle of Rights - The rights of an owner of a freehold estate to possession,
enjoyment, control, and disposition of real property.
Title - The evidence of right which a person has to the ownership and
possession of land, commonly considered as a history of rights.
Deed - A written document by which ownership of land is transferred from
one party to another.
Mineral Rights – The landowner’s ability to take minerals from the earth or
to sell or lease this right to others.
Air Rights - The rights in real property to the reasonable use of the air space
above the surface of the land.
NOTES
2.2 Land, Real Estate, and the Real Property
Key Terms to Know
Law of Contracts COURSE WORKBOOK
Please refer to page 3 of the Law of Contracts – Infographics booklet.
NOTES
2.2.2 Land, Real Estate, Real Property
Infographic
Law of Contracts COURSE WORKBOOK
0:00 - Real property vs Personal property
3:00 - Chattels
4:00 - How to test if an item is personal or real property
7:35 - Deed vs Bill of Sale
9:20 - Manufactured housing
12:30 - Plants
14:20 - Fixtures
17:20 - Personal fixtures vs trade fixtures
Personal Property - All property that is not considered to be real property.
That which is movable (not attached to land).
Chattels – Goods or every species of property movable or immovable which
are not real property.
Bill of Sale – A written instrument given to pass title of personal property
from vendor to vendee.
Mobile Home – A structure transportable in one or more sections, designed
and equipped to contain not more than two dwelling units to be used with
or without a foundation system.
Emblements – The crops and other annual plantings considered to be
personal property of the cultivator.
Fixtures – Personal property that has become real property by having been
permanently attached or adapted to real property.
Trade Fixtures – items that are installed by a commercial tenant and are
removable upon termination of the tenancy.
NOTES
2.3 Real Property vs. Personal Property
Key Terms to Know
Law of Contracts COURSE WORKBOOK
0:00 - Characteristics of real property
0:25 - Economic characteristics of real property
1:55 - Physical characteristics of real property
NOTES
2.4 Characteristics of Real Property
Law of Contracts COURSE WORKBOOK
0:00 - Ownership in real estate
1:00 - Ownership in severalty
1:50 - Tenancy in common
4:05 - Joint tenancy
5:10 - Tenancy by the entirety
6:05 - Community property
7:45 - Trusts
Severalty Ownership - Owned by one person only. Sole ownership.
Tenancy in Common - An estate or interest in land held by two or more
persons, each having equal rights of possession and enjoyment, but without
any right of succession by survivorship between the owners.
Joint Tenancy - Two or more natural persons own that comes with a special
benefit called the right of survivorship.
Undivided ownership of a property interest by two or more persons each of
whom has a right to an equal share in the interest and a right of
survivorship, i.e., the right to share equally with other surviving joint tenants
in the interest of a deceased joint tenant.
Right of Survivorship - The right of a surviving tenant or tenants to succeed
to the entire interest of the deceased tenant; the distinguishing feature of a
joint tenancy.
Tenancy by the Entirety - Ownership by married persons where each owns
the entire estate with the survivor taking the whole estate upon the death
of the other.
NOTES
2.5 Forms of Real Estate Ownership
Key Terms to Know
Law of Contracts COURSE WORKBOOK
Community Property - Property acquired by husband and/or wife during a
marriage when not acquired as the separate property of either spouse.
Each spouse had equal rights of management, alienation, and testamentary
disposition of community property.
Trusts – A legal device whereby one person transfers ownership of property
to someone else to hold or manage for the benefit of a third party.
Trustee – One who holds property in trust for another to secure the
performance of an obligation. Third party under a deed of trust.
Trustor – One who borrows money from a trust deed lender, then deeds
the real property securing the loan to a trustee to be held as security until
trustor has performed the obligation to the lender under terms of a deed of
trust.
Beneficiary – One entitled to the benefit of a trust.
NOTES
2.5 Forms of Real Estate Ownership
(continued)
Key Terms to Know
Law of Contracts COURSE WORKBOOK
0:00 - Partnerships
1:35 - Corporation
3:05 - Limited Liability Company (LLC)
Partnership – An association of two or more people who operate a business
as co-owners and share in the business profits and losses.
Corporation – An entity established and treated by law as an individual or
unit with rights and liabilities, or both, distinct and apart from those of the
persons composing it. A corporation is a creature of law having certain
powers and duties of a natural person. Being created by law it may
continue for any length of time the law prescribes.
Limited Liability Company (LLC) – A business structure that combines the
pass-through taxation of a partnership or sole proprietorship with the
limited liability of a corporation.
NOTES
2.6 Ownership of Real Estate by Business
Organizations
Key Terms to Know
Law of Contracts COURSE WORKBOOK
0:00 - Condominiums
1:10 - Cooperative
2:20 - Time-shares
Condominium – A form of ownership of real property recognized in all
states that consists of individual ownership of some aspects and co-
ownership in other aspects of the property.
Cooperative – A form of ownership in which stock holders in a corporation
occupy property owned by the corporation under a lease.
Time-Share - A license or contractual or membership right of occupancy in a
project which is not coupled with an estate in the real property.
NOTES
2.7 Condominiums, Cooperative,
Townhouses, and Time-Shares
Key Terms to Know
Law of Contracts COURSE WORKBOOK
Please refer to page 4 of the Law of Contracts – Infographics booklet.
NOTES
2.7.2 Subdivisions Infographic
Law of Contracts COURSE WORKBOOK
0:00 - Laws affecting real estate
3:00 - Texas Real Estate License Act (TRELA)
NOTES
2.8 Laws Affecting Real Estate
Law of Contracts COURSE WORKBOOK
After completing this Chapter, you will be able to:
1) Discuss the difference between a performance and forbearance
contract, and provide an example of each.
2) Discuss the difference between an express and implied contract.
3) Explain the difference between a valid, void, voidable, and
unenforceable contract.
4) Summarize the essential elements of a valid contract, and provide
an example of each.
5) List at least three ways a contract can be terminated.
NOTES
3.0 Chapter 03 Learning Objectives
Law of Contracts COURSE WORKBOOK
0:00 - Introduction
1:50 - What is a contract
3:00 - Performance contract
4:10 - Forbearance contract
5:10 - Option contract
Contract – A legally enforceable agreement to do, or not to do something.
Option – An irrevocable right to buy a property at an agreed upon price.
NOTES
3.1 Contracts
Key Terms to Know
Law of Contracts COURSE WORKBOOK
0:00 - Express and implied contracts
1:35 - Statute of frauds
2:40 - Implied contracts
Express Contract – A contract that has been put into words, either spoken
or written.
Implied Contract – An agreement that has not been put into words, but is
implied by the actions of the parties.
Statute of Frauds – A State law, based on an Old English statute, requiring
certain contracts to be in writing and signed before they will be enforceable
at law, e.g. contracts for the sale of real property, contracts not be
performed within one year.
NOTES
3.2 Express or Implied Contracts
Key Terms to Know
Law of Contracts COURSE WORKBOOK
0:00 - Bilateral contracts
1:05 - Unilateral contracts
2:10 - Independent Contractor Agreement (Bilateral contract)
3:10 - Leases (Bilateral contract)
3:40 - Option to terminate (Unilateral contract)
5:40 - Listing agreements
8:00 - Buyer and tenant representation agreements
Bilateral Contract – A contract in which each party promises to do
something.
Unilateral Contract – When one party promises to do something if the other
party performs a certain act, but the other party does not promise to
perform it; the contract is formed only if the other party does perform the
requested act.
Listing Contract – A contract in which a property owner employs a real
estate broker to market the property described in the contract.
NOTES
3.3 Unilateral or Bilateral Contracts
Key Terms to Know
Law of Contracts COURSE WORKBOOK
0:00 - Executed contract
0:35 - Executory contract
Executed Contract – A contract that has been fully performed.
Executory Contract – A contract in which something remains to be done by
one or both of the parties.
NOTES
3.4 Executed or Executory Contracts
Key Terms to Know
Law of Contracts COURSE WORKBOOK
0:00 - Essential elements of a valid contract
1:10 - Offer and acceptance
1:45 - Consideration
2:45 - Consent
3:10 - Legal purpose
4:20 - Legally competent parties
5:10 - Statue of frauds (contracts must be in writing)
Consideration - Anything given or promised by a party to include another to
enter into a contract, e.g., personal services or even love and affection. It
may be a benefit conferred upon one party or a detriment suffered by the
other.
NOTES
3.5 Elements of a Valid Contract
Key Terms to Know
Law of Contracts COURSE WORKBOOK
0:00 - Valid contracts
0:45 - Void contracts
1:05 - Voidable contracts
1:15 - Unenforceable contracts
1:30 - Voidable contracts and minors
Valid – Having force, or binding force; legally sufficient and authorized by
law.
Void – To have no force or effect; that which is unenforceable.
Voidable – That which is capable of being adjusted void, but is not unless
action is taken to make it so.
NOTES
3.6 Valid, Void, Voidable & Unenforceable
Contracts
Key Terms to Know
Law of Contracts COURSE WORKBOOK
0:00 - Terminating of a contract
0:35 - Discharge a contract
1:00 - Assignment
1:35 - Novation
1:50 - Breach of contract
2:15 - Other ways to terminate a contract
2:40 - Partial performance
3:10 - Substantial performance
3:30 - Impossibility of performance
3:50 - Mutual agreement
4:00 - Operation of law
Assignment – A transfer of benefits and obligations within a contract to a 3rd
party who is not originally a party to the contract.
Novation – The substitution or exchange of a new obligation or contract for
an old one by the mutual agreement of the parties.
Breach of Contract – A violation of the terms or conditions of a contract
without a legal excuse.
Rescission of Contract – The abrogation or annulling of contract; the
revocation or repealing of contract by mutual consent by parties to the
contract, or for cause by either party to the contract.
NOTES
3.7 Termination of Contracts
Key Terms to Know
Law of Contracts COURSE WORKBOOK
After completing this Chapter, you will be able to:
1) List the four governmental powers in real property, and provide an
example of each.
2) Describe at least three types of freehold estates.
3) Describe at least four types of liens.
4) Describe at least three types of easements in detail.
5) Explain the difference between riparian and littoral rights.
NOTES
4.0 Chapter 04 Learning Objectives
Law of Contracts COURSE WORKBOOK
0:00 - Objectives
2:25 - Key terms to know
NOTES
4.1 Objectives & Key Terms
Law of Contracts COURSE WORKBOOK
0:00 - Introduction to government powers
5:00 - PETE
6:05 - Police power
13:00 - Eminent domain
17:35 - Taxation
19:40 - Escheat
Police Power – The right of any political body to enact laws and enforce
them, for the order, safety, health, morals and general welfare of the public.
Eminent Domain – A right of the government to acquire property for
necessary public use by condemnation; the owner must be fairly
compensated.
Condemnation – Taking private property for public use, with fair
compensation to the owner; exercising the right of eminent domain.
Escheat – The reversion of the State of property in event the owner thereof
abandons it or dies, without leaving a will and has no distributes to whom
the property may pass by lawful descent.
Taxation – A charge on real estate to raise funds to meet public needs.
Administrator – A person appointed by the probate court to administer the
estate of a deceased person who died intestate.
NOTES
4.3 Governmental Powers
Key Terms to Know
Law of Contracts COURSE WORKBOOK
Please refer to page 5 of the Law of Contracts – Infographics booklet.
NOTES
4.3.2 PETE - Infographic
Law of Contracts COURSE WORKBOOK
0:00 - Freehold estates
1:20 - Fee Simple Estates / Fee Simple Absolute
1:50 - Fee Simple Defeasible estate
3:10 - Life estates
Freehold Estate – An estate of indeterminable duration, e.g., fee simple or
life estate.
Fee Simple Estate – Absolute ownership of real property; a person has this
type of estate where the person is entitled to the entire property with
unconditional power of disposition during the person’s life and descending
to the person’s heirs or distributes.
Fee Simple Absolute – An inheritable estate in land providing the greatest
interest of any form of title.
Fee Simple Determinable – An estate that will end automatically when the
stated event or condition occurs. The interest will revert to the grantor or
the heirs of the grantor.
Remainderman – A person who inherits or is entitled to inherit property
upon the termination of the estate of the former owner.
Life Estate – A freehold estate created for the duration of the life or lives of
certain named persons; a non-inheritable estate.
Life Tenant – The owner of a life estate.
Estate in Reversion – Property or estate ownership that reverts back to the
grantor after a temporary ownership period.
NOTES
4.4 Estates in Land
Key Terms to Know
Law of Contracts COURSE WORKBOOK
Estate in Remainder – An estate which vests after the termination of the
prior estate.
Reversionary Interest – The interest which a person has in lands or other
property, upon the termination of the preceding estate. A future interest.
Dower – A wife’s interest in her husband’s real property.
Curtsey – A husband’s interest in the real property of his wife.
NOTES
4.4 Estates in Land (continued)
Key Terms to Know
Law of Contracts COURSE WORKBOOK
Please refer to page 6 of the Law of Contracts – Infographics booklet.
NOTES
4.4.2 Freehold Estates - Infographic
Law of Contracts COURSE WORKBOOK
0:00 - Homestead exemptions
Homestead – A legal life estate in land that is owned and occupied as a
family home.
NOTES
4.5 Homestead
Key Terms to Know
Law of Contracts COURSE WORKBOOK
0:00 - Encumbrances
1:00 - Liens
1:38 - Tax liens
2:25 - Mortgage lien
2:50 - Mechanic’s lien
3:25 - Deed restrictions / Covenants, Conditions, & Restrictions (CC&Rs)
4:30 - Easements
5:35 - Easement in gross
6:05 - Easement by necessity
7:50 - Easement by prescription
10:00 - Terminating an encumbrance
11:30 - License
12:35 - Encroachment
Encumbrance – A claim, charge, or liability that attaches to, and is binding
on real estate.
Lien – A claim against a property that provides security for the repayment of
a debt or an obligation of the property owner.
Voluntary Lien – Any lien placed on property with consent of, or as a result
of, the voluntary act of the owner.
Involuntary Lien – A lien imposed against property without consent of an
owner (ex: taxes, special assessments, federal income tax liens, etc..).
Mechanic’s Lien – A specific lien that gives security to persons or companies
who perform labor or furnish material to improve real property.
NOTES
4.6 Encumbrances
Key Terms to Know
Law of Contracts COURSE WORKBOOK
Tax Lien – An encumbrance against a property filed by the taxing
jurisdiction for delinquency in paying real property taxes.
Covenants, Conditions, and Restrictions (CC&Rs) – The basic rules
establishing the rights and obligations of owners of real property within a
subdivision or other tract of land in relation to other owners within the
same subdivision or tract and in relation to an association of owners
organized for the purpose of operating and maintaining property commonly
owned by the individual owners.
Easement – A right acquired by one party to use the land of another party
for a special purpose.
Easement in Gross –A right of use in the land of another without the
requirement that the holder of the right own adjoining land.
Easement by Necessity – Exists when a landowner has no access to roads
and is landlocked.
Easement by Prescription – Obtained by use of the land of another for the
legally prescribed length of time.
Servient Tenement – Land encumbered by an easement.
Dominant Tenement – Land benefiting from an easement appurtenant.
Encroachment - An unlawful intrusion onto another’s adjacent property by
improvements to real property; e.g. a swimming pool built across a property
line.
NOTES
4.6 Encumbrances (continued)
Key Terms to Know
Law of Contracts COURSE WORKBOOK
Please refer to page 7 of the Law of Contracts – Infographics booklet.
NOTES
4.6.2 Easements - Infographic
Law of Contracts COURSE WORKBOOK
0:00 - Riparian rights
0:40 - Littoral rights
1:20 - Erosion
1:45 - Accretion
2:15 - Avulsion
2:35 - Doctrine of prior appropriation
Riparian Rights – The rights of a land owner or land occupier to use flowing
water (such as a river) that is adjacent to the land.
Littoral Rights – The right of a property owner whose land borders on a
body of water, such as a lake, ocean or sea, to reasonable use and
enjoyment of the shore and water the property borders on.
Erosion – The eating away of a coastline or land by the action of water, ice,
and/or wind, or wearing away of a surface by corrosion or traffic.
Accretion – The increasing in land area resulting from the deposit of soil by
the natural action of the water.
Avulsion – A sudden and perceptible loss of land by the action of water as
by a sudden change in the course of a river.
NOTES
4.7 Water Rights
Key Terms to Know
Law of Contracts COURSE WORKBOOK
0:00 - Mineral rights
Mineral Rights – The landowner’s ability to take minerals from the earth or
to sell or lease this right to others.
NOTES
4.8 Mineral Rights
Key Terms to Know
Law of Contracts COURSE WORKBOOK
0:00 - Lead-based paint disclosure
1:20 - Asbestos
Asbestos – A fibrous mineral found in many building materials that when
improperly disturbed, can cause serious lung diseases.
Friable – A quality of some asbestos that causes it to crumble, allowing toxic
particles to escape into the air and lodge in people’s lungs.
NOTES
4.9 Environmental Issues
Key Terms to Know
Law of Contracts COURSE WORKBOOK
After completing this Chapter, you will be able to:
1) Discuss the difference between a unilateral and bilateral contract,
and provide at least one example of each.
2) List at least three ways a contract can be discharged.
3) Summarize the types of listing contracts used in residential
transactions.
4) Describe at least two ways a listing contract may be terminated.
5) Describe the agency relationship created by a Buyer Agency
Agreement.
6) State at least three types of leases, and provide at least one
example of each.
NOTES
5.0 Chapter 05 Learning Objectives
Law of Contracts COURSE WORKBOOK
0:00 - Introduction
2:50 - Learning objectives
5:40 - Key terms
NOTES
5.1 Objectives & Key Terms
Law of Contracts COURSE WORKBOOK
0:00 - Real estate contracts / TREC website
NOTES
5.2 Real Estate Contracts
Law of Contracts COURSE WORKBOOK
0:00 - Contract basics
2:20 - Types of real estate contracts
6:00 - Essential elements of a contract
NOTES
5.3 Contract Law
Law of Contracts COURSE WORKBOOK
0:00 - Discharging a contract
0:40 - Fully performed contract
1:15 - Assignment of contract
2:50 - Novation
3:25 - Breach of contract
5:15 - Statute of limitations
7:00 - Partial performance
7:30 - Substantial performance / impossibility to perform
9:00 - Mutual agreement / operation of law
9:35 - Rescission
Statute of Limitations – A law establishing the time period within which
certain lawsuits may be brought.
NOTES
5.4 Discharge of Contracts
Key Terms to Know
Law of Contracts COURSE WORKBOOK
Please refer to page 8 of the Law of Contracts – Infographics booklet.
NOTES
5.4.2 Discharge of Contracts - Infographic
Law of Contracts COURSE WORKBOOK
0:00 - Listing agreements
5:00 - Buyer agency agreement
5:55 - Real estate sales contracts
7:00 - Option agreements
8:55 - Escrow agreements
Listing Contract – A contract in which a property owner employs a real
estate broker to market the property described in the contract.
NOTES
5.5 Listing Agreements, Options & Purchase
Overview
Key Terms to Know
Law of Contracts COURSE WORKBOOK
0:00 - Leases
1:30 - Land contracts
2:25 - Contracts and copyrights
NOTES
5.6 Leases, Land and Other Agreements
Law of Contracts COURSE WORKBOOK
0:00 - The Listing Agreement
4:30 - Ready, willing, and able buyer
7:00 - Exclusive right to sell agreement
10:50 - Exclusive agency agreement
14:30 - Open listing
Exclusive Agreement (Exclusive Right to Sell Listing Agreement) – A listing
given to only one broker who is entitled to the commission if anyone sells
the property during the term of the listing contract.
Non-Exclusive Listing (Open Listing) – A listing given to one or more brokers
in which the broker procuring a sale is entitled to the commission but
imposes no commission obligation on the owner when the owner sells the
property.
NOTES
5.7.1 Listing Agreement Types – Part 1
Key Terms to Know
Law of Contracts COURSE WORKBOOK
0:00 - Open listing / unilateral agreement
3:40 - Provisions in listing agreement / MLS clause
11:00 - Net listing
Multiple Listing Service (MLS) – An association of real estate agents
providing for a pooling of listings and the sharing of commission on a
specified basis.
NOTES
5.7.2 Listing Agreement Types – Part 2
Key Terms to Know
Law of Contracts COURSE WORKBOOK
0:00 - Terminating a listing agreement
NOTES
5.8 Listing Agreement Termination
Law of Contracts COURSE WORKBOOK
Please refer to page 6 of the Law of Contracts – Supporting Documents
booklet.
NOTES
5.9.1 Residential Real Estate Listing
Agreement Exclusive Right to Sell
Law of Contracts COURSE WORKBOOK
Please refer to page 14 of the Law of Contracts – Supporting Documents
booklet.
NOTES
5.9.2 Residential Real Estate Listing
Agreement Exclusive Right to Lease
Law of Contracts COURSE WORKBOOK
0:00 - Buyer agency agreement
1:00 - Residential Real Estate Listing Agreement: Exclusive Right to Sell
13:30 - Residential Real Estate Listing Agreement: Exclusive Right to Lease
Buyer Agency Agreement – An employment contract that appoints a
brokerage firm as a buyer’s agent for the purpose of finding a suitable
property for the buyer.
NOTES
5.9.3 Buyer Agency Agreement – Sell and
Lease
Key Terms to Know
Law of Contracts COURSE WORKBOOK
Please refer to page 25 of the Law of Contracts – Supporting Documents
booklet.
NOTES
5.10.1 Residential Buyer/Tenant
Representation Agreement
Law of Contracts COURSE WORKBOOK
0:00 - Buyer Representation Agreement
NOTES
5.10.2 Buyer Representation Agreement
Law of Contracts COURSE WORKBOOK
0:00 - Leasing real estate
1:30 - Leasehold estates
2:20 - Estate for years
2:35 - Estate for period to period
2:45 - Estate at Will / Estate at Sufferance
Lease – A contract between owner and tenant, setting forth conditions
upon which tenant may occupy and use the property and the term of the
occupancy. Sometimes used as an alternative to purchasing property
outright, as a method of financing right to occupy and use real propriety.
Estate for Years – An interest in land by virtue of a contract for the
possession of them for a definite and limited period of time. May be for a
year or less. A lease may be said to be an estate for years.
Estate From Period to Period – An interest in land where there is no
definite termination date but the rental period is fixed at a certain sum per
week, month, or year. Also called a periodic tenancy.
Tenancy at Will – A property tenure that can be terminated at any time by
either the tenant or the owner (landlord). It exists without a contract or
lease, and is unspecific in duration or the exchange of payment.
Estate at Sufferance – An estate arising when the tenant wrongfully holds
over after the expiration of the term. The landlord has the choice of
evicting the tenant as a trespasser or accepting such tenant for a similar
term under the conditions of the tenant’s previous holding. Also called a
tenancy at sufferance
NOTES
5.11 Leasing Real Estate & Leasehold
Estates
Key Terms to Know
Law of Contracts COURSE WORKBOOK
0:00 - A lease
2:00 - Statute of frauds
3:40 - Leasehold estates
4:30 - Types of leasehold estates
5:30 - Requirements of a valid lease agreement
Lessor – An owner who enters into a lease agreement with a tenant; a
landlord.
Lessee – One who contracts to rent, occupy, and use property under a lease
agreement; a tenant.
Statute of Frauds – A State law, based on an Old English statute, requiring
certain contracts to be in writing and signed before they will be enforceable
at law, e.g. contracts for the sale of real property, contracts not be
performed within one year.
Leasehold Estate – A tenant’s right to occupy real estate during the term of
the lease. This is a personal property interest.
NOTES
5.12.1 Leasing – Part 1
Key Terms to Know
Law of Contracts COURSE WORKBOOK
Please refer to page 9 of the Law of Contracts – Infographics booklet.
NOTES
5.12.1.2 Less Than Freehold Estates -
Infographic
Law of Contracts COURSE WORKBOOK
0:00 - Lease terms
2:15 - Security deposits
6:50 - Accessibility
10:30 - Maintenance of the property
12:20 - Assignment and sub-leasing
13:00 - Options
Security Deposit – A sum of money that the landlord requires of the tenant
prior to the lease; it is to be refunded at the end of the lease based on the
condition of the premises.
Commingling – The illegal mixing of personal funds with money held in trust
on behalf of a client.
Assignment – The transfer of legal rights and obligations by one party to
another.
Sublease – The transfer of only part of a lease term with reversion to the
lessee; a lesser lease estate.
NOTES
5.12.2 Leasing – Part 2
Key Terms to Know
Law of Contracts COURSE WORKBOOK
0:00 - Gross lease
2:55 - Net lease
3:30 - Percentage lease
5:25 - Variable lease
6:55 - Ground lease
7:10 - Sandwich lease
7:45 - Oil & gas lease
Gross Lease – A lease in which the lessor pays all costs of operating and
maintaining the property and real property taxes.
Net Lease – A lease requiring a lessee to pay charges against the property
such as taxes, insurance and maintenance costs in addition to rental
payments.
Percentage Lease – Lease on the property, the rental for which is
determined by amount of business done by the lessee; usually a percentage
of gross receipts from the business with provisions for a minimum rental.
Graduated Lease – Lease which provides for a varying rental rate, often
based upon future determination; sometimes rent is based upon result of
periodical appraisals; used largely in long-term leases.
Ground Lease – An agreement for the use of land only, sometimes secured
by improvements placed on the land by the user.
NOTES
5.13 Different Types of Leases
Key Terms to Know
Law of Contracts COURSE WORKBOOK
Please refer to page 10 of the Law of Contracts – Infographics booklet.
NOTES
5.13.2 Types of Leases - Infographic
Law of Contracts COURSE WORKBOOK
0:00 - Discharging a lease / expiration of the lease
0:45 - Agreement between tenant and landlord
7:00 - Operation of law
NOTES
5.14 Lease Termination
Law of Contracts COURSE WORKBOOK
0:00 - Options
2:55 - 2 parties to an option
Optionor – A person who gives an option.
Optionee – A person who receives an option.
NOTES
5.15 Options
Key Terms to Know
Law of Contracts COURSE WORKBOOK
Please refer to page 29 of the Law of Contracts – Supporting Documents
booklet.
NOTES
5.17.1 Residential Lease
Law of Contracts COURSE WORKBOOK
0:00 - Residential lease agreement
NOTES
5.17.2 Residential Lease Agreement
Law of Contracts COURSE WORKBOOK
After completing this Chapter, you will be able to:
1) Explain how and when the One to Four Family Residential Contract
(Resale) is used.
2) Describe the importance of at least three paragraphs of the One to
Four Family Residential Contract (Resale).
3) Describe at least two ways earnest money is used in a transaction.
4) List at least three types of deeds and explain how each is used.
5) Describe at least two actions that may lead to a breach of contract.
NOTES
6.0 Chapter 06 Learning Objectives
Law of Contracts COURSE WORKBOOK
0:00 - The real estate transaction process
0:35 - Making the offer
5:00 - Submitting the contract to the other seller’s broker
8:55 - Accepting the offer
NOTES
6.2 Offer and Acceptance
Law of Contracts COURSE WORKBOOK
0:00 - Statute of frauds / parole evidence rule
Statute of Frauds – A State law, based on an Old English statute, requiring
certain contracts to be in writing and signed before they will be enforceable
at law, e.g. contracts for the sale of real property, contracts not be
performed within one year.
NOTES
6.3 Statute of Frauds
Key Terms to Know
Law of Contracts COURSE WORKBOOK
Please refer to page 11 of the Law of Contracts – Infographics booklet.
NOTES
6.3.2 Statute of Frauds - Infographic
Law of Contracts COURSE WORKBOOK
0:00 - The sales contract / conditions for closing
3:00 - Offer vs a contract
4:45 - The mailbox rule
6:25 - Parties to the contract
7:30 - Essential elements of a contract
Constructive Notice – Notice of the condition of title to real property given
by the official records of a government entity which does not require actual
knowledge of the information.
Vendor – A seller.
Vendee – a purchaser; buyer.
NOTES
6.4 The Document
Key Terms to Know
Law of Contracts COURSE WORKBOOK
Please refer to page 12 of the Law of Contracts – Infographics booklet.
NOTES
6.4.2 Essential Elements of a Valid Contract -
Infographic
Law of Contracts COURSE WORKBOOK
0:00 - Financing
0:20 - Earnest money deposit
Earnest Money – Down payment made by a purchaser of real estate as
evidence of good faith. A deposit or partial payment.
NOTES
6.5 Financing Information
Key Terms to Know
Law of Contracts COURSE WORKBOOK
0:00 - Conveyance of property / deeds
NOTES
6.6 Conveyance of Property
Law of Contracts COURSE WORKBOOK
0:00 - Default of contract
Breach of Contract – A violation of the terms or conditions of a contract
without a legal excuse.
NOTES
6.7 Default and Breach of Contract
Key Terms to Know
Law of Contracts COURSE WORKBOOK
Please refer to page 13 of the Law of Contracts – Infographics booklet.
NOTES
6.7.2 Contract Remedies - Infographic
Law of Contracts COURSE WORKBOOK
Please refer to page 43 of the Law of Contracts – Supporting Documents
booklet.
NOTES
6.8.1 One to Four Family Residential
Contract - Resale
Law of Contracts COURSE WORKBOOK
0:00 - One to Four Family Residential Contract (Resale) review
0:30 - The parties
2:20 - The property / legal description
3:30 - The improvements / accessories / exclusions
5:00 - Financing
8:00 - Earnest money
9:10 - Title policy
9:50 - The survey
10:30 - Title notices
10:55 - Seller disclosure notice
NOTES
6.8.2 The Sales Contract – Part 1
Law of Contracts COURSE WORKBOOK
0:00 - Residential service contract (home warranty)
1:55 - Broker fees
2:10 - The closing
4:25 - Special provisions
5:20 - Settlement
6:00 - Proration
8:00 - Addendum
9:00 - Termination option
10:00 - Attorney consultation
10:30 - Signatures
11:30 - Broker’s information
NOTES
6.8.3 The Sales Contract – Part 2
Law of Contracts COURSE WORKBOOK
After completing this Chapter, you will be able to:
1) Summarize at least three contingencies commonly found in a sales
contract.
2) Explain the difference between an addendum and an amendment.
3) List at least two types of addenda in a residential contract, and
describe the purpose of each.
NOTES
7.0 Chapter 07 Learning Objectives
Law of Contracts COURSE WORKBOOK
0:00 - Introduction
0:50 - Learning objectives
2:05 - Key terms
NOTES
7.1 Goals & Key Terms
Law of Contracts COURSE WORKBOOK
0:00 - Contingencies
5:15 - Elements of a contingency
7:15 - Mortgage contingency
13:00 - Appraisal contingency
NOTES
7.2.1 Contingencies – Part 1
Law of Contracts COURSE WORKBOOK
0:00 - Appraisal contingency
1:20 - Title contingency
2:15 - Homeowners contingency
3:10 - Inspection contingency
14:00 - Property sale contingency
15:45 - Other contingencies
NOTES
7.2.2 Contingencies – Part 2
Law of Contracts COURSE WORKBOOK
Pease refer to page 52 of the Law of Contracts – Supporting Documents
booklet.
NOTES
7.3.1 TREC Amendment
Law of Contracts COURSE WORKBOOK
0:00 - Amendments vs addenda
2:30 - Amendment form
NOTES
7.3.2 Amendments
Law of Contracts COURSE WORKBOOK
Pease refer to page 53 of the Law of Contracts – Supporting Documents
booklet.
NOTES
7.4.1 Third Party Financing Addendum
Law of Contracts COURSE WORKBOOK
0:00 - Addenda forms
2:10 - 3rd Party Financing Addendum form
Addendum – Additional pages of material that are added to and become
part of a contract.
NOTES
7.4.2 Addenda
Key Terms to Know
Law of Contracts COURSE WORKBOOK
After completing this Chapter, you will be able to:
1) Identify the parties to a mortgage, and explain each of their roles in
detail.
2) Identify the parties to a deed of trust, and explain each of their roles
in detail.
3) Explain the difference between judicial and non-judicial foreclosure.
4) Explain the difference between the primary and secondary
mortgage markets.
5) Describe at least two types of loans used in residential transactions.
NOTES
8.0 Chapter 08 Learning Objectives
Law of Contracts COURSE WORKBOOK
0:00 - Introduction
1:00 - Lesson objectives
2:30 - Key terms
NOTES
8.1 Goals & Key Terms
Law of Contracts COURSE WORKBOOK
0:00 - Mortgage law
1:40 - Title theory states
3:55 - Lien theory states
5:30 - Modified lien theory
Mortgage – An instrument recognized by law by which property is
hypothecated to secure the payment of a debt or obligation; a procedure
for foreclosure in event of default is established by statute.
Mortgagor – One who gives a mortgage on his or her property to secure a
loan or assure performance of an obligation; a borrower.
Mortgagee – One to whom a mortgagor gives a mortgage to secure a loan
or performance of an obligation; a lender or creditor.
NOTES
8.2 Mortgage Law
Key Terms to Know
Law of Contracts COURSE WORKBOOK
0:00 - Promissory note
2:20 - Elements of a promissory note
Promissory Note – A borrower’s personal promise to pay a debt according
to the agreed terms.
Usury – On a loan, claiming a rate of interest greater than that permitted by
law.
Prepayment Penalty – The charge payable to a lender by a borrower under
the terms of the loan agreement if the borrower pays off the outstanding
principal balance of the loan prior to its maturity.
NOTES
8.3 Promissory Note
Key Terms to Know
Law of Contracts COURSE WORKBOOK
0:00 - Mortgage vs deed of trust
6:30 - Duties of a mortgagor or trustor
Deed of Trust – A legal document by which a borrower pledges certain real
property or collateral as guarantee for the repayment of a loan. It differs
from the mortgage in a number of important respects. For example, instead
of their being two parties to the transaction there are three. There is the
borrower who signs the trust deed and who is called the trustor. There is
the third, neutral party, to whom trustor deeds the property as security for
the payment of the debt, who is called the trustee. And, finally, there is the
lender who is called the beneficiary, the one who benefits from the pledge
agreement in that in the event of a default the trustee can sell the property
and transfer the money obtained at the sale to lender as payment of the
debt.
Trustor – One who borrows money from a trust deed lender, then deeds
the real property securing the loan to a trustee to be held as security until
trustor has performed the obligation to the lender under terms of a deed of
trust.
Beneficiary – The lender on the security of a note and deed of trust.
Trustee – One who holds property in trust for another to secure the
performance of an obligation. Third party under a trust.
NOTES
8.4.1 Mortgage or Deed of Trust – Part 1
Key Terms to Know
Law of Contracts COURSE WORKBOOK
Pease refer to page 14 of the Law of Contracts – Infographics booklet.
NOTES
8.4.1.2 Mortgage vs Deed of Trust -
Infographic
Law of Contracts COURSE WORKBOOK
0:00 - Duties of a trustor
2:30 - Provision for default / acceleration clause
5:00 - Assignment of mortgage
5:30 - Release of mortgage lien or deed of trust
6:50 - Tax and insurance reserves
8:20 - ‘Subject-to’
9:00 - Assumption
10:30 - Alienation clause
12:00 - Recording the mortgage / deed of trust
13:00 - Priority of mortgage liens
Acceleration Clause – A condition in a real estate financing instrument
giving the lender the power to declare all sums owing lender immediately
due and payable upon the happening of an event, such as sale of the
property, or a delinquency in the repayment of the note.
Assignment – A transfer by a person of that person’s rights under a
contract.
Release Clause – A stipulation that upon the payment of a specific sum of
money to the holder of a trust deed or mortgage, the lien of the instrument
as to a specifically described lot or area shall be removed from the blanket
lien on the whole area involved.
Reserves – An accumulation of funds, collected by the lender from the
borrower as part of each monthly mortgage payment, an amount allocated
to pay property taxes and insurance when they are done.
NOTES
8.4.2 Mortgage or Deed of Trust – Part 2
Key Terms to Know
Law of Contracts COURSE WORKBOOK
“Subject To” a Mortgage – When a grantee takes title to real property
subject to a mortgage, grantee is not responsible to the holder of the
promissory note for the payment of any portion of the amount due.
Assumption of Mortgage – The taking of a title to property by a grantee
wherein the grantee assumes liability for payment of an existing note
secured by a mortgage or deed of trust against the property, becoming a co-
guarantor for the payment of a mortgage or deed of trust note.
Alienation Clause – A clause in a contract giving the lender certain rights in
the event of a sale or other transfer of mortgaged property.
NOTES
8.4.2 Mortgage or Deed of Trust – Part 2
(continued)
Key Terms to Know
Law of Contracts COURSE WORKBOOK
0:00 - Land contracts and seller financing
Land Contract – A contract used in a sale of real property whereby the seller
retains title to the property until all or a prescribed part of the purchase
price has been paid.
NOTES
8.5 Land Contracts and Owner Financing
Key Terms to Know
Law of Contracts COURSE WORKBOOK
0:00 - Buyer default
0:50 - Judicial foreclosure
1:45 - Non-judicial foreclosure
2:25 - Strict foreclosure
3:35 - Deed in lieu of foreclosure
5:40 - Redemption
Foreclosure – A procedure whereby property pledged as security for a debt
is sold to pay the debt in event of default in payments or terms.
Judicial Foreclosure – A court proceeding requiring that property be sold to
satisfy a mortgage lien.
Deed in Lieu of Foreclosure – A deed to real property accepted by a lender
from a defaulting borrower to avoid the necessity of foreclosure
proceedings by the lender.
Redemption – Buying back one’s property after a judicial sale.
NOTES
8.6 Foreclosures and Short Sales
Key Terms to Know
Law of Contracts COURSE WORKBOOK
0:00 - Real estate financing market / Federal Reserve System
1:30 - Primary mortgage market
3:55 - Secondary mortgage market
8:20 - Fannie Mae, Freddie Mac, Ginnie Mae
9:30 - Federal home loan bank
10:00 - Farmer Mac
11:00 - Straight loan (term loan)
13:00 - Principle and interest
14:00 - Interest-only loan
14:30 - Balloon payment
16:00 - Negative amortization loan
18:15 - Fully amortized loan / fixed loans
20:00 - Adjustable rate mortgage (ARM)
22:10 - Reverse mortgage
Federal Reserve System – The federal banking system of the United States
under the control of central board of governors (Federal Reserve System)
involving a central bank in each of twelve geographical districts with broad
powers in controlling credit and the amount of money in circulation.
Primary Mortgage Market – The activity of lenders making mortgage loans
to individual borrowers.
Secondary Mortgage Market – The buying and selling of existing deeds of
trust and promissory notes.
NOTES
8.7.1 The Real Estate Financing Market,
Techniques and Loan Programs -
Part 1
Key Terms to Know
Law of Contracts COURSE WORKBOOK
Fannie Mae – The shortened name for the Federal National Mortgage
Association (FNMA), a privately owned corporation that purchases FHA, VA,
and conventional mortgages.
Freddie Mac – A nickname for the Federal Home Loan Mortgage
Corporation (FHLMC), a corporation wholly owned by the Federal Home
Loan Bank System that purchases FHA, VA, and Conventional mortgages.
Ginnie Mae – A nickname for the Government National Mortgage
Association (GNMA), a U.S. government agency that purchases FHA and VA
mortgages.
Straight Loan – Periodic payments of interest that are only for the life of the
loan, with payment of the principle in full at the end of the loan.
Principle – The amount of money borrowed, or the amount of the loan.
Interest – The charge in dollars for the use of money for a period of time.
Balloon Mortgage – A mortgage in which the scheduled payment will not
amortize the loan over the mortgage term; therefore, for the debt to be
fully satisfied, a final payment called a balloon payment, larger than the
uniform payments, is required.
NOTES
8.7.1 The Real Estate Financing Market,
Techniques and Loan Programs -
Part 1 (continued)
Key Terms to Know
Law of Contracts COURSE WORKBOOK
Negative Amortization – Occurs when monthly installment payments are
insufficient to pay the interest accruing on the principal balance, so that the
unpaid interest must be added to the principal due.
Amortization – The liquidation of a financial obligation on an installment
basis.
Fixed-Rate Mortgage – A mortgage in which the interest rate does not
change.
Adjustable Rate Mortgage (ARM) – A mortgage loan which bears interest at
a rate subject to change during the term of the loan, predetermined or
otherwise.
Reverse Annuity Mortgage – Used by older people who need additional
income and want to take advantage of the equity in their homes.
NOTES
8.7.1 The Real Estate Financing Market,
Techniques and Loan Programs -
Part 1 (continued)
Key Terms to Know
Law of Contracts COURSE WORKBOOK
Please refer to page 15 of the Law of Contracts – Infographics booklet.
NOTES
8.7.1.2 Primary and Secondary Mortgage
Markets - Infographic
Law of Contracts COURSE WORKBOOK
Please refer to page 16 of the Law of Contracts – Infographics booklet.
NOTES
8.7.1.3 Types of Loans - Infographic
Law of Contracts COURSE WORKBOOK
0:00 - Purchase money mortgage
0:45 - Package loan
2:40 - Construction loans
4:00 - Buy-down
5:25 - Home equity loan
7:00 - Conventional loans
9:20 - Private mortgage insurance
16:30 - FHA insured loans
18:20 - Mortgage insurance premiums
21:35 - VA loans
22:30 - Agricultural loan programs
Purchase Money Mortgage – A mortgage given by a buyer to a seller to
secure payment of all or part of the purchase price.
Conventional Loan – A mortgage securing a loan made by investors without
governmental underwriting, i.e., which is not FHA insured or VA guaranteed.
The type is customarily made by a bank or savings and loan association.
Subsidy Buydown – Funds provided usually by the builder or seller to
temporarily reduce the borrower’s monthly principal and interest payment.
Home Equity Loan – A loan against the equity in a home.
Conforming Loan – Those loans processed on uniform loan forms according
to FNMA/FHLMC guidelines.
NOTES
8.7.2 The Real Estate Financing Market,
Techniques and Loan Programs -
Part 2
Key Terms to Know
Law of Contracts COURSE WORKBOOK
PITI – An acronym denoting that a mortgage payment includes, principal,
interest, taxes, and insurance.
Private Mortgage Insurance (PMI) – Mortgage guaranty insurance available
to conventional lenders on the first, high risk portion of a loan.
FHA-insured Loan – A mortgage loan in which payments are insured by the
Federal Housing Administration.
VA Loan – A loan made to qualified veterans for the purchase of real
property wherein the Department of Veteran’s Affairs guarantees the
lender payment of the mortgage.
NOTES
8.7.2 The Real Estate Financing Market,
Techniques and Loan Programs -
Part 2 (continued)
Key Terms to Know
Law of Contracts COURSE WORKBOOK
Please refer to page 17 of the Law of Contracts – Infographics booklet.
NOTES
8.7.2.2 PITI - Infographic
Law of Contracts COURSE WORKBOOK
0:00 - Truth-in-Lending Act (Regulation Z)
4:15 - Advertising under TILA
4:55 - Equal Credit Opportunity Act
7:30 - Real Estate Settlement Procedures Act (RESPA)
Truth-in-Lending Act – The name given to the federal statutes and
regulations (Regulation Z) which are designed primarily to insure that
prospective borrowers and purchasers on credit receive credit cost
information before entering into a transaction.
Real Estate Settlement Procedures Act (RESPA) – A federal law requiring
the disclosure to borrowers of settlement (closing) procedures and costs by
means of a pamphlet and forms prescribed by the United States
Department of Housing and Urban Development.
NOTES
8.8 Financing Legislation
Key Terms to Know
Law of Contracts COURSE WORKBOOK
0:00 - Computerized loan organization (CLO)
NOTES
8.9 Computerized Loan Organization (CLO)
Law of Contracts COURSE WORKBOOK
After completing this Chapter, you will be able to:
1) Identify the parties to a deed, and explain the role of each.
2) Identify the types of deeds used in voluntary alienation.
3) Provide three examples of involuntary alienation.
4) Explain the difference between marketable title and clouded title.
NOTES
9.0 Chapter 09 Learning Objectives
Law of Contracts COURSE WORKBOOK
0:00 - Learning objectives
2:20 - Key terms
NOTES
9.1 Goals & Key Terms
Law of Contracts COURSE WORKBOOK
0:00 - Title
1:30 - Voluntary alienation
3:30 - Requirements of a valid deed
9:45 - Different types of deeds / general warranty deed
13:35 - Special warranty deed
14:30 - Bargain and sale deed
15:15 - Quitclaim deed
17:55 - Transfer tax stamps
Title – The evidence of right which a person has to the ownership and
possession of land, commonly considered as a history of rights.
Voluntary Alienation – Transfer of title freely by the owner.
Deed – A written document by which ownership of land is transferred from
one party to another.
Grantee – A person who acquires an interest in land by deed, grant, or other
written instrument.
Grantor – A person, who by a written instrument, transfers to another the
interest in land.
General Warranty Deed – A deed used to convey real property which
contains warranties of title and quiet possession, and the grantor thus
agrees to defend the premises against the lawful claims of third persons.
NOTES
9.2 Title and Voluntary Alienation
Key Terms to Know
Law of Contracts COURSE WORKBOOK
Special Warranty Deed – A deed in which the seller warrants or guarantees
the title only against defects arising during the period of his or her tenure or
ownership of the property.
Bargain and Sale Deed – Any deed that recites a consideration and purports
to convey the real estate; a bargain and sale deed with a covenant against
the grantor’s act is one in which the grantor warrants that grantor has done
nothing to harm or cloud the title.
Quitclaim Deed – A deed to relinquish any interest in property which the
grantor may have, without any warranty of title or interest.
NOTES
9.2 Title and Voluntary Alienation
(continued)
Key Terms to Know
Law of Contracts COURSE WORKBOOK
0:00 - Involuntary alienation
0:35 - Transfer by adverse possession
5:00 - Transfer of title by will
7:05 - Transfer of title by descent
8:25 - Probate proceeding
Involuntary Alienation – Transfer of title to real property as a result of a lien
foreclosure sale, adverse possession, the filing of a petition in bankruptcy,
or condemnation under power of eminent domain or upon the death of the
titleholder, to the State when there are no heirs.
NOTES
9.3 Involuntary Alienation and Conveyance
of Estates
Key Terms to Know
Law of Contracts COURSE WORKBOOK
0:00 - Public records
0:30 - Constructive notice
1:25 - Actual notice
2:10 - Ways public records are ordered
3:55 - Chain of title
5:20 - Title search
6:40 - Marketable title
11:00 - Title insurance
12:15 - Eminent domain
Constructive Notice – A fact, imputed to a person by law, which should have
been discovered because of the person’s actual notice of circumstances and
the inquiry that a prudent person would have been expected to make.
Actual Notice – Express or implied knowledge of a fact.
Marketable Title – Title which a reasonable purchaser, informed as to the
facts and their legal importance and acting with reasonable care, would be
willing and ought to accept.
Chain of Title – A term applied to the past series of transactions and
documents affecting the title to a given parcel of land.
Clouded Title – Title that is encumbered or burdened with defects.
NOTES
9.4 Public Records and Proof of Ownership
Key Terms to Know
Law of Contracts COURSE WORKBOOK
Title Search – An examination of public records, laws, and court decisions to
disclose the current facts regarding the ownership of real estate.
Abstract of Title – A condensed history, or summary of all transactions
affecting a particular tract of land.
Title Insurance – Insurance against loss or damage resulting from defects or
failure of title to a given parcel of real estate.
NOTES
9.4 Public Records and Proof of Ownership
(continued)
Key Terms to Know
Law of Contracts COURSE WORKBOOK
After completing this Chapter, you will be able to:
1) Identify at least two documents a lender must provide to a
borrower during the loan approval process, and explain the purpose
of each document.
2) Identify at least two prohibited acts under RESPA.
3) Identify at least three items that are prorated between a buyer and
seller at closing.
NOTES
10.0 Chapter 10 Learning Objectives
Law of Contracts COURSE WORKBOOK
0:00 - Learning objectives
1:45 - Key terms
NOTES
10.1 Goals & Key Terms
Law of Contracts COURSE WORKBOOK
0:00 - The loan approval process / pre-approval
5:35 - Selection of the property
7:10 - Uniform Residential Loan Application
9:30 - Credit report
13:00 - Clear title
13:40 - The appraisal
15:30 - Insurance
16:10 - The underwriter
16:40 - Final approval
Pre-Approval – A step above prequalification, it involves verifying a
purchaser’s credit, down payment, and employment history.
Good Faith Estimate – The lender’s estimate of the borrower’s settlement
costs; RESPA is required to furnish it to the borrower at the time of the loan
application.
Clear Title – Title which is not encumbered or burdened with defects.
Underwriting – The act of reviewing loan documentation and evaluation the
borrower’s ability and willingness to repay the loan and sufficiency of
collateral value of the property.
NOTES
10.2 Loan Approval Process
Key Terms to Know
Law of Contracts COURSE WORKBOOK
Please refer to page 55 of the Law of Contracts – Supporting Documents
booklet.
NOTES
10.2.2 Uniform Residential Loan Application
Law of Contracts COURSE WORKBOOK
0:00 - Inspections
5:20 - Resolving contingencies
NOTES
10.3 Inspections
Law of Contracts COURSE WORKBOOK
0:00 - Title work
0:40 - Title insurance
1:20 - Preparation for closing / HUD-1 form
5:00 - Change of address
5:30 - Final inspection / walk-through
8:20 - Review GFE vs HUD-1 form
10:55 - Duties of the seller
18:15 - Conducting the closing
22:50 - Mortgage Disclosure Improvement Act
Title Insurance – Insurance against loss or damage resulting from defects or
failure of title to a given parcel of real estate.
HUD Form No. 1 – A standard settlement form required by RESPA.
Debit – In a closing statement, an expense or money received against a
credit.
Credit – In a closing statement, money to be received or credit given for
money or an obligation given.
Escrow Agent – The neutral third party holding funds or something of value
in trust for another or others.
NOTES
10.4 Title Work and Preparation for Closing
Key Terms to Know
Law of Contracts COURSE WORKBOOK
Please refer to page 63 of the Law of Contracts – Supporting Documents
booklet.
NOTES
10.4.2 HUD-1 Settlement Statement
Law of Contracts COURSE WORKBOOK
0:00 - RESPA
Real Estate Settlement Procedures Act (RESPA) – A federal law requiring
the disclosure to borrowers of settlement (closing) procedures and costs by
means of a pamphlet and forms prescribed by the United States
Department of Housing and Urban Development.
NOTES
10.5 Real Estate Settlement Procedures
Act (RESPA)
Key Terms to Know
Law of Contracts COURSE WORKBOOK
Please refer to page 66 of the Law of Contracts – Supporting Documents
booklet.
NOTES
10.5.2 HUD Good Faith Estimate
Law of Contracts COURSE WORKBOOK
0:00 - Prorations
3:00 - Closing and funding
Proration – The division of certain settlement costs between a buyer and
seller.
Proration of Taxes – To divide or prorate the taxes equally or
proportionately to time of use, usually between seller and buyer.
NOTES
10.6 Prorations, Closing and Funding
Key Terms to Know
Law of Contracts COURSE WORKBOOK
0:00 - Transaction process overview
NOTES
10.7 Transaction Process Overview
Law of Contracts COURSE WORKBOOK
After completing this Chapter, you will be able to:
1) Identify at least one way to legally describe a property.
2) Define the effective date of a contract, and explain its significance.
3) Provide at least two examples of both real and personal property.
NOTES
11.0 Chapter 11 Learning Objectives
Law of Contracts COURSE WORKBOOK
0:00 - Learning objections
1:20 - Key terms
NOTES
11.1 Goals & Key Terms
Law of Contracts COURSE WORKBOOK
0:00 - Common issues in contracts / names of the parties
4:00 - Name of the property
5:25 - Check boxes
7:50 - Special provisions
11:05 - Default
NOTES
11.2.1 Common Issues in Contracts – Part 1
Law of Contracts COURSE WORKBOOK
0:00 - Signatures & dates
4:45 - E-sign
8:55 - Addenda
NOTES
11.2.2 Common Issues in Contracts – Part 2
Law of Contracts COURSE WORKBOOK
0:00 - Real property vs personal property
3:35 - Title
NOTES
11.3 Common Areas of Concern
Law of Contracts COURSE WORKBOOK
Please refer to page 18 of the Law of Contracts – Infographics booklet
NOTES
11.3.2 Real Property vs Personal Property -
Infographic