CHAPTER 6 CONTRACTS AND TITLE CLOSING

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CHAPTER 6CONTRACTS AND TITLE CLOSING

• This chapter introduces students to the types and
  contents of contracts that are common in real
  estate sales transactions and discusses the title
  closing process.

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Necessary elements of a contract

• Offer and acceptance
• Consideration
• Capacity of parties
• Lawful purpose
• Writing requirement
• Statute of frauds
• Partial performance

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Real estate sales contracts

• Groundwork for negotiating a sales contract
• Negotiation stage
• Sales contract (Figure 11.1)
• Description of property and fixtures
• Purchase price
• Title
• Escrow
• Provisions for earnest money
• Property destruction
• Miscellaneous provisions
• Broker's commission
• Conclusion to the contract

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Performance and breach of contract

• Breach
• Specific performance
• Remedies for breach of contract

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Option-to-buy contracts

• A contract that gives one party the right, but
  not an obligation, to purchase a property within
  a specified time horizon at a specified price.

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Contract for Deed(Land Contract or Agreement for
Deed)

• Installment payments over time
• Seller retains title until the agreed amount is
  paid.
• If payment is missed, buyer may lose property
  however, many states say buyer is entitled to a
  refund of their equity (but not interest paid).

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Title Closings

• Buyers responsibilities
• Financing the purchase
• Obtaining a title opinion
• Having the property surveyed
• Obtaining property insurance
• Inspecting the property
• Other responsibilities

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Title Closings cont

• Sellers responsibilities
• Preparing the deed
• Removing encumbrances
• Paying the sellers loan
• Obtaining a termite bond
• Other responsibilities

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Title Closings cont

• Cost at Closing
• Buyers costs
• Sellers costs
• Pro-ration of homeowners costs
• Understanding the settlement statement
• HUD Uniform Settlement Statement (Fig. 15.1)
• Example
• Parties present at closing
• Events at closing
• Escrow closing

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