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Chapter 6

Chapter 6. Contracts in Real Estate Transactions. Contracts. An exchange of promises between parties, conditioned on certain events and enforceable by law. Necessary Elements of a Contract Offer and acceptance Consideration Capacity of parties Lawful purpose

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Chapter 6

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  1. Chapter 6 Contracts in Real Estate Transactions

  2. Contracts • An exchange of promises between parties, conditioned on certain events and enforceable by law. • Necessary Elements of a Contract • Offer and acceptance • Consideration • Capacity of parties • Lawful purpose • Writing requirement (Statute of Frauds)

  3. Contract Issues • Breach of Contract • One party does not fulfill contract • Specific Performance • If seller breach: • Sell property • Pay buyer fees • If buyer breach: • Earnest money

  4. Contract Contingencies • Specified conditions in a contract that relieve the parties of their promises to perform • financing contingency • title contingency • inspection and repair contingency

  5. Common Real Estate Contracts • Real Estate Sales Contract • Option-to-Buy Contract • Contract for Deed

  6. Real Estate Sales Contract • Bilateral – buyer & seller • See website for Standard Texas Contract

  7. Option-to-Buy Contract • Option fee • Property “held” for period • Seller must sell at agreed price if buyer decides to purchase • Common developer tool

  8. Contract for Deed • A.K.A. Installment Sales Contract • Stretches payments over time • Buyer has possession • Seller keeps title until paid in full • Recent Texas changes (2001) • 60-day cure • Buyer’s equity

  9. End Chapter 6

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