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Law of Contracts Solutions
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Law of Contracts SolutionsDefault of contract and types of damages (pg 137) - answer Liquidated Damages - The
seller can choose to accept the buyer's earnest money as liquidated damages,
releasing all parties from any further obligation under the contract. Liquidated damages
are damages that are established in the contract.
Monetary Damages - The injured party may "seek such other relief as may be provided
by law." This would be an award of monetary damages by the court. Because monetary
damages are awarded by the court, one never knows what they will be until the court
rules.
Specific Performance - The injured party files a court action seeking an order of the
court directing the defaulting party to perform according to the terms of the contract.
Specific performance is the only remedy that would possibly result in the full execution
(closing) of the transaction.
Leases and "right of first refusal" (pg 19) - answer Right of first refusal - Gives the
tenant the right to purchase the leased property by matching or bettering any offer
before the property will be sold to someone else.
There's also the possibility of a leasing having an option to purchase, AKA lease-
purchase agreement, which gives the tenant occupancy in the present time and the
right to purchase at a future date.
Default remedies and their results (pg 137) - answer Seller Default - in the event of
default by the seller, the buyer becomes the injured party. The buyer has the option of:
Specific Performance
Monetary Damages
Refund of Earnest Money. The buyer's acceptance of an earnest money refund
terminates the contract, releasing both parties from any further obligation under the
contract.
Buyer Default - Options are:
Liquidated damages
Monetary Damages
Specific Performance
Paragraph 11 - Legal vs Illegal Entries (pg 135) - answer
TVLB Programs and Provisions (pg 196) - answerTexas Veteran's Loan Program -
Veteran obtains an FHA, VA, or Conventional Loan from a participating lender. The
qualification process is the same as for any other FHA, VA, or Conventional Loan. The
difference is that the loan is sold to the Texas Veterans Land Board (VLB), as opposed
, to a secondary market purchaser such as Fannie Mae or Freddie Mac. The primary
benefit is that the rate on the VLB loan is often up to 1% below prevailing market rates.
Economic and Physical Characteristics of Land (pg 44) - answerPhysical:
1. Indestructibility or Durability - Land cannot be destroyed.
2. Immobility - Land cannot be moved
3. Nonhomogeneity - No two parcels of land are the same.
Economic:
1. Scarcity - theory of supply and demand (low inventory = price increase)
2. Modification - value is affected by man-made changes to the land (ex: railroads,
freeways, roads, etc.)
3. Fixity - land and buildings take a long period to pay for themselves
4. Situs - location of the property or land from an economic, not a geographic viewpoint.
Responsibility of agents when receiving an offer (pg 123) - answerThe agents must
present all offers to the seller. The agent doesn't have the authority to dismiss an offer
without presenting it unless the party has given the agent instruction to the contrary.
The exception is if the agent has written instruction to reject an offer of a certain price.
Title policy, abstracts, commitments, opinion of title (pg 217) - answerAbstract of title - a
complete history of the title of a piece of property that includes deeds, easements, liens,
foreclosures, wills, marriages, deaths, life estates, fee simple estates, and anything else
that may have ever been recorded about a property.
Sovereignty of the soil - the government is the original owner of all land
Patents transfer ownership from the government to an individual and looks much like a
deed.
Attorney's Opinion of Title - An opinion regarding the state of the title and its ability to be
transferred.
TREC Temporary lease agreements and features (pg 18) - answerBuyer's Temporary
Residential Lease - for use when the buyer occupies the property for no more than 91
days prior to closing
Seller's Temporary Residential Lease - for use when the seller occupies the property for
no more than 91 days after closing
Option Contracts (pg 65) - answerAn agreement between a buyer and seller or landlord
and tenant. A seller, in exchange for some form of consideration (an option fee), gives
the buyer the right to purchase the property at some preset price and terms for a period.
(ex: a buyer has a one-year option to purchase a tract of land at $150,000 cash, the
buyer can exercise the option and purchase the property at that price any time during
the year.)
Paragraph 11 - Special Provisions - What can an agent write (pg 135) - answerThis
space is where terms can be addressed that are not covered in standard contracts or
addenda forms. License holders should ensure that any special provisions added to a
contract are factual statements that do not change the legal effect of the contract.
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