CHAPTER 6 CONTRACTS AND TITLE CLOSING

1. 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.

2. Necessary elements of a contract: • Offer and acceptance • Consideration • Capacity of parties • Lawful purpose • Writing requirement • Statute of frauds • Partial performance

3. 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

4. Performance and breach of contract: • Breach • Specific performance • Remedies for breach of contract

5. 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.

6. 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).

7. Title Closings: • Buyer’s responsibilities • Financing the purchase • Obtaining a title opinion • Having the property surveyed • Obtaining property insurance • Inspecting the property • Other responsibilities

8. Title Closings: con’t • Seller’s responsibilities • Preparing the deed • Removing encumbrances • Paying the seller’s loan • Obtaining a termite bond • Other responsibilities

9. Title Closings: con’t • Cost at Closing • Buyer’s costs • Seller’s costs • Pro-ration of homeowner’s costs • Understanding the settlement statement • HUD Uniform Settlement Statement (Fig. 15.1) • Example • Parties present at closing • Events at closing • Escrow closing