1. Chapter 8: Real Estate Sales Contracts
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2. THE PURPOSE SALES CONTRACT
 to allow time to ascertain that the parties
can each perform the terms of the
agreement which are written and signed
promises to perform.
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3. EARNEST MONEY DEPOSIT
 Shows buyer’s “good faith”
No law governs the amount
Earnest money is not consideration
Not required for valid contract
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4. PURCHASE CONTRACTS
 Provision for buyer’s earnest money deposit
 Buyer’s offer to purchase
Acceptance of the offer by seller
Provisions for payment of broker fees
 Instructions to closing agent
Possession
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5. CONTRACT TERMS
Closing Agent
Prorating
Inspections
Loan Conditions
Property damage
Buyer default
Time limits
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6. “TIME IS OF THE ESSENCE”
 This is a legal term which means the time l imits set by the
contract must be faithfully observed or the contract is
voidable by the non-defaulting par ty.
 Due to the legal nature of this term, it should not be used by
the real estate agent!
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7. ADDITIONAL CONTRACT TERMS
Signatures
Acceptance
Notification
Federal Clauses
Preprinted Clauses
Riders
Negotiation
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8. LEAD-BASED PAINT IN HOUSING
Approximately three-quarters of the nation's
housing built before 1978 contains some lead-based
paint. Federal law requires that before a
buyer or tenant becomes obligated under a
contract for sale or lease the seller or landlord
must disclose the possibility of lead-based
paint and lead-based paint hazards and provide
available reports along with the pamphlet
“Protect Your Family From Lead in Your Home.”
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9. A short purchase contract
used to secure a real estate
transaction until a more
formal contract can be
signed.
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BINDER

10. LETTER OF INTENT
Used to express the mutual intention to
buy, sell, lease, develop, or invest
Outlines agreement of terms
No obligation is created
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11.  If the preprinted form requires extensive
cross-outs, changes, and riders, the
contract should be drafted by a lawyer.
A real estate license is not a license to
practice law.
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PRACTICING LAW

12. OTHER TYPES OF CONTRACTS
Installment Contracts
Option Contracts
Lease with Option to Buy
Right of First Refusal
Exchange Agreements
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13. Deed and Installment Contract Compared
Deed Installment Contract
Buyer Seller
Deed
Buyer Seller
Buyer Seller
Buyer Seller
Buyer Seller
Deed
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14. Possible Trading Combinations
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15.  The job of the real estate agent is to determine the business
details of the transaction and not to practice law!
 A real estate l icense is not a l icense to practice law.
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16. Key Terms
 Binder
 Default
 Earnest money
deposit
 Equitable title
 Installment
contract
 Lease-option
 Qualified intermediary
 Right of first refusal
 Tax-deferred exchange
 “Time is of the
essence”
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