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PrepAgent・26 minutes read

Implied contracts are based on actions, while valid contracts require mutual consent, lawful object, consideration, and capable parties. Various real estate terms such as blockbusting, steering, and redlining are essential to understand for real estate exams.

Insights

  • Implied contracts are based on actions rather than explicit agreements, such as the expectation to pay at a restaurant, showcasing the importance of understanding implicit understandings in various situations.
  • Understanding the four essentials of a valid contract – mutual consent, lawful object, consideration, and capable parties – is crucial, as the absence of any element renders the contract void, highlighting the necessity of meeting all requirements for a legally binding agreement.

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Recent questions

  • What is an implied contract?

    An implied contract is expressed through actions, like the saying "if it looks like a duck, walks like a duck, it must be a duck." It is an agreement that is not explicitly stated but understood based on the behavior and actions of the parties involved. For example, when you sit down at a restaurant, it is expected that you will pay for your meal after eating. In real estate, an implied contract can occur when an agent operates without the seller's authority, but both parties agree to the actions taken.

  • What are the essentials of a valid contract?

    The four essentials of a valid contract are mutual consent, lawful object, consideration, and capable parties. Mutual consent means that both parties must agree to the terms of the contract. The object of the contract must be legal and not against public policy. Consideration refers to something of value exchanged between the parties, such as money or services. Finally, the parties involved in the contract must be legally capable of entering into a contract. If a contract lacks any of these essentials, it becomes void.

  • What is a voidable contract?

    A voidable contract allows one party to rescind it under certain circumstances, such as cases of duress or when a minor is involved. This means that the contract is initially valid but can be voided by one of the parties. For example, if one party was forced into signing the contract under threat, they may have the option to rescind it. It is essential to understand the conditions under which a contract can be voided to protect the rights of the parties involved.

  • What is negative fraud in real estate?

    Negative fraud in real estate occurs when an agent knows the truth but intentionally fails to disclose it to the other party. This can be misleading and deceptive, as the agent withholds crucial information that could impact the transaction. On the other hand, actual fraud involves outright lying or making false statements to deceive the other party. It is important to be aware of these distinctions to ensure transparency and honesty in real estate dealings.

  • What is eminent domain?

    Eminent domain is a government power that allows the government to take private property for public use. This power is granted under the Fifth Amendment of the U.S. Constitution, with the requirement that just compensation must be provided to the property owner. Eminent domain is typically used for projects that benefit the public, such as building roads, schools, or other infrastructure. It is crucial to understand the implications of eminent domain and the rights of property owners when dealing with real estate transactions.

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Summary

00:00

Essentials of Contracts and Real Estate Transactions

  • Implied contract is expressed through actions, like the saying "if it looks like a duck, walks like a duck, it must be a duck."
  • An example of an implied contract is when you sit down at a restaurant, it's expected you'll pay after eating.
  • In real estate, an implied contract occurs when an agent operates without the seller's authority but the actions are agreed upon by both parties.
  • The four essentials of a valid contract are mutual consent, lawful object, consideration, and capable parties.
  • If a contract lacks any of the four essentials, it becomes void.
  • A voidable contract allows one party to rescind it, like in cases of duress or a minor's involvement.
  • Negative fraud occurs when the agent knows the truth but doesn't disclose it, while actual fraud is outright lying.
  • Constructive fraud happens when the agent genuinely believes a false statement, like in the case of a wrong-colored house.
  • An Assessor evaluates property for tax purposes, similar to an appraiser but specific to taxes.
  • Taxes are specific liens, while encumbrances are broader limitations on property enjoyment, including easements.

23:26

Real Estate Laws and Practices Explained

  • A promissory note is crucial for lending money as it provides a guarantee for repayment.
  • Blockbusting, also known as panic peddling, involves pressuring individuals to sell their homes due to the arrival of certain groups in the neighborhood.
  • Violating the Fair Housing Act of 1968 is considered blockbusting, a serious offense.
  • The Fair Housing Act of 1968 was enacted in 1968 and is a significant law to remember for real estate exams.
  • Steering occurs when buyers are directed to specific areas based on their background or ethnicity.
  • Redlining is the term used when making loans in violation of the Fair Housing Act.
  • Exclusive right to sell listings do not require proving procuring cause, unlike exclusive agency listings.
  • A safety clause or protection period clause allows agents to receive payment even after a listing expires if they found the buyer during the listing period.
  • Eminent domain is a government power that allows the government to take private property for public use, with just compensation being a key aspect.
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