Contract Clauses
What is a contract condition called?
A Contingency
Escheat
When a property reverts to the state after a person dies without a valid will or heirs.
LTV stands for?
Loan to value
Loan to value ratio is?
the % of the appraised value of the property that the bank will loan for a mortgage.
An Assignment is?
When a buyer wishes to substitute another qualified buyer with all other contract terms remaining the same.
If a buyer must sell their current home before they can purchase a new home, what type of condition to purchase is this?
A home sale contingency
Fiduciary
A person in position of trust held by law to high standards of good faith & loyalty.
Definition of a conforming loan?
Loans that meet Fannie/Freddie standards that can be sold on a secondary market.
If the LTV is 80/20 and the house appraised for $100,000. how much will the buyer be permitted to borrow?
A. $20,000.
B. $100,000.
C. $80,000
D. $120,000
Who is a principal is, and who owes duty to a principal?
A principal is a buyer, seller, tenant, or lessor, of a property. A broker owes fiduciary to a principal.
Who must waive a condition that is intended to benefit both parties to a contract?
Both! Neither can waive it without the others consent
Abstract of Title
A brief summary of the history of title to a piece of property listing all recorded documents that affect title.
Appraisal is?
An estimate or opinion of value of property on a certain date.
If your buyer client is approved to purchase a home for 2 &1/2 times their annual salary, and the home they want to buy is priced at $300,000., what must their monthly salary be?
Sale price: $300,000 divided by 2.5= $120,000 yr.
$120,000.yr. divided by 12 months= $10,000 per month
What is Dual Agency?
When a broker represents both the seller and buyer in the same transaction.
When a contract is conditional, the promisor must?
Make good faith effort to fulfill the condition
A latent defect is best described as?
A defect that is hidden from view
Alienation Clause?
A contract clause that gives a lender certain stated rights when there is a transfer of ownership or significant interest in the property. (due on sale clause)
If the minimum down payment required is $15,000. on a home purchase price of $300,000., what is the LTV ratio?
95/5 ($300,000 divided by $15,000. = 5%)
What is the difference between an Exclusive Agency listing, and an Exclusive Right to Sell Listing?
In Exclusive agency, Only one broker is authorized to sell, and the broker receives no commission if the owner finds a buyer.
In an exclusive right to sell, only one broker is authorized to sell, if anyone finds a buyer the broker still receives commission during the agency term.
What are two types of common purchase contract contingencies?
Finance and Inspection
Bump Clause
A provision in a purchase agreement that allows a seller to keep a property on the market until a condition in the contract is fulfilled.
Loans for which payments are applied to principal and interest?
Amortized Loan
Your buyer is preapproved for a $325,000 conventional loan with 80/20 LTV. He finds a home and is in contract at a purchase price of $319,000. The home appraisal comes in at a value of $310,000.How much will the bank lend him to purchase this home?
$310,000. appraised value x 80%= $248,000.
How is a contract discharged?
1. Performance
2. Substantial performance
3. Mutual Agreement of Release of contract
4. Impossibility of performance ( Property destroyed or death of one of the parties to contract)