REAL ESTATE OUTLINE
Questions Ch 1.
2. It is very rarely ever the case that all the costs will match up correctly. The old and new mortgage influence the price of sale, as does closing costs and many other factors
3. (a)The purchase and sale contract sets price & the exact form of contingencies. The deed says from the seller to Buyer: “Here is my house (& land).” It is recorded in courthouse or land records office, so we know who owns that. The note says from the buyer to bank: “I will repay your loan.” The mortgage or deed of trust says from the buyer to bank: “If I don’t repay, you may take my house.”
(b) Why maybe a promissory note but no mortgage? May do it if the borrower is super trustworthy, or has other security, or is paying a very high interest rate, or is family, or the seller has been bamboozled (Belleville). Why may you have a mortgage but not the accompanying note? May do it to secure some other debt or obligation or someone else’s debt.
4. (a) Pros – Appease bar associations, and help clients out who want to go ahead and get the deal done, but don’t want to make a mistake. Cons – Signed contract used to lure a better offer (Shopping the deal). There is no requirement you have to say why you turned it down but if you say you turned it down because of a bad reason then you can be held liable (better to not say anything).
(b) It is not illegal to do so in your jurisdiction but it may be very immoral, and unethical so I would probably say no; however, you are also duty bound to do what is in the best interests of your client.
(c) Not required to specify in reasons in most jurisdictions. You do not want to list price solely ever. It would only be a good idea to list other reasons than price if you believe those to be valid reasons that benefit your client.
5. (a) Attorney’s probably earned the reputation as being deal breakers because they get a fee in relation to part of the sale, and it is in their best interests financially to hold out and turn down a deal in favor of a better offer.
(b) The attorney should be faulted if it acts unethically by holding out for a larger sale solely based on price or failing to go ahead when the sale is advantageous to his client, but not necessarily the most advantageous to the attorney. The attorney should be praised when he tells the buyer not to go through with the sale because of defects in the property, an unreasonable price on the property, also if the attorney is engaging in dual representation and so recuses himself.
6. (a) The attorney probably should not represent both parties. The ABA is against it, and it also increases the demand for more lawyers. (b) If he really desires to he should get the consent of both parties in writing explaining that they agree to this.
7. (a) The attorney shouldn’t disclose because he will be violating attorney client privilege and could be disbarred.
(b) He should withdraw immediately because if he does not he will be helping the fraud and be liable himself. There is a fraud exception to disclosing confidences but it is best not to try and navigate around it. Just get out and keep quiet.
8. (a) The attorney should get the seller to sign a piece of paper acknowledging that he only represents the buyer. (b) The buyer’s attorney has 3 levels of notice that are possible and one is to tell the other party that the note is unsecured. It’s questionably whether or not he has a legal obligation but he definitely has a moral obligation and he should tell the party.
(c) Probably not, you can only go so far without being totally detrimental to your client. There is one level of notice though that says he should say the deal is unfair. So if the deal is grossly unfair he may have a duty to tell the seller. Also the attorney could refuse to participate in an unfair deal.
Questions Ch. 2
(a) They might already be a real estate agent and can do it themselves, real estate brokers are expensive and the cut may be more than the home owner is wishing to allow. Also the hassle may be very small, and not worth a broker’s time.
(b) Most use a broker because you get your home on MLS or realtor.com and more prospective buyers get to see it. The cost of a broker is minimal compared to the hassle of an inexperienced person doing it themselves.
(a) The purpose of these laws is to weed out the untrustworthy and to test all perspective brokers for a general knowledge of agency and real estate law.
(b) The law is there to prevent amateurs from posing as qualified professionals and owners are not trying to do that when they market their own homes. They are acting solely for their own benefit.
(c) As long as she limits her activities to just matchmaking (introducing buyer and seller) she should be fine. The principal may however, change his mind and revoke the offer at will so she probably doesn’t have much of a shot at enforcing the oral promise. Also oral promises are not valid with respect to a contract for land.
(d) I believe it’s justifiable. You are facilitating commerce and this exception helps that.
(e) Yes as long as they are not wearing two hats and acting in a dual role. If they make it clear that they are acting merely as a finder and not as an attorney for the deal then they should be able to legitimately claim brokerage commissions.
(a) Open Listing, Exclusive Agency, Exclusive Right to Sell
(b)The broker might not work as hard. There might be resistance from the guild, like not showing your house very much or to the right type of buyers. The broker also might not try as hard to bridge the gap between the asking price and the offer.
(c) She should talk to her friend before making the listing agreement, she should insist on an exclusive agency so that no other brokers can be allowed in. She could also write a spot exception. Lastly, she needs to warn the friend not to talk to a broker.
(d) California says they must pay the commission. However, it li
a sale and price is not always the only motivating factor. Schools in the area may prompt someone to buy or not buy; job location; location of family close by, and many other things.
(b) Brokers fear that buyers and sellers could antagonize each other and kill the deal if they get to haggling over emotion-charged details. Also they want their commission and the buyer and seller may make a deal to cheat the broker out of his commission. Using a broker has a lot of advantages. He has been there before and isn’t going to get upset or embarrassed or discouraged during negotiations. Also it allows both parties time to react and think instead of making a hasty decision.
(c) A buyer could risk losing the entire deal, because once you reject a counteroffer there is no duty to go through with the sale. The seller may find someone willing to pay that price.
Chapter 4 Questions
1. We use contracts because they can help guard against the fogginess of memory. It confirms and provides evidence of the parties’ agreement. Written contracts are universal in custom and practice for realty sales. Brokers insist upon written purchase-and-sale contracts as essential to the paper trails that will demonstrate their having earned their commissions by procuring “ready, willing, and able buyers.”
2. Letters of intent are not enforceable contracts, a formal agreement is meant to follow within a specified period of time, and if it doesn’t the obligation to negotiate in good faith and the letter itself is automatically deemed terminated. LOI embody the main deal points expected eventually to form the basis of the contract. The parties hope not to squander time or legal fees trying to work out all the fine points of a comprehensive contract until they attain consensus on matters of primary importance. A written contract may be modified by later oral agreement eve if the agreement specified all modifications were to be made in writing. Any provision in a contract may be waived by subsequent consent, express or implied. One may be estopped from disputing an oral modification whose conduct induces another’s reliance on it.
5. Email contracts are generally held valid because of the email is easily retrievable and copyable. However, consideration and meeting of the minds (standard contract law provisions) apply. Contracts on email are just like written contracts because we have record of them. There is one limit on e-signature though. An