Broker Chapter 11

Contracts

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Learning Objectives 







Describe the characteristics of the 3 major types of listings Describe at least 3 statutory requirements for listing agreements Distinguish between a listing broker's employment to find a purchaser and to effect a sale List the 4 types of legal contracts the licensee may prepare Copyright Gold Coast Schools

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Learning Objectives 





List 4 documents that the licensee can use to gather information for preparing a contract Describe the differences between a tenancy by the entireties, a joint tenancy and a tenancy in common Specify what steps are desirable to protect the parties if the buyer takes occupancy before or after the closing date Copyright Gold Coast Schools

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Learning Objectives 





Describe the differences between an option contract and a right of first refusal Describe the effects of Johnson v. Davis Supreme Court ruling on real estate practice in Florida Define the differences between a lease option agreement and a lease purchase agreement Copyright Gold Coast Schools

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Entitlement to Commission 



A condition of employment must exist for a broker to be entitled to a commission Listing agreements with sellers

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Types of Listings 

Open listing  



Given to many brokers Only broker who brings a ready, willing and able buyer is entitled to a commission Unilateral contract, seller is obligated

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Types of Listings 

Exclusive agency listing 



Allows the seller to sell without owing the listing broker a commission The listing broker is entitled to a commission if any brokerage firm sells the property

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Types of Listings 

Exclusive right of sale listing 



The broker is entitled to a commission no matter who sells the property The most widely used listing

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Types of Listings 

Net listings     

Seller agrees to accept a minimum amount Any excess is the broker’s commission Unjust enrichment Customary commission Legal in Florida

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Written Listing Agreements 

Rules   

Definite expiration date May not be automatically renewed Signed copy to owner within 24 hours

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Entitlement to Commission 

Procuring cause 



Find a purchaser — ready, willing and able buyer Effect a sale — deal must close

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Purchase and Sale Contracts  

Unauthorized practice of law Statute of Frauds 

The sale of any interest in real property must be in writing to be enforceable

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Electronic Commerce 

 

Electronic signatures are legally enforceable Encryption is a problem Not commonplace yet

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Documents Necessary 

Seller documents   

 

Deed Title policy Survey - shows encroachments, easements and setback violations Mortgage Zoning

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Provisions of Real Estate Contracts 

Contract for sale and purchase 



FAR/BAR widely used for routine residential transactions Contract date – –

“Time is of the essence” Use realistic times

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Parties to the Contract 

Seller 

Both husband and wife should sign –



Even if only one owns homestead property

Buyer  

Each buyer should be named Each buyers should sign

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Types of Ownership 

Sole owner  

Called owner in severalty Sole and separate owner – –

Married If homestead owner is survived by a spouse and lineal descendants (remaindermen)

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Types of Ownership 

Joint tenancy versus tenancy in common  



Joint tenancy has the characteristic of survivorship Tenancy in common has the characteristic of inheritability

Tenancy by the entireties   

Husband and wife Characteristic of survivorship Simultaneous conveyance

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Co-ownership Tenancy in Common

Unities of title Parties Survivorship

Same or different Two or more No Second most common

Joint Tenancy

Tenancy by the Entireties

Same

Same

Two or more

Husband and wife

Must state

Yes

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Most common 19

Earnest Money Deposit  







Not required with a real estate contract Entered on the real estate contract A broker is not required to have an escrow account A broker is not responsible for a returned escrow check if timely deposited Post dated checks require the seller’s approval and must be noted on the contract Copyright Gold Coast Schools

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Earnest Money Deposit 

  

Subsequent additional earnest money Notes as earnest money Old earnest money for new contract Licensee as buyer

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Provisions of Real Estate Contracts 

 

Legal description is an essential element of the contract Purchase Price Method of payment

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Financing Terms   

Buyer financial statement Buyer prequalification Time limit 

  

Use reasonable time frame

Owner occupied Conditional on buyer loan Loan documents

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Financing Terms  

Cash Sale Seller to carry first mortgage   

 

  

Due on sale clause Balloon payment Reserves

New conventional mortgage Straight second mortgage FHA Adjustable Loan Assumption Copyright Gold Coast Schools

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Chattel and Fixture Inclusions 





Inaccurate or incomplete descriptions of personal property can render the contract unenforceable Personal property itemized in the contract with stated amounts is subject to sales tax A closing date is not a legal requirement of a sales contract

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Provisions of a Contract 

Evidence of Title 

    

Time to examine title

Date of closing Proration of expenses Possession of Property Time allowed for acceptance Type of deed

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Remedies for Contract Breach 

  

Liquidated damages - available to a seller when a buyer defaults Rescission on breach Compensatory damages Specific performance

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Miscellaneous Issues 

Special assessment  



Government lien Seller usually pays lien if improvement completed Buyer assumes pending liens unless work is substantially completed

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Miscellaneous Issues 

Licensee acting as buyer or seller 

Disclose – – –





Information That licensee no longer represents the seller License status in contract

Provide a no brokerage relationship disclosure Licensee may accept a commission

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Miscellaneous Issues 

    

Contingent on sale of buyers’ properties Right of first refusal Contingent on property inspection Conditional on spouse’s approval Signing and acknowledgement Number of copies needed Copyright Gold Coast Schools

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Disclosure 

Psychologically impacted or stigmatized properties 





Scenes of murder, suicides or are alleged to be haunted Disclosure is not required

Occupant infected with HIV or AIDS  

Not a material fact Disclosure violates Florida law

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Disclosure  

 

Homeowners’ association Ad Valorem Tax Disclosure Radon gas Property disclosure 

Lead based paint – – – –

Residential building built prior to 1978 Information pamphlet Seller must disclose presence of lead based paint if seller knows Buyer can inspect

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Disclosure   

Transaction fees Energy-efficiency brochure Building code violations

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Other Contracts  

Lease purchase agreement Option contract  



Unilateral contract, optionor bound Requires substantial or adequate consideration

Agreement for Deed

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