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Chapter 6 Contracts and Title Closings

Chapter 6 Contracts and Title Closings. Contract : an exchange of promises between parties, conditioned on certain events and enforceable by law. 5 required elements of any valid contract: - Offer - Acceptance - Counter-offer - Consideration - Parties with capacity - Lawful purpose

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Chapter 6 Contracts and Title Closings

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  1. Chapter 6 Contracts and Title Closings

  2. Contract: an exchange of promises between parties, conditioned on certain events and enforceable by law. 5 required elements of any valid contract: - Offer - Acceptance - Counter-offer - Consideration - Parties with capacity - Lawful purpose - 6th- “In writing” for real estate contracts

  3. Breach of contract: failure to perform an obligation - Specific performance: court can order a party to fulfill its contractual obligation - Obligations of Seller compared to Buyer Contingencies: Occurrences that may allow a party out of its contractual obligations - Financing - Title/Survey - Inspection and Repair

  4. Option to Buy Contract Contract for Deed/Land Contract: Installment sales Negotiating a contract: - Price - Timing - Expenses

  5. Closing - Buyer’s typical responsibilities - Obtain financing - Examine title evidence - Have the property surveyed - Obtain property insurance - Have the property inspected

  6. Seller’s typical responsibilities - Prepare deed - Remove all encumbrances - Prepare papers/pay with respect to Seller’s loan - Cooperate with Buyer’s agents

  7. Typical Buyer’s costs at closing - Loan origination fee - Loan discount points - Appraisal fee - Credit report fee - Mortgage insurance premium - Title insurance premium - Escrow fees - Recording fees

  8. Typical Seller’s costs at closing - Brokerage commissions - Escrow fees - Recording fees HUD-1 Uniform Settlement Statement: discloses the financial details for both buyer and seller

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