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Modern Real Practice in Illinois Tenth Edition

Unit 11: Real Estate

Contract Law

• A must be: – Voluntary – An agreement or promise – Made by legally competent parties – Supported by legal – Having to do with a legal act

Contract Law

• Express Contracts – Parties state terms and intentions in words – May be oral or written • Implied Contracts – Agreement of parties demonstrated by conduct

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Contract Law

• Bilateral Contracts – both parties promise to do something; one promise is given in exchange for another – example: a real estate sales contract • Unilateral Contracts – one-sided agreement; one party makes a promise to induce a second party to do something, and the second is not legally obligated to act • Executed and Executory Contracts

Essential Elements of a Valid Contract

• (mutual assent, , agreement) • Consideration • Reality of consent • Legally competent parties • Legal purpose • Statute of requires contracts for the sale of real estate must be in writing to be enforceable in a court of law.

Validity of Contracts

• A contract is valid when it meets all the essential elements that make it legally sufficient or enforceable • A contract is void when it has no legal force or effect because it lacks some or all of the essential elements of a contract.

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Validity of Contracts

• A contract is voidable when it appears to be valid but may be rescinded or disaffirmed by one or both parties based on some legal principle • A contract is unenforceable when it seems on the surface to be valid; however, neither party can sue the other to force performance

Validity of Contracts

• In Illinois, contracts with minors for “necessaries” are enforceable.

Discharge of Contracts

• Performance of a Contract • – the transfer of rights or duties under a contract – Equitable Title vs Legal Title • – substitution of a new contract in place of the original

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Discharge of Contracts

• – violation of any of the terms or conditions of a contract without legal – Seller’s remedies – Buyer’s remedies – Suit for – Statute of Limitations

Discharge of Contracts

• Termination can occur when any of the following take place: – Partial performance – Substantial performance – of performance – Mutual agreement – Operation of law – Rescission

Contracts Used in the Real Estate Business

• Contract forms • Listing and Buyer Agency Agreements • Leases • Real Estate Sales Contracts • Escrow Agreements

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Contracts Used in the Real Estate Business

• In Illinois – Chicago Bar Association, et al. versus Quinlan and Tyson, Inc. – Ruled that real estate licensees are authorized only to fill in blanks on printed form contracts that are customarily used in the real estate community

Customary Terms of Real Estate Sales Contracts

• Offer, counteroffer, and acceptance • Earnest money agreement • Equitable title • Destruction of premises • • Contingencies • Amendments and addendums • Additional provisions • Home and construction warranties

Contracts Use in the Real Estate Business

• Options – contract in which optionor gives optionee the right to buy or lease property at a fixed price within a certain period of time – optionee pays a fee for option right • Land Contracts – also known as Contract for Deed, Installment Contract, or Articles of Agreement for Warranty Deed – seller (vendor) retains legal right to property; buyer (vendee) gains equitable title to property

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Electronic Signatures and Paperless Transactions

• Illinois Electronic Commerce Security Act • ESIGN Act • Uniform Eletronic Transactions Act (UETA) • Brokerages must still maintain records of transactions for five years; however, storage in the cloud is permissible

Letters of Intent

• Commercial transactions • Illinois Supreme Court case Quake Const., Inc. v. American Airlines, Inc. set guidelines to determine if a letter of intent is binding – Typically in writing – Amount of detail – Amount of money – Formal writing – Contemplation of formal written document

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