Contract

Definition

• An agreement between two or more parties, especially one that is written and enforceable by law.
• In real estate parlance, the contract is the legal document by which buyer and seller make offers and counteroffers for a piece of property. The real estate contract describes the property, includes or excludes items in the property, names the price, apportions the closing costs between the parties and sets forth a closing date. When buyer and seller agree on terms and sign the same document, the property is said to be "under contract." More formally known as agreement for sale, purchase agreement or earnest money contract.

Synonyms
arrangement, pledge, obligation, deal, fine print, promise, engagement, agreement, guarantee, commitment

Related Terms and Acronyms

• Acceleration Clause — Definition,
  • A provision within a document that explains how the lender expects payment for a loan, in due haste.
• Acceptance — Definition,
  • A property seller's formal, written approval of a buyer's offer.
• Addendum — Definition,
  • A change made to a contract.
• Alienation Clause — Definition,
  • A requirement that the borrower pay the mortgage in full upon transfer of the property.
• Amount Due at Lease Signing — Definition,
  • The total amount due before the consumer can take delivery of a leased vehicle. It can include any security deposit, title fee, capitalized cost reduction, monthly payments paid at signing and registration fees.
• Annuity Contract — Definition,
  • A contract that outlines each party's responsibilities as they relate to an annuity.
• Anticipatory Breach — Definition,
  • A notification that one party to a contract plans to renege, releasing the other party from having to fulfill its end of the agreement.
• As is Where is — Definition,
  • The buyer must examine the goods or property and buy at his or her own risk.
• Assumption Clause — Definition,
  • A provision in a mortgage contract that allows a buyer to take responsibility for the loan from the seller.
• Bilateral Contract — Definition,
  • A legal agreement in which both parties promise to give each other something. A purchase agreement in which the buyer promises to give money and the seller promises to transfer property is a bilateral contract.
• Bill of Sale (BS) — Acronym, Important,
  • A written document that serves as evidence of the transfer of title to personal property.
• Binder — Definition,
  • An agreement to consider the purchase of real estate. The agreement is secured and backed by a cash deposit as evidence of good faith on the part of the purchaser.
• Boilerplate — Definition,
  • Standard, routine language in legal documents.
• Bona Fide — Definition,
  • In good faith. In real estate, a bona fide purchaser or seller has the legal right to give or receive title.
• Breach of Contract (BOC) — Acronym,
  • Failure to abide by terms of a legal agreement without a legal excuse.
• Breach of Covenant — Definition,
  • Violation of a promise made in a contract or property deed.
• Breach of Warranty — Definition,
  • A determination that a seller cannot pass clear title of property to a buyer.
• Cancellation Clause — Definition,
  • A provision in a lease or other contract that spells out under what conditions the parties can call off the deal.
• Capitalized Cost — Definition,
  • A leasing term that refers to the price of the car. The lower the capitalized cost, the lower the monthly lease payment. The cap cost is negotiable and can be reduced by a cash down payment, trade-in or a manufacturer's rebate; it can be increased by the loan acquisition fee or costs left over from a previous lease.
• Caveat — Definition,
  • A charge or instrument placed on land title.
  • To give warning, notice or caution; beware.
• Claim — Definition,
  • A creditor's assertion of a right to payment from a debtor or the debtor's property.
• Confusio-Lexicon Maximus — Definition,
  • The rescinding of language in process when none is making nonsense less and therefore incurred but not reported deficiencies in mental capacities are not apparently un-obviously imposed.
• Consent Judgement — Definition,
  • A judge's legally binding approval of a written agreement by the parties of a lawsuit.
• Contingency — Definition,
  • A condition that must be met before a property sale can be completed, such as a home inspection or mortgage approval.
• Contract For Deed (CFD) — Acronym,
  • An agreement for sale of property in which the buyer takes possession while making payments, but the seller holds title until full payment is made. Also called a land contract.
• Contract to Purchase — Definition,
  • A document in which a property's buyer and seller approve the price and other terms of the transfer of title. Also known as an agreement of sale, a purchase contract or a sale contract.
• Contractual Lien — Definition,
  • A legal claim against property as a result of a voluntary contract, such as a mortgage.
• Covenant — Definition,
  • A promise made in a contract or property deed.
• Defendant — Definition,
  • The accused party in a lawsuit or criminal trial.
• Guarantee — Definition,
  • An enforceable warranty on the promise of quality of a product or formal promise by one person to take responsibility for the debts or obligations of another person if that person fails to meet them.
• Guarantor — Definition,
  • Someone who guarantees something.
• Homeowners Insurance Binder — Definition,
  • A document accompanying a homeowner's insurance policy that verifies the property is properly insured.
• Indefeasible — Definition,
  • That which cannot be forfeited or done away with. Indemnity Protection or exemption from loss or damage.
• Injunction — Definition,
  • A court order that prohibits a party from taking a specific course of action.
• Insurance Attorney — Definition,
  • An attorney who works with insurance law.
• Insurance Policy — Definition,
  • A legal contract between an insurer and entity that specifies what the insurer is required to cover and any benefits the insured entity is entitled to.
• Investment in the Contract — Definition,
  • The principal that has been contributed to an annuity.
• Irrevocable — Definition,
  • Unalterable.
• Irrevocable Beneficiary — Definition,
  • A life insurance or segregated fund beneficiary whose benefit cannot be revoked or modified in any way without his or her consent.
• Judgement — Definition,
  • A determination by a court of law or a judicial decision.
• Kicker — Definition,
  • Any benefit to a lender above ordinary fixed-interest payments such as an equity position in a property or a percentage participation in the income stream.
• Land Contract (LC) — Acronym,
  • An agreement for sale of property in which the buyer takes possession while making payments, but the seller holds title until full payment is made.
• Letter of Intent — Definition,
  • A formal notification that a buyer intends to buy property. It is not legally enforceable.
• Lien — Definition,
  • A legal hold or claim of a creditor on the property of another.
• Loan Commitment — Definition,
  • A lender's promise to advance a specific sum on specific terms.
• Modification — Definition,
  • A change in terms of the loan agreement.
• Non-Disclosure Agreement (NDA) — Acronym,
  • A contract that disallows one or more parties from disclosing information covered by the contract.
• Note — Definition,
  • A legal acknowledgement of a debt and an implicit promise to repay. It includes the loan amount, interest rate and term.
• Notice of Default (NOD) — Acronym, Important,
  • The step in the foreclosure process where the lender informs the court that the borrower is in arrears.
• Oral Agreement — Definition,
  • A spoken, unwritten legal agreement, worth the paper it's printed on.
• Plaintiff — Definition,
  • The party who initiates a lawsuit.
• Policy — Definition,
  • A set of rules or guidelines.
  • An insurance contract.
• Policy Declarations — Definition,
  • The section of the insurance policy that declares the specifics of the insurance policy including premiums, named perils, and policy limits, amongst others.
• Pre-paid Expenses — Definition,
  • also called prepaid items or prepaids -- Recurring costs such as taxes, insurance and interest that are paid at closing and which cannot be financed.
• Purchase Agreement — Definition,
  • A written promise to pay a specific amount for a property at a specified time. The purchase agreement is a written statement of the offer, which both the borrower and the seller will sign if the offer is accepted.
• Quantum Meruit — Definition,
  • Used in contract law it means "reasonable value of services."
• Real Estate Agent — Definition,
  • A person who is licensed to represent a buyer or seller of land and the buildings and other improvements on it.
• Realtor — Definition,
  • A real estate broker or an associate holding active membership in a real estate board.
• Renewal — Definition,
  • Signing on again with the same lender once a term is up.
• Rescission — Definition,
  • Cancellation of a contract by agreement of the parties.
• Right of First Refusal — Definition,
  • An agreement by an owner to give another party an opportunity to buy the property before it is offered to anyone else.
• Sales Contract — Definition,
  • A legal written document that details the agreed upon conditions between a seller and a buyer regarding the sale of a specific property. Also called an "Agreement of Sale."
• Service Contract — Definition,
  • Also known as extended warranty. A contract that covers certain car repairs or problems after the manufacturer's or dealer's warranty expires. Extended warranties are sold by car manufacturers, dealers and independent companies. With a new car, the extended warranty usually must be purchased by the end of the first year of ownership.
• Settlement — Definition,
  • An agreement between the parties of a legal case.
• Settlement Statement — Definition,
  • A document that details who has paid how much to whom.
• Specific Performance — Definition,
  • A remedy in a court of equity compelling a defendant to carry out the terms of an agreement or contract. It is available only where the remedy of damages cannot afford adequate relief to the plaintiff.
• Statute — Definition,
  • A law established by an act of the legislature.
• Statute of Frauds (SOF) — Acronym,
  • A law which provides that certain contracts must be in writing to be enforceable at law. This includes real estate contracts.
• Statute of Limitations (SOL) — Acronym,
  • A period of time specified by statute within which an action at law must be brought or else be forfeited.
• Voidable — Definition,
  • Where one party to a contract is entitled to rescind the contract at his/her option.
• Waiver — Definition,
  • The intentional and voluntary renunciation, abandonment, or surrender of some claim, right, or privilege.
• X — Definition,
  • A symbol used in contracts, or other legal documents, representing where a signature should appear.