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Hello again. Welcome back
to real estate economics.
I'm John McDonald,
Emeritus Professor of Economics
at the University of Illinois,
Chicago, and Emeritus professor
of real estate at
Roosevelt University.
This is the third lecture
in our series and
the last one on the legal
aspects of real estate.
Today's talk is about
contracts for real estate.
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Previously we did the
forms of ownership.
We're concentrating on the
maximum ownership rights
that one can possess,
that we called the
Simple Estate.
Now, there are, however,
even with maximum ownership,
limitations on ownership,
you have to pay your taxes,
you have to be using
the real estate for legal
purposes naturally,
and you are also subject to what
is called eminent domain or
compulsory purchase
when the government
needs to obtain your property
for a public purpose.
Today, we're doing contracts.
We're going to start with
the contract for sale.
It's said that the
sales contract
is the most important
contract in real estate,
but there are several
other contracts
that we will touch on briefly.
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The sales contract,
what are the basic
requirements for
a sales contract in the application
of the law of contracts?
First of all, parties must have
legal objectives, naturally,
and are competent to act.
Competent, namely the person
who's selling actually
owns the property and that
the party is of legal age.
Now, that's just start,
there is offer and acceptance.
All legal contracts have
an offer and an
acceptance of that offer.
Not only that, there is a
statement of consideration.
In other words, value given or
promise made by both
of the parties.
Each party is making a
promise or giving something
of value in exchange
for what they are receiving
from the other party.
There is no defect to
mutual agreement i.e.,
no one is under duress
that you are free
to make the deal that is being
described in the contract.
Finally, in real estate,
the contract for sale
must be in writing,
including the legal
description of the property
that we talked about
briefly in the last class.
Now, that legal description
is complicated,
it really has to be in writing
and then of course signatures
of the buyer and the seller.
These are the basic contract for
sale and there are
several other contracts
in real estate,
and contracts in general as
well for things other
than real estate.
