If you’ve considered a career as a real estate salesperson or broker, or are currently in a qualifying course in your state, then this article will give you a heads up on some important terms that will help you in your career. They are broken down by two topics to keep you mindful of the context in which they are used, contracts and leases. While only a few will be covered here, they are normally the most important ones that salespersons will come across.
A contract is an agreement between two parties either to engage in an act or to keep from doing some act. There are various types of contracts, which include express, bilateral, unilateral, voidable, and executory. While most of these terms would be used by a lawyer, the more important ones will be defined. An express contract is one where the parties have agreed orally or in writing to all the terms that have been stated. An example is the listing contract, which you can read about in my other articles. A bilateral contract is one where both parties have agreed to perform in a certain way to each other. A typical sale of a building is an example of this, because the seller promises to give the building in exchange for the buyers promise to give the agreed upon monetary value. If a contract is dishonored, meaning one party fails to perform, then liquidated damages are to be paid in compensation for the breach of contract.
The important things for salespersons to understand involve the terms used in the lease contract. A lease is a type of contract where one party gives another an interest in a property, or complete possession of that property, in exchange for something that is given up by the other party. The owner of the property, and who normally sets up the terms of the lease contract is known as the lessor, while the tenant or future possessor of the property is the lessee. A lease contract usually involves what’s known as a net lease, where the lessee pays for expenses related to the land or building. Common sense thus dictates that a gross lease is one where all expenses are paid by the lessor. If the property is income producing, an agreement can be entered via a percentage lease, where the lessee pays an agreed upon amount of rent plus a percentage of the income that the property makes.