Chapter 9: Contracts

A buyer writes a contract with a contingency that says if a certain thing does NOT happen, the buyer does NOT have to purchase the property. This contract does not close due to this contingency. Normally, any earnest money should be given to the: A.) buyer B.) seller C.) broker D.) state

A

A contract whereby either party is not able to sue the other party would be classified as: A.) unenforceable B.) void C.) voidable D.) enforceable

A

A property has had termite problems in the past. A broker tells a buyer that the termite problems have been taken care of knowing that the problems actually still exist. The broker is guilty of: A.) deceptive and fraudulent conduct B.) puffing C.) fraud only in skill and care D.) negligent misrepresentation

A

An agent brought an offer to a seller with the seller counteroffering back to the buyer. In the meantime, another offer was brought to the seller with terms more favorable to the seller. The seller's best option would be to: A.) rescind the first counteroffer before the acceptance and then accept the better offer B.) go ahead and accept the better offer and just ignore the outstanding counteroffer C.) wait for a third offer and hope the other two buyers won't go elsewhere D.) counteroffer on the new offer and wait back to hear from both buyers

A

Which of the following statements is true regarding earnest money? A.) It must remain intact with the seller until closing B.) It is typically given by a buyer to a broker along with the offer to purchase contract C.) The broker determines the amount of earnest money with each contract D.) Any interest earned on the earnest money is credited to the buyer

B

A buyer is in the process of purchasing a home. If the buyer would like to be protected against a faulty heating system in the home, the buyer should investigate purchasing: A.) title insurance B.) mortgage title insurance C.) a home warranty protection plan D.) life insurance

C

A listing agent has received several offers on a listed property all at the same time. The listing agent should: A.) present the offers in the order received B.) present the best offer first C.) present all offers together at the same time D.) present only the offers with pre-approved buyers

C

A seller's agent has a property listed. A buyer would like to make an offer on the property but wants to include an inspection contingency. In order to protect the seller, the listing agent should: A.) discourage these types of contingencies B.) refuse to take such an offer to the seller C.) make the inspection contingency for the shortest time frame possible D.) only allow contingencies based on financial issues

C

An agent is working with a married couple in the purchase of a home. The couple asks the agent how they should take title to the property. The agent should say: A.) tenancy in the entireties B.) joint tenancy C.) see an attorney D.) tenancy in common

C

An offer to purchase contract has been presented to a seller. Which of the following statements is true regarding the contract negotiation? A.) Any counteroffer must be close to the terms of the original offer B.) Any counteroffer must be in writing C.) The offer could be withdrawn any time prior to conveyance of an acceptance or rejection D.) The buyer would have a three day right of rescission even after acceptance by the seller

C

What is the purpose of earnest money being part of a real estate contract? A.) Without it, there would be no consideration B.) It gives the broker commission money in case the buyer does not close C.) It establishes the intent of the buyer to carry out the contract D.) It provides for payment of some of the buyer's closing costs

C

Which of the following statements would be the BEST example of puffing? A.) Telling a buyer a home on a septic system is connected to city sewers B.) Telling a buyer a property with 60 acres has 75 acres C.) Telling a buyer this home has the most beautiful view overlooking the lake D.) Telling a buyer a residentially zoned lot can be used for a commercial structure

C

As part of a real estate transaction between a buyer and seller, the seller was required to pay taxes by December 31st. What clause should be put in the contract to assure this happens? A.) Alienation clause B.) Subordination clause C.) Acceleration clause D.) Time is of the essence clause

D

What is true when a counteroffer is made? A.) This represents a partial acceptance B.) It is binding on the offeree C.) It voids only part of the previous offer D.) It voids the previous offer

D

A buyer contacts a listing broker about writing an offer on a property the broker has listed. The buyer wants to make an offer $40,000 below the list price. What should the listing broker do? A.) Write the offer as instructed by the buyer B.) Tell the buyer that writing such a low offer would be a waste of time C.) Pressure the buyer to raise the amount of the offer D.) Qualify the buyer before presenting the offer

A

A buyer made an offer with earnest money to a seller on a listed property. The offer contained a clause saying the offer was only good for 24 hours. While the seller was considering the offer within the 24-hour frame, the buyer changed his mind and called his buyer's agent to rescind the offer. The buyer's agent notified the listing agent of the recission of the offer. In this case, the earnest money: A.) can only be returned to the buyer if the seller agrees B.) should be returned to the buyer immediately C.) should be held by the brokerage and applied to the next offer the buyer wishes to make D.) can only be returned to the buyer by court order

B

A person signs a lease on a house. The lease agreement also gives the tenant the right to buy the house for a set amount at the end of the lease. This would be called a: A.) lease purchase B.) lease option C.) lease with a right of first refusal D.) lease with a license

B

A seller and buyer enter into a sales contract on a property. The seller breaches the agreement causing the buyer to sue for specific performance. If the buyer wins this lawsuit, the seller will have to: A.) pay damages B.) follow through with the original contract C.) return the earnest money to the buyer D.) rescind the contract

B