CONTRACTS AND REGULATIONS 7
A transaction broker advises the parties regarding the transaction. They may NOT give buyers their personal opinions. True or False
True
Pursuant to an exclusive right-to-buy contract, a broker may always show the same property to another buyer. True or False
True
The Seller holds security deposits in the amount of $1,000 from each of six tenants. On the settlement sheet:
Debit Seller & Credit Buyer $6,000
In a net loan proceeds settlement sheet, the net loan amount is shown as a:
Debit broker single entry
LEGAL FEES, COST AND EXPENSES. Anything to the contrary herein notwithstanding, in the event of any arbitration or litigation relating to this Contract, prior to or after Closing Date the arbitrator or court must award to:
the prevailing party all reasonable costs and expense
In Colorado in the event that an exclusive right-to-buy contract is not signed by a buyer, the default relationship is that of a:
transaction broker relationship
A transaction broker may disclose adverse material facts regarding the buyer's financial ability to purchase the property in the purchase of a property. True or False
true
ONLY A written contractual agreement establishes agency. True or False
true
When an Exclusive Right-to-Buy Contract has been executed, who is obligated to pay the broker working with the buyer? - The seller - The listing broker - The buyer - It is determined by which box or boxes are checked in the contract
It is determined by which box or boxes are checked in the contract
The buyer's legal procedure to enforce a contract is: - Lis pendens - Specific performance - An attachment - An injunction
Specific performance. Is the buyer's legal remedy to enforce the terms of the contract
Which of the following is true when a broker negotiates a fee under the Exclusive Right-to-Buy Contract? - The listing broker must pay the negotiated fee at closing - The buyer will pay the fee at closing - The broker may be directed to seek payment from any or all of several sources - If the broker cannot get the fee from the listing broker or seller, the buyer is under no obligation to pay
The broker may be directed to seek payment from any or all of several sources
According to the lead-based paint disclosure provision, contained in the Residential Contract to Buy and Sell, which of the following is correct if the building permit for a residential improvement was issued prior to January 1, 1978?
The contract is void unless disclosure is signed by the seller and brokers prior to the parties signing the sales contract.
Licensees are NOT required to use the Licensee Buyout Addendum to Contract to Buy and Sell under which of the following circumstances?
When an agent decides to purchase a property listed by another broker
An Exclusive Right-to-Buy contract may: - not continue for an indefinite period of time without a specific termination date - have a termination date up to one year after the start date of the contract - may involve three or more parties to the contract - all of the above
all of the above
In the absence of an exclusive right-to-buy contract, a buyer may: A) look at houses with more than one agent in the same day B) look at the same house with more than one agent in the same day C) look at houses with a broker and then purchase a home being held open by another broker in the same day D) all of the above
all of the above
The alternative dispute resolution, mediation clause, in the Exclusive Right-to-Buy Contract is for the purpose of: - limiting the time period for disputes to 30 days - encouraging alternatives to litigation - reducing the cost of resolving disputes - all of the above
all of the above
The buyer agent of company P closed on a property on Tuesday. The buyer agent should bring the completed file and commission check to the broker: - as soon as possible - by Friday - after dinner and a celebration cocktail - before the property closes
as soon as possible
Proper disclosure of brokerage relationships must be made: - verbally - personally by the employing broker - in writing - with witnesses
in writing
In a legally binding contract consideration could be: - A refrigerator - Money - A promise - All of the above
All of the above
Agency disclosure does not have to be made to a buyer under which of the following circumstances? - Showing a home at an open house - When responding to general factual questions concerning advertised properties - During "small talk" regarding general price range, location, property styles, etc. - All of the above
All of the above. You need to disclose your brokerage relationship in writing before engaging in any activity which requires a brokerage license. Commission rule E-35 states that "brokerage activities" occur when a broker elicits or accepts confidential information from a party concerning specific real estate needs, motivations, or financial qualifications. Activities such as open houses, preliminary conversations, or small talk concerning price range, location, property styles, or responding to general factual questions about properties that have been advertised for sale or lease do not qualify as triggering brokerage activities.
All of the following are true in the Colorado Right-to-Buy Contract except: - That the broker may be compensated by the seller - Allows for the broker to be an agent for the sellers as well as the buyers - May provide that the broker be paid an hourly rate - Must have definite termination date
Allows for the broker to be an agent for the sellers as well as the buyers
Broker Beatrice meets with Buyer Bob, and together they negotiate the terms of an Exclusive Right-to-Buy Contract. Buyer Bob is unrealistic in his expectations of properties available in his price range, and after looking at several houses decides to wait until next year and save some more money before making a purchase. In regards to the Exclusive Right-to-Buy Contract, which of the following is true? - Beatrice may retain the contract in her original files until next year - Beatrice may destroy the contract, as it never came to fruition - Beatrice must submit the contract to the office to be retained with all other permanent records - Beatrice can hold on to the contract and use it again next year
Beatrice must submit the contract to the office to be retained with all other permanent records. All contracts must remain with the permanent records of the office. Exclusive Right-to-Buy Contracts expire in one year, so a new contract will be needed.
How is the relationship handled when a buyer wishes to work with a broker to locate property to purchase? - Brokerage will be an agent for the buyer unless there is written agreement for another relationship - Buyer and broker must sign an exclusive representation agreement - Buyer will be a customer with no working relationship to the brokerage company - Buyer and broker may agree to a relationship which could include agency, transaction-brokerage, or no working relationship between the parties
Buyer and broker may agree to a relationship which could include agency, transaction brokerage, or no working relationship between the parties
An agent and buyer enter into an Exclusive Right-to-Buy Contract, the - Broker must be a buyer's agent - Buyer may have agreements with several brokers - The broker is bound to work with one buyer at a time - Buyer is bound to work with only one broker during the term of the contract
Buyer is bound to work with only one broker during the term of the contract
In the Exclusive Right-to-Buy Contract, who is responsible with regard to registered sex offenders? - Sex offenders privacy rights are protected by state and federal law - Sellers will be required to disclose any sex offenders in the neighborhood - Buyers must obtain this information from local law enforcement agencies - Brokers must disclose the presence of any known sex offenders
Buyers must obtain this information from local law enforcement agencies
Which of the following is true of brokers working for buyers under the Exclusive Right-to-Buy Contract? - They may require listing brokers to adjust their offered split to match the buyer's broker's negotiated fee - They may negotiate an hourly fee to be paid in addition to any other compensation agreed upon - They may also seek a refundable retainer fee, which must be credited toward any fee earned - They may also receive compensation from lenders and other service providers without disclosure to the buyer
They may negotiate an hourly fee to be paid in addition to any other compensation agreed upon. All compensation received by the buyer's broker must be disclosed. Hourly fees may be charged in addition to other compensation if that is what the parties have agreed upon.
In a buyer-agency situation, what responsibility does the agent have to the principal? - To be vicariously liable for their actions - To pay a commission - To disclose psychologically impacting events surrounding a property - To be an advocate of the buyer's best interests
To be an advocate of the buyer's best interests
A broker enters into an Exclusive Right-to-Buy contract with a purchaser. The purchaser finds a satisfactory property and makes an offer, which is accepted. The listing broker is unavailable during much of the transaction and the selling broker performs several of the listing broker's responsibilities. In gratitude, the seller offers a $500 bonus to the selling broker. When is it acceptable for the broker to receive this money? - Never, as he is an agent of the buyer - Only with the listing broker's permission - With full written disclosure to both parties - After clearing it with the Real Estate Commission
With full written disclosure to both parties
The length of the holdover period in the exclusive right-to-buy contract is best described as:
a freely negotiable period that may be invalidated when the buyer signs a new exclusive right-to-buy contract
The real estate broker is liable to the buyer if he: - executes a contract in the seller's name after proper power of attorney authorization - acts in excess of the authority given by his principal - makes statements based on misrepresentations by the seller - gives buyer's earnest money to seller and sale later fails through no fault of agent
acts in excess of the authority given by his principal
A transaction broker may disclose the following information regarding a buyer he is assisting in the purchase of a property: - that the buyer is willing to pay more for the property than he offered - what the buyer's motivation to purchase the property is - adverse material facts regarding the buyer's financial ability to purchase the property - what the buyer's race and country of origin is
adverse material facts regarding the buyer's financial ability to purchase the property. The buyer's financial ability to purchase the property is considered a fact, which must be disclosed to a seller.
When a buyer executes a real estate sales contract that is accepted and signed by a seller: - buyer may take possession of the real estate - seller gives buyer ownership rights - buyer gets legal title - buyer has equitable title
buyer gets equitable title. Upon acceptance of the sales contract, the buyer has an interest in the property called equitable title. Legal title is not conveyed until closing.
The Exclusive Right-to-Buy Contract is available as: - various sizes and shapes - multiple flavors - different colors - buyer-agency and transaction broker relationships
buyer-agency and transaction broker relationships
Broker Brown met buyers (the Bakers) at an open house. They established good rapport with each other, and the purchasers signed an Exclusive Right-to-Buy Contract with Broker Brown. The Bakers called Brown on numerous occasions to make an appointment to view properties. In each case Brown had a previous engagement. Finally the Bakers found a home they wanted at a house that was being held open by another broker and the Bakers purchased the property through that broker. When Brown learned of the transaction he demanded his commission, claiming it was rightfully his as a result of the Exclusive Right-to-Buy Contract. Broker Brown: - is entitled to receive his commission under the terms of the Exclusive Right-to-Buy agreemnt - did not fulfill his obligations under the terms of the Exclusive Right-to-Buy agreement and is likely not entitled to receive a commission - should receive a referral fee from the broker holding the open house as the buyers are rightfully his - none of the above
did not fulfill his obligations under the terms of the Exclusive Right-to-Buy agreement and is likely not entitled to receive a commission. Broker Brown did not fulfill his obligations under the terms of the contract. Broker Brown has not earned a commission. He was obligated to be available when the Bakers' wanted to view properties. By not being reasonably available, he breached the contract.
A father and son own land as joint tenants. The father conveys one half of his interest to his daughter. Ownership would now be held by:
father, son and daughter as tenants in common
Under an Exclusive Buyer Agency Agreement, the broker has what agency relationship to the purchaser? - Principal - Fiduciary - Transaction Broker - Client
fiduciary. A fiduciary relationship is one where one person places complete confidence in another in regard to a particular transaction or one's general affairs or business.
George is a buyer's agent filling out a Contract to Buy and Sell for young married buyers. When he asks how they wish to take title they are unsure. What should George do? - leave the choice blank and advise the couple to seek legal counsel and let George know their choice later - explain the differences of the various ways to take title and suggest the one George knows is correct - leave the choice blank since the title company will know what to do - advise them to take title as joint tenants since that is appropriate for a married couple
leave the choice blank and advise the couple to seek legal counsel and let George know their choice later
RESPA applies to the activities of:
lender's financing the purchase of a borrower's residence
Pursuant to an Exclusive Right-to-Buy Contract, a broker: - may always show the same property to another buyer - may not show the same property to more than one buyer - may show the same property to another buyer only if a buyer-agency relationship has been established - may show the same property to another buyer only if a transaction broker relationship has been established
may always show the same property to another buyer. The Exclusive Right-to-Buy Contract contains a clause authorizing the broker to show properties to more than one buyer.
In a transaction broker situation, what responsibility does the principal have to the agent? - To present all offers in a timely manner - To account for funds - A fiduciary responsibility - He may have to pay a commission
may have to pay a commission
What is the maximum commission rate that a buyer may be charged pursuant to an Exclusive Right-to-Buy contract? - 0.028 - 0.03 - 0.07 - none of the above
none of the above. Anti-trust laws prohibit price fixing. There is no maximum. All commissions are negotiable.
The law requiring real estate contracts to be in writing to be enforceable is called the
statute of frauds
If the buyer assigns her right to purchase a property pursuant to an Exclusive Right-to-Buy Contract to her brother-in-law: - the broker is no longer entitled to a commission - the broker shall still have the right to collect a commission - the broker may only collect a commission if the brother- in-law signs an Exclusive Right-to-Buy Contract - the broker may only collect a commission if the listing broker feels that the selling broker has earned it
the broker shall still have the right to collect a commission. The broker's right to collect a commission is specifically protected in the Exclusive Right-to-Buy Contract even if the buyer's right to purchase is assigned to another party.