Contracts: Practice Quesitons

Which of the following constitutes illegal commingling by a licensee?

Broker deposits payroll funds into the trust account

A seller and buyer have agreed to a sales contract. The buyer backs out of the agreement. Which of the following could the seller NOT do?

File for a writ of execution

What is the purpose of earnest money being part of a real estate contract?

It establishes the intent of the buyer to carry out the contract

A buyer phoned a seller to inquire about a piece of real estate the seller had for sale. The buyer and seller agreed to the price and terms over the phone. Which of the following is the MOST LIKELY legal effect of this agreement?

Non-enforceable

Y offers X $60,000 for X's property. Which of the following terms BEST describes the role of X?

Offeree

A prospective buyer wanted to have the right to purchase a home at a set price within the next 90 days but did not want to be obligated to purchase it. Which of the following documents would allow the buyer to do this?

Option

A salesperson received an offer on a house. While preparing to present the offer, another offer on the same house came into the office. Which of the following statements BEST describes what the salesperson should do?

Present both offers at the same time

A listing agent presents two offers to a seller that are close to the list price. The listing agent advises the seller to take the higher priced offer. The seller is leaning toward accepting the higher priced offer when the listing agent learns of another offer from a third buyer on the same property. This new offer is a lot lower than the other two offers. What should the listing agent do?

Present the offer from the third buyer because the listing agent must present all offers regardless of how low the price might be

When a contract is signed between a buyer and a seller, the buyer is known to have received equitable title upon the happening of which of the following events?

Signing of the agreement by the buyer and seller

A buyer and seller negotiated a sale whereby the seller was to include all the kitchen appliances. Upon moving in, the buyer discovered that the seller had taken all the kitchen appliances. What would be the buyer's best remedy?

Sue the seller for specific performance

Which of the following statements BEST describes the usual legal effect of a contract signed between an adult and a minor?

Voidable by the minor

False information was given to induce a person to enter into a contract. Which of the following legal effects BEST describes this contract?

Voidable by the misrepresented party

When does a sales contract become legally binding for the buyer?

When the seller's acceptance is communicated back to the buyer

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?

Write the offer as instructed by the buyer

A buyer made an offer on a property a broker had listed. The broker presented the offer to the seller. While the seller was still considering the offer, the buyer contacted and informed the broker that the buyer wanted to withdraw the offer. The broker should

continue to market the property for the seller

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

deceptive and fraudulent conduct

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:

make the inspection contingency for the shortest time frame possible

In order for a real estate sales contract to be valid, it must include a

property description

A broker tells a buyer that the broker thinks a particular house is the best in the neighborhood. The buyer purchases the property only to find another property later on that is more desirable. The broker is guilty of

puffing

In the process of preparing to present an offer to the seller, a broker receives another offer. The broker:

should present the offers together

A sales contract must be in writing to be enforceable due to the

statute of frauds

A contract where one or more of the parties can rescind is called

voidable

Which of the following elements must be in a contract to have a valid contract?

A clear description of the land

A person with a mental impairment would like to enter into a contract for the purchase of a piece of real estate. Which of the following statements would be true?

A person appointed by the court as a guardian can sign the contract on behalf of the mentally impaired person

Which of the following would be an example of an impossibility of performance regarding a sales contract?

A seller had signed the contract without the consent and knowledge of the other owners who were joint tenants

Which of the following items would NOT always be part of a real estate purchase contract?

Earnest money

What is true when a counter-offer is made?

It voids the previous offer

Which of the following statements would be the BEST example of puffing?

Telling a buyer this home has the most beautiful view overlooking the lake

Two brothers wanted to purchase a property for their parents to live in during their retirement years. The brothers wanted to take title in a manner that limited their tax liability. As an agent helping the brothers in this purchase, what would you recommend?

That the brothers seek advice from an attorney

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

follow through with the original contract

H had a property for sale for $129,000. B made an offer for $123,000. H made a counter-offer of $127,000. Which of the following statements is NOT true regarding this situation?

The counter-offer would be binding on B

R made a promise to sell the property to T. T, however, was only obliged to purchase the property if a certain condition was met. Which of the following statements would be true

This is a unilateral contract where T does not have to perform

Which of the following items would NOT always be a part of a contract for the sale of personal property?

Written agreement

When a change is needed in a contract, the best way to accomplish this would be with an

amendment

Knowingly misrepresenting a material fact in a deliberate way so that someone else suffers a loss in an attempt to make money is:

fraud

A seller of a property could NOT transfer marketable unencumbered title. What should the broker do with any earnest money involved in the transaction?

Give it to the buyer

A broker had a piece of property listed for $90,000. A buyer submitted an $89,000 offer. Which of the following statements is correct regarding this situation?

The buyer can revoke the offer until it is accepted

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. The contract does not close due to this contingency. Normally, any earnest money should be given to the:

buyer

A sales contract is accepted by both parties with earnest money being involved in the transaction. What should the broker do with the earnest money?

Deposit it into an escrow account immediately

A contract whereby either party is not able to sue the other party would be classified as

unenforceable

A contract where one party is bound to perform but the other party is not would be referred to as:

uni-lateral

An agent brought an offer to a seller with the seller counter-offering 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

rescind the first counteroffer before acceptance and then accept the better offer

When is a purchaser said to have equitable title?

At the signing of the sales contract by both buyer and seller

An offer to purchase contract has been presented to a seller. Which of the following statements is true regarding the offer?

It could be withdrawn anytime prior to conveyance of an acceptance or rejection

An offer to purchase contract was contingent upon the buyer receiving a loan. The buyer was not able to obtain financing. The buyer informed both the seller and the broker of the loan denial. Which of the following statements is true?

The broker must return the earnest money to the buyer

A mortgage contingency usually includes all of the following items EXCEPT:

name of the lending institution

A contract is not completed and binding until it is signed by the

offeree

S owns a property and lists the property for sale with a broker. The broker finds a buyer who makes an offer on the property. S is considered to be the

offeree

A contract that begins as uni-lateral but could end up being bi-lateral is an

option contract

A good example of a unilateral contract would be an

option contract

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

see an attorney

A broker has a property listed for $110,000. A buyer tells the listing broker she would like to make an offer of $90,000. What should the listing broker do?

Tell the buyer that the broker will present the offer to the seller

A seller told a broker, "If you find me a buyer, I'll pay you a commission. However, I don't want to sign a formal agreement." This type of agency would be classified as an

expressed

In order to be in compliance with the Statute of Frauds, a sales contract must be

in writing

A right to buy a property for a definite sale price with a definite time period is referred to as an

option contract

A listing agent has received several offers on a listed property all at the same time. The listing agent should

present all offers together at the same time