Real Estate
When is a purchaser said to have "equitable title?
At the signing of the sales contract by both buyer and seller/Equitable title is the right to obtain title in the future. This is obtained by the buyer when the buyer and seller both sign the contract.
The broker must return the earnest money to the buyer
Broker deposits payroll funds into the trust account/A broker can never deposit payroll funds into a trust account - this would always be commingling.
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
Which of the following items would NOT always be part of a real estate purchase contract?
Earnest money/Earnest money is not required to have a contract. Remember that earnest money is not the consideration itself. The promise to pay the sale price is the consideration given by the buyer.
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/A writ of execution is typically where the court orders a sheriff to seize property and sell it to satisfy a judgment.
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
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It could be withdrawn anytime prior to conveyance of an acceptance or rejection/An offer or counteroffer can be withdrawn up until acceptance and communication back of the acceptance.
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/Earnest money is considered to be good faith money showing sincerity on the part of the buyer.
What is true when a counter-offer is made?
It voids the previous offer/A counter-offer does void the previous offer.
What is the best definition of good consideration?
Love and affection
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/The statute of frauds says that oral contracts for the sale of real estate are unenforceable.
Y offers X $60,000 for X's property. Which of the following terms BEST describes the role of X?
Offeree/Y (offeror) is making the offer to 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/An "option" gives the optionee the RIGHT to buy at a specific price within a specific time period.
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/Specific performance is court action to force completion of a contract. This would be the buyer`s best remedy.
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
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
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 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
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 statements BEST describes the usual legal effect of a contract signed between an adult and a minor?
Voidable by the minor/It is voidable by the injured party (minor). We assume the minor is extremely vulnerable to being taking advantage of by an adult. Therefore, although the adult is bound, the minor may void it. It is not automatically void.
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/It is voidable by the person to whom it was misrepresented. However, the contract is not illegal nor automatically void (the person may actually want to complete it anyway).
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 broker must present all offers to a seller no matter how low the offer might be.
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 a(n):
amendment/An amendment is used to change an item in a contract./An addendum is used to add something to a contract, not change - an amendment is used for a change.
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 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/An offer can always be withdrawn up until acceptance; therefore, the broker will continue to market the property for other possible buyers
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/Knowingly misrepresenting something in an attempt to make money would be deceptive and fraudulent conduct.
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/An expressed agency is created, either orally or in writing, by a principal authorizing an agent to act on their behalf.
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/Specific performance is court action to force completion. If the court orders this, the seller must complete the original agreement.
Knowingly misrepresenting a material fact in a deliberate way so that someone else suffers a loss in an attempt to make money is:
fraud/Fraud is lying with the intent to make money.
In order to be in compliance with the Statute of Frauds, a sales contract must be:
in writing
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/A buyer wanting an inspection contingency is normal. However, it is reasonable to insist on a short time frame for the inspection. If the buyer backs out based on the inspection, the seller can put the property back on the market quickly.
A mortgage contingency usually includes all of the following items EXCEPT:
name of the lending institution/A contingency allows a party to void a contract upon some event happening or failing to happen. The buyer usually writes the contract contingent upon a loan of a particular amount (1), by a particular date (2), at a particular interest rate (3). At the time of contract, the buyer usually does not know who the lender will be
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 right to buy a property for a definite sale price with a definite time period is referred to as a(n):
option contract/An option contract does give the right to buy in the future for a definite price within a definite time frame.
A good example of a unilateral contract would be a(n):
option contract/An option contract is a one way promise and is therefore a unilateral contract.
A contract that begins as uni-lateral but could end up being bi-lateral is a(n):
option contract/An option contract is where the seller promises to sell but the buyer has the option of purchasing or not. So initially, an option is a one way promise or uni-lateral but could end up bi-lateral if the buyer decides to purchase.
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/An agent must present all offers together at the same time to allow the seller to choose which one is best.
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/Puffing is a subjective opinion and is not illegal - this was just the broker`s opinion.
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:
rescind the first counteroffer before acceptance and then accept the better offer/The seller should not accept the new better offer until the counteroffer has been rescinded.
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
In the process of preparing to present an offer to the seller, a broker receives another offer. The broker:
should present both offers together
A sales contract must be in writing to be enforceable due to the:
statute of frauds
A contract whereby either party is not able to sue the other party would be classified as:
unenforceable/An unenforceable contract is where neither party has standing in court to sue the other.
A contract where one party is bound to perform but the other party is not would be referred to as:
uni-lateral/A uni-lateral contract is a one way promise - a promise for an action. One party is bound but the other is not.
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/A joint owner who signs a sales contract without the consent of the other owners has no legal authority to do so - this would be never be valid and therefore would be impossible to perform.