CH. 13

What is the time period in New York for bringing a legal action involving a real estate contract? 1 year 4 years 6 years 10 years

6 years

What is the difference between a sales contract and a binder?

A sales contract is an agreement whereby the buyers agree to purchase a property and the sellers agree to transfer title to the property. A binder is an agreement whereby the buyers put down earnest money as evidence of their good faith and intention to complete the transaction. This agreement is used to bind the parties until they can prepare a more formal sales contract.

Which of the following contracts must be in writing to be enforceable? A parol contract A six-month lease A two-year lease An executory contract

A two-year lease

What is the difference between a void contract and a voidable contract?

A void contract is an agreement that does not meet the tests for validity, and therefore is no contract at all. A voidable contract is one which initially appears to be valid, but is subject to cancellation by a party to the contract who is believed to have acted under some kind of disability.`

When is a contract terminated? After a cooling period After both parties have signed it After it is performed After the parties agree to their respective promises

After it is performed

What is the difference between an express contract and an implied contract?

An express contract is one in which all the terms and covenants of the agreement have been clearly stated and agreed to by all parties, whether verbally or in writing. An implied contract is an unstated or unintentional agreement that may be considered to exist when the actions of any of the parties suggest the existence of an agreement.

Which of the following is a good example of a unilateral contract? A listing agreement A personal services agreement A sale contract An option to buy

An option to buy

What is a parol contract? A written contract An oral contract An express contract An implied contract

An oral contract

What contract provision shows a division of expenses between buyers and sellers? Apportionments Debits & Credits Terms of Payment Exclusions

Apportionments

Which contract provision allows for the transfer of the contract to another person? Assignment of a Contract Operation of Law Transfer Clause Execute Clause

Assignment of a Contract

What are the five criteria of a valid contract?

Competent parties Mutual agreement Lawful objective Consideration In writing

If a property's seller changes the buyer's original offer to purchase, the seller has Modified the offer. Forfeited the offer. Rescinded the offer. Countered the offer

Countered the offer

What is used to seal a binder agreement? A promise to pay A judgment letter A property lien Earnest money

Earnest money

According to contract law, every valid contract is also what? Void Enforceable Enforceable or unenforceable Voidable

Enforceable or unenforceable

During the specified period of an installment sales contract, what type of title does the buyer receive? Marketable title Researched title Equitable title Legal title

Equitable title

Buyer Bill has agreed to pay for a computer system after all hardware has been installed and operational. What type of contract does Bill hold? Executory Lateral Executed Open Option

Executory

Refraining from taking legal action when a promissory note payment is late is called Caveat emptor. Forbearance Binder Time is of the essence

Forbearance

Which legal remedy would force the buyer to give up any earnest money deposit for defaulting on a sales contract? Rescission Forfeiture Suit for damages Suit for specific performance

Forfeiture

List five provisions typically found in New York sales contracts. (See screens 15 and 16 for other correct answers.)

Identification of parties Legal description Personal property provision Consideration Terms of payment

How might a voidable contract become valid? If neither party agrees to the terms. If the party who has reason to disaffirm the contract elects instead to perform it. If the party who wants to enforce the contract seeks legal relief. If the party who wants to enforce the contract seeks damages.

If the party who has reason to disaffirm the contract elects instead to perform it.

What is an important legal feature of a contract? It represents a "meeting of the minds." It must use precise wording in a document. It is not voidable. It can be created only by an attorney.

It represents a "meeting of the minds."

A prospective homebuyer submits a signed offer to buy a house with the condition that the seller pays financing points at closing. The seller disagrees, crosses out the points clause, then signs and returns the document to the buyer. At this point, assuming all other contract validity items are in order, what is the status of the offer? It's an accepted offer; therefore a valid contract. It's an invalid contract. It's still an offer. It's an invalid offer.

It's still an offer.

Which contract provision makes previous promises null and void? Mager Clause Merger Clause Rescind Clause Vacant Clause

Merger Clause

Bob and Charlotte are both 17 years old and are married. When may they purchase their first home? In a year when they become 18 years old When one of their parents co-signs the contract for the home. Now In 4 years when they become 21 year-old legal adults

Now

Which contract would be used to transfer real estate interests from one party to another? Listing contract Mortgage contract Option agreement Promissory agreement

Option agreement

Correcting an error in a contract document requires a legal action called Rescission. Forfeiture. Reformation. Modification.

Reformation.

Which legal remedy cancels the contract and returns the parties to their pre-contract condition? Rescission Forfeiture Suit for damages Suit for specific performance

Rescission

Which legal remedy resets parties to pre-contract status? Revision Reorder Rescission Refile

Rescission

What do we call the right of a person to have the first opportunity to purchase or lease a property? Right of first refusal First right to buy Right to resend Right to counteroffer

Right of first refusal

Which legal remedy attempts to force the defaulting party to comply with the terms of the contract? Rescission Forfeiture Suit for damages Suit for specific performance

Suit for specific performance

What is a right of first refusal?

The right of a person to have the first opportunity to purchase or lease a property.

When must a suit for damages be initiated?

The suit must be initiated within the time period allowed by the Statute of Limitations.

What does "time is of the essence" mean?

This phrase emphasizes the requirement that events related to the contract must be performed on time.

A buyer provides earnest money along with an offer to purchase for all of the following reasons EXCEPT which? To show the seriousness of the offer To meet purchase offer requirements To increase the seller's comfort level To represent possible liquidated damages in case of buyer default

To meet purchase offer requirements

An option to buy is what kind of contract? Unilateral Implied Parol Bilateral

Unilateral

An option-to-buy is what kind of contract? A parol contract Bilateral contract Implied contract Unilateral contract

Unilateral contract

Issues that are not covered in a preprinted purchase agreement are dealt with by Adding hand written notes to the agreement. The broker creating a new purchase agreement. Using a preprinted rider. Not dealing with the uncovered issue.

Using a preprinted rider.

A verbal long-term lease may be Valid but unenforceable. Void but enforceable. Voidable. Illegal.

Valid but unenforceable.

If Joe entered into a contract with Sue only to discover that Sue committed fraud during the circumstances leading up to the contract, Joe has entered into which kind of contract? Valid Valid but unenforceable Void Voidable

Voidable

A contract that conveys an interest in real estate must include a title closing entity. contain default penalties. include all outstanding liens against the property. contain a legal description of the property.

contain a legal description of the property.

A patron at a restaurant is agreeing to a(n) expressed contract. intended contract. implied contract. allowance contract.

implied contract.

Neighbor Sam told seller Jake that he would buy 2 adjoining acres if Jake ever decides to sell. This is an example of a legal and binding contract. voidable and illegal contract. valid but unenforceable contract. enforceable contract.

valid but unenforceable contract.

A contact agreement to sell alcohol to minor would be considered legal. executable. excusable. void.

void.

A contract which neither party can enforce is called voidable. void. open. denied.

void.