Contracts 4

If a buyer makes an offer to a seller that is contingent upon the buyer financing the purchase with a new loan, which of the following need NOT be stated in a Georgia real estate sales contract:

the name of the lender.

A buyer signed a contract to buy a house for $100,00. The property appraised for $110,000, to obtain a larger loan for the buyer the broker submitted a false contract to the lender for $110,000. Is the broker's action legal?

No, this would be considered fraud.

Which of the following actions will generally NOT terminate an offer?

Notice of revocation by the offeror which has not been received by the offeree.

A broker finds a buyer who is willing to enter into an option on a property for 90 days. The potential buyer pays $1,000 for the option right which is acceptable to the property owner. Which of the following is TRUE?

The sales commission is earned only if the option is exercised.

A buyer and seller are using a contract for deed (land contract) agreement for the purchase of real property. Which of the following statements concerning this agreement is correct?

The seller is the vendor and retains legal title.

Ina land contract (contract for deed), which of the following statements is correct?

The seller retains legal title.

A new home being sold is owned by a corporation. Which of the following statements concerning the sales contract is INCORRECT?

The signature of at least two major stockholders will suffice.

A minor leases an apartment. Immediately upon reaching the age of majority, the lessee notified the lessor that the lease was being terminated. Which of the following is true in this situation?

The termination is possible because the recession was made within a reasonable amount of time after the lessee reached the age of majority.

what do the terms "offer and acceptance", "mutual assent" & "meeting of the minds" all mean?

They mean there is an unqualified acceptance of an offer, which is an essential element of a contract.

A broker listed a property owned by a husband and wife. The husband had to leave the country on a business trip and granted a power of attorney to hi wife authorizing her to sign offers on his behalf. The wife would be considered:

an attorney in fact.

For a person to have contractual capacity, that person must:

be mentally competent.

All of the following are features of a land contract EXCEPT:

buyer receives a deed to the property at closing.

A written employment agreement between a property owner and a real estate broker authorizing the broker to find a buyer for a owner's real property would be considered an:

expressed bilateral, executory listing agreement.

When adding special stipulations to a contract if there is a conflict between the wording in the stipulations and portion of the preprinted contract the:

handwriting wording takes precedence over the typewritten wording which takes precedence over preprinted wording.

An enforceable purchase agreement is formed when:

the buyer knows of the seller's written acceptance of the offer

All of the following are typical provisions in a listing agreement EXCEPT:

the closing date of the sale.

Who signs the listing agreement?

the listing broker or someone authorized by the broker and the client.

Which of the following statements about options is true?

An option is enforceable by only optionee.

When is a sales contract considered executed?

At closing when all the parties hav fulfilled their promises.

A seller received a closing check for $210,150. The broker's commission was 5% and the closing costs paid by the seller amounted to $3,600. What was the selling price?

$225,000. (100% SP - 5%SP) + $3600 +$210,150 = Sales price (100%SP-5%SP)+$213,750=Sales price (100%SP-5%SP)=$213,750 95%=$213,750 = $225,000

An owner has a five acre parcel of property and purchases a tract of land one mile square adjoining the five acre tract. If the owner wishes to sell both parcels for $1,200 an acre, the approximate selling price would be: A. $726,000. B. $774,000. C. $786,000. D. $906,000.

$774,000. mile square = section = 640 acres 5 acres/645 acres 645 acres x $1200/acres= $774,000.

A seller desires to net $20,000 from the sale of her property which has a loan balance of $61,700. The brokerage fee will be 7% of the sales price and the seller must pay $2,000 in other selling expenses. Which sales price would provide her with $20,000 net?

$90,000. 100% Sales Price - 7% Sales Price - $61,700-$2,000 = $20,000 93% Sales Price = $83,700 Sales Price = $90,000

A seller accepts an offer from a buyer subject to the following: 80% financing, a home inspection, closing on or before October 1, an attorney's approval on marketable title, and possession within 30 days of closing with a daily rental amount from closing to possession. This is a example of:

A contract subject to contingencies.

Which of the following statements BEST describes a void contract?

A contract that is not legally enforceable.

Which of the following scenarios will render a contract void?

A listing contract for commercial property was signed by the CEO, but the articles of incorporation gave the authority to buy, sell, and lease property to the secretary.

The safety (broker protection) clause in an exclusive right to sell listing protects the broker's commission rights for what time period after expiration of the listing?

A reasonable period of time negotiated between broker and principal.

Which of the following agreements would be considered void?

A sales contract signed by an unauthorized person.

If a purchaser is transferred to another city before closing, can he or she assign the contract and let the new purchaser close? A. Yes, unless there is a statement in to contract to the contrary. B. No, only the seller can transfer his or her interest to another party. C. No, contracts cannot be assigned. D. Yes, all contracts can be assigned.

A. Yes, unless there is a statement in to contract to the contrary.

An owner listed their property for sale with a real estate agent. The agent advertises the property as a "great value" and receives two reasonable offers from different buyers at the same time. What is the best advice the agent could give the owner regarding the two offers?

Accept one offer and make a backup contingent counteroffer on the other.

A buyer made an offer on a seller's residential property. The offer included earnest money in the form of an antique clock valued at $3,000. The agent should:

Advise the seller of the form and value of the earnest money being offered.

Which of the following contracts would be considered a unilateral agreement?

An option agreement which expires in six months.

A prospective purchaser asked the seller to lease the house with an option to purchase. If the seller agrees to this type of arrangement, when should you prepare to write the required sales contract?

At the same time you write the lease, attach a copy to the lease, consult with your broker, and have both contracts signed by the parties.

An elderly mother has moved to a nursing home and wants her son to sell her home. To act as the agent of the mother, the son would need: A. A deed signed by the mother. B. A power of attorney signed by the mother. C. A listing agreement signed by the son. D. A power of attorney signed by the son

B. A power of attorney signed by the mother.

When a licensee offers to purchase a property a property as a condition to obtaining a listing to sell, the licensee must: A. Make a disclosure in the sale contract that they are acting as a dual agent. B. Enter into a written sales contract prior to or at the same time the seller signs the listing agreement. C. Offer the "asking price" of the property being purchased. D. Enter into a written sales contract after the listing contract has been signed.

B. Enter into a written sales contract prior to or at the same time the seller signs the listing agreement.

A buyer makes an offer to purchase a seller's property. If the seller wanted to accept the offer, which of the following statements is CORRECT? A. If the offer had a time limit, the seller could not accept. B. If the offer had a time limit, the seller could accept within the time limit or later if the buyer agreed. C. If the offer did not have a time limit and the seven day right of rescission had not expired, the seller could accept. D. If the offer did not have a time limit and the three day right of rescission had not expired, the seller could accept.

B. If the offer had a time limit, the seller could accept within the time limit or later if the buyer agreed.

Under an option agreement the optionee: A. Is obligated to purchase the property at the fixed price. B. Must pay the optionor valuable consideration. C. Will take possession of the property. D. Must include a down payment.

B. Must pay the optionor valuable consideration.

Carr offers to buy Smith's property under the following conditions, the purchase price is $275,000, the closing date is March 15, and the down payment is $20,000. Smith agrees to all of the terms except the down payment, which he wants to be $25,000. Smith changes the $20,000 to $25,000 and signs the agreement. Which of the following statements is correct concerning this situation?

By changing anything in the offer, Smith has rejected Carr's initial offer and made a counteroffer.

The buyer includes earnest money as part of an offer to purchase with the understanding the earnest money would be returned if the buyer is unable to qualify for a loan. Which of the following clauses should be included in the offer to reflect the buyers request? A. "As is" clause, B. "Time is of the essence" clause C. Mortgage contingency clause. D. Property sale contingency clause.

C. Mortgage contingency clause.

A buyer and seller mutually agree to rescind their residential sales contract. If the buyer was secured by the listing broker, working under an exclusive right to sell listing,the broker might be entitled to: A. The earnest money. B. One half of the earnest money. C. The full commission. D. One half of the commission.

C. The full commission.

A buyer signs an offer to purchase for $250,000 that requires the refrigerator remain with the property. The seller agrees to the price, but removes the stipulation about th refrigerator. The seller initials the change and signs the document. Which of the following is true? A. The offer has been signed by both parties and is considered a binding contract. B. The seller does not have right to change the original offer. C. The original offer by the buyer is terminated and the seller has created a new counteroffer. D. If the buyer rejects the seller's offer, the seller can accept the buyer's original offer.

C. The original offer by the buyer is terminated and the seller has created a new counteroffer.

Which of the following must be included in a valid real estate sales contract?

Consideration.

Under the Electronic Signatures in Global and National Commerce Act (E-Sign), which of the following statements is correct?

Contracts using e-mail have the same legal significance as those found on paper.

An inactive licensee buying property for herself must always: A. Advise fer broker with a written letter of intent. B. Maintain a copy of the contract for seven years. C. Be represented by a licensed broker. D. Clearly disclose her licensing status in the sales contract.

D. Clearly disclose her licensing status in the sales contract.

Which of the following is NOT required to have a valid real estate sales contract?

Earnest money.

A buyer submits an offer to purchase contingent on the buyer's spouse approving the property within 48 hours. Which of following statements is correct concerning this agreement?

If accepted by the seller the contract would be voidable by the buyer.

A Georgia salesperson is to present a seller's counteroffer to a buyer. To determine the estimated amount of cash the buyer will need, the salesperson will need to know all of the following EXCEPT the:

Loan prepayment penalty.

A buyer makes an offer to a seller agreeing to all the terms in the listing agreement. Would this result in a valid contract between the buyer and seller:

No, because there was no acceptance by the seller.

A minor signed a written sales contract to purchase a parcel of property from an adult seller. After the contract was signed, the seller learned the buyer was a minor and declared the contract void. Is the seller's action permissible?

No, in this situation only the minor may void the agreement.

Under an option agreement can a salesperson collect a commission directly from the seller?

No, the commission would be paid to the salesperson's broker.

In the termination of a real estate sales contract that includes earnest money. Which of the following actions return the contact's parties to their original position before the contract (status quo), including return of the earnest money?

Recession.

When an offer to purchase has been accepted and signed by all parties, the salesperson is obligated to deliver a signed copy of the purchase agreement to:

Seller, buyer, and broker(s).

Franklin pays $2,000 to owner Simpson for a 6-month option. Which of the following is TRUE?

Simpson may sell the property to another during the option period.

A buyer makes an offer on the seller's property. The seller changes the price and signs the counteroffer. Which of the following statements regarding this situation is INCORRECT?

The agreement is binding on both parties.

A buyer planned to buy an existing house and build a swimming pool in the backyard. After signing the contract, the buyer discovered the restrictive covenants would not permit a swimming pool. What is the buyer's recourse?

The buyer has no legal recourse.

Which of the following statements BEST describes the difference between a bilateral and unilateral contract?

The number of parties obligated to perform.

A buyer makes an offer to purchase a property listed for sale and does not state in the offer a specific expiration date. Which of the following statements would be TRUE concerning this situation?

The offer can be withdrawn by the buyer anytime prior to communication of acceptance.

A salesperson completed a listing agreement which the owner signed. When should the salesperson furnish the owners a copy of the listing agreement form?

Upon securing the signature of the owners.

In a land contract (contract for deed), who agrees to pay real estate taxes, insurance premiums, repairs and upkeep on the property?

Vendee

When does an offer become a valid sales contract?

When the acceptance of the offer is communicated to the offeror.

A buyer signs a contract to purchase a house, but then attempts to have the contract voided. He is able to prove that he was legally mentally ill when he signed the contract. Will the buyer likely have the contract declared void?

Yes, because his mental illness renders the contract voidable.

An executor called an agent to list a property to settle an estate. While showing the property to the agent, the executor commented, "My aunt always had tenants in the upstairs apartment." Without checking with zoning, the agent listed and sold the property as multifamily, If the property is not zoned multifamily, does the buyer have the right to rescind the contract?

Yes, because the agent misrepresented the property, and any contract entered into under misrepresentation is voidable.

An adult buyer who is illiterate signs a contract to purchase property from a seller. The buyer understands the nature of the contract because the terms were explained orally. Is the contract binding?

Yes, because the buyer understands the terms of the contract.

A buyer made an offer to purchase a property which was accepted by the seller. Prior to closing, the buyer had to leave the country and gave the right to buy the property to second buyer. Is the action permissible?

Yes, contracts are assignable unless otherwise stated.

Due to an ambiguity in the financing terms, the sellers failed to understand they will be carrying a second mortgage note for five years and wanted to cancel the contract. Might the court cancel the contract?

Yes, if a contract contains any ambiguity the court will generally rule against the party who prepared it.

Can an offer to purchase with a "time is of the essence" clause by withdrawn by the offeror before the expiration date?

Yes, provided the offer has not been accepted and communicated.

A fifteen year old minor signs a sales contract to purchase real property. Can the minor disaffirm the contract?

Yes, while under age and for a reasonable period of time after attaining legal age.

When an offer to purchase is made on a property on which a sales contract already exists, the licensee should be sure that the subsequent offer contain a contingency. If it does not, the licensee should:

advise the seller to reject the offer and make a counteroffer contingent on the first contract not closing.

An executed contract means:

all of the parties have fully performed their duties

A promise made by one party to induce another party to enter into a contract is:

a consideration

An offer which terminates the original offer and initiates a new offer is called:

a counteroffer.

An offer does not contain a specific expiration date. Unless withdrawn, the courts will usually declare that the offer should remain open for:

a reasonable time.

In most states, all of the following contracts need to be in writing to be enforceable EXCEPT:

a three-month lease agreement on an apartment.

An implied contract would arise from the:

actions of the parties.

For a real estate sales contract to be valid, it must include:

consideration Offer, acceptance, consideration and mutuality of obligation; competency and capacity and written instrument

Agent Mary presents an offer from buyer Lisa to the seller who accepts all provisions except one. This situation:

constitutes a counter offer and a termination of the original offer.

At closing, a title is transferred to the buyer. Until that event occurs, a contract entered into by the buyer and a seller is:

executory.

A buyer and seller are negotiating the sale of a house through the mail. Acceptance of a mailed offer becomes an effective and binding contract when:

deposited in the mail by the offeree.

A buyer and seller entered into a purchase and sale agreement on a property. At the time of the parties signing the contract, the:

legal title remained with the seller and the buyer received equitable title.

For a person to have legal capacity to contract they must be:

mentally competent.

When an offer is signed by the buyer and then given to the seller's broker with an earnest money check to present to the seller, the

offer can be withdrawn any time prior to acceptance

A buyer makes an offer to purchase the seller's property for $125,000. The seller makes a counteroffer of $126,000. In the counteroffer, the seller is the:

offeror.

A bilateral contract is created when:

promises have been exchanged by two parties and both are obligated to perform.

A contract must state the purchase price and method of payment, including the amount of earnest money, if any. If no definite purchase price is stated, the contract:

purchase price must be stated in a manner that can lead to the calculation of a definite amount.

The purpose of the stature of frauds is to:

require real estate contracts to be in writing to be legally enforceable.

A borrower is in default on their loan. Rather than experiencing the delay and expense of a foreclosure action the lender agrees to release the mortgage so the property can be sold to a new purchaser. If the sale produces less money than is owned the lender the transaction would be referred to as a:

short sale.

Every enforceable contract for the sale of real estate must be in writing and signed by all parties, in accordance with the:

statute of frauds.

The law pertaining to the period of time within which legal proceeding against certain actions in a contract must be brought to court is called the:

statute of limitation.

A property is under contract with a sales price of $250,000. Before closing the property value appreciates to $260,000 and the seller breaches the sales contract. The buyer asks the court to force the seller to go through with the sale and transfer the property as previously agreed. This action is a:

suit for specific performances.

A broker was listing a property owned by a married couple. The husband signed the listing but his wife was out of town. The husband instructed the broker to immediately advertise the property and put the listing in the multiple listing service. The broker should:

tell the husband that they will start marketing the property after obtaining the signature of the wife.

Prior to closing, mold is discovered during a home inspection. Who pays for the removal of the mold?

the agreed upon parties in the sales agreement.

A real estate sales agreement contains the language "time is of the essence." Such language in a contract typically means:

the time limits stipulated in the contract must be faithfully followed.

A sales contract contains special stipulations:

to express conditions specific to the sale.

A property owned by a corporation is listed for sale. The brokerage engagement should have the corporate seal affixed and the signature of an authorized officer. In the abscence of the corporate seal the brokerage engagement must be signed by:

two authorized officers.

A salesperson is writing a residential lease in Georgia. Under what circumstances may the salesperson consult an attorney about this process without prior authorization from the employing broker?

under no circumstance.

An oral agreement for the sale of real estate would be

valid between the parties and unenforceable in court.

A contract entered into based on a misrepresentation is:

voidable by the aggrieved party.

A real estate sales contract with a mortgage contingency would be classified as:

voidable by the buyer

A contract that appears valid but was entered into as a result of fraud or misrepresentation is:

voidable by the defrauded party.

An intoxicated buyer made an offer on a seller's property. The seller accepted the offer and communicated the acceptance to the buyer. This contact would be:

voidable by the offeror

An intoxicated buyer made an offer on a seller's property. The seller accepted the offer and communicated the acceptance to the buyer. This contract would be:

voidable by the offeror.