Contracts

Which of these real estate contracts would not include a section on broker compensation?

A Non-exclusive, not for compensation buyer representation agreement

What is an advanced fee agreement?

A fee the agent charges a client for services the agent expects to provide but haven't yet been provided. An advanced fee is a fee that the agent charges the client for services that haven't yet been provided. DRE allows these fees, but only if it has reviewed and approved them first.

When offer and acceptance has occurred, both parties enter into ______.

A mutual Agreement

What makes a non-exclusive buyer representation agreement different from an exclusive buyer representation agreement?

A non-exclusive agreement allows the buyer to work with other brokers, who may end up representing the buyer in the transaction In context of the buyer broker agreement, non-exclusive means the buyer isn't limited to working with one particular broker in the search for a property and can use any broker as a representative when making an offer.

After getting into a fender bender, Parker had to buy a new car. To make the down payment on the car, he had to skip a couple of his mortgage payments. He received a notice from his lender indicating the remaining amount of his loan is due immediately and in full. What clause in his mortgage stipulates this?

Accelaration

Stacy has gone into default on her mortgage. Her lender is demanding that the entire loan balance be paid in full. Which mortgage clause permits her lender to do this?

Acceleration

Stacy has gone into default on her mortgage. Her lender is demanding that the entire loan balance be paid in full. Which clause in the security instrument permits her lender to do this?

Acceleration The acceleration clause allows the lender to accelerate the loan and require payment in full if the borrower defaults. The alienation clause makes the loan payable in full if the property acting as security is transferred. The defeasance clause requires the lender to return title to the property once the loan is paid off. A default clause explains what constitutes default, and what can happen upon default (such as acceleration)

Executory contract

All parties have agreed to the contract, but they're still in the process of completing the terms

Judy's garage is a mess, but she doesn't have time to clean it. She asks her neighbor Tara, who's a college student, if she'd like to earn $50 to spend three hours organizing it. Tara eagerly agrees and shows up bright and early the next Saturday, as arranged. What's this an example of?

An Express Agreement This is an agreement with clearly defined terms, mutually understood by legally competent parties, and with sufficient consideration. It's an express agreement. It's not implied because the parties defined the terms. It's not unilateral because both parties have agreed to obligation. It's not a voidable contract because all of the essential elements of a valid contract are present.

Carl and Sadie, who are neighbors, got into a disagreement about early-morning noise on the weekends. The two came to an agreement: Carl promised to not mow the lawn before 10 a.m., and Sadie promised to put bark collars on her dogs in the early morning hours. Their promises represent the ______ in their agreement.

Consideration

Real estate licensees who use advance fee agreements in California need to have the agreement approved by which regulatory body?

Department of Real Estate The Department of Real Estate must approve any advanced fee agreements a real estate licensee uses

Which of these is an example of Good consideration?

Gifting a house to a family member Valuable consideration differs from "good" considerations; which may merely be consideration of affection, such as when a person gives a family house to her child, receiving love and goodwill in return.

Which of these statements is NOT true about an option contract?

It's the optionee's promise to buy property from an optioner. The option contract is an agreement between optionee and optioner, but the optionee isn't promising to buy the property. The optionee has the right to buy, under specified terms, but it's the optionor who promises to sell. The optionee (buyer) can choose whether or not to exercise the option.

Which of the following elements must a valid contract include?

Legally competent Parties

Hank, a 32-year-old parolee, signs a lease with Dee, his 54-year-old landlady. The lease is in writing and says Hank will provide Dee with a specific amount of methamphetamines each month as rent. They both sign the contract. Is this a valid contract?

No, the contract isn't for a legal purpose

Which type of a buyer representation agreement allows a buyer to enter into agreements with multiple brokers and pay only the broker who found the property that was ultimately purchased by the buyer?

Non-exclusive buyer representation agreement the non-exclusive buyer representation agreement allows buyers to enter into multiple-buyer representation agreements.

A(n) ______ is an offer to purchase a specific piece of real estate, but without the obligation to buy it.

Option Contract An option contract gives the potential buyer the right to buy a piece of real estate under certain terms, but it isn't an obligation to buy. The optionee (the buyer) has the right to decide against purchasing within the specified time frame and terms of the agreement.

Reggie has thoroughly reviewed the sales contract with his clients, the Arnolds, and has confirmed that they understand all of the terms and provisions. What should Reggie do next?

Recommend that the arnolds review the sales contract with an attorney before signing it

Which of these statements about alien residents and non-residents of California is true?

Resident and non-resident aliens have the same property ownership rights as citizen sin California

Calli is a buyer who just learned that the price she offered on a house was $10,000 more than it actually appraised for. Calli doesn't want to pay more than the house is worth, and the seller won't budge on price. What is Calli's best option?

She can back out due to the appraisal contigency

Erica signed a purchase contract to buy Jean's condo. All goes smoothly (it happens!), and Jean gets her money, while Erica gets the keys to the condo. The deed is recorded and escrow is closed. What is their purchase contract called at this point?

Since all of the terms of the contract are complete, it's an executed contract

In a contract, consideration is the giving of ______.

Something of value in exchange for something of value

California law requires a notice about compensation to the broker in the listing agreement. What does that notice need to communicate?

The amount or rate of the commission is not fixed by law

Sharon purchased her home with a loan. She signed a deed of trust and a promissory note. Why did she need both of these documents to receive the loan?

The deed of trust identifies her home as security for the loan, and the promissory note documents the terms of the loan and her promise to repay

Amy is explaining the broker's and seller's duties section of a listing agreement to a new client. Which of these would be an accurate statement to make?

The seller and the broker agree to exercise reasonable effort and cooperation in the sale of the property

Carter, a licensee, never posts his clients' property on the MLS. This gives him the opportunity to find the buyer himself, potentially doubling his commission. What disadvantage might apply to Carter's clients?

Their properties may not sell for top dollar. It's important that the listing agent ensures the client's understanding of the benefits of using the MLS, which include increased exposure. Opting out could have a negative impact on the sales price.

When is an advanced fee agreement in California legal?

When the DRE reviews and approves it

addendum

an additional document that gets added to the purchase and sale agreement. The document will include any additional information or requests that the buyer did not put into the original purchase and sale agreement

amendment

used to change the terms of the contract after it's sign and all parties have to agree to the change.

Ezra's lease on his condo includes an option to purchase. He told his landlord, Sherm, that he's ready to purchase the condo, and they've negotiated a purchase price and closing date. What kind of contract is this?

Bilateral

Which of the following scenarios describes an example of unilateral rescission?

Bobby, the buyer, makes an offer on a house that doesn't meet the appraisal contingency. He cancels the sale. A contract is rescinded when both parties agree to cancel the agreement and return both parties to their pre-contract position.

Which of the following situations entitles Gary to commission with a 30-day protection clause?

Buyers who views the property while listed with Gary make an accepted off 10 days after the listing expires. The contract must be within the protection and be the result of the broker's actions during the initial listing period.

Which of the following statements is accurate when used by a broker explaining a buyer representation agreement to a consumer

If we find a property you like that my broker has listed, I may need to act as a dual agent The buyer broker agreement includes provisions that disclose the potential for a dual agency and offer buyers the option to accept or refuse it. It can't be required of a client

What's the best definition of legal purpose?

Written for a lawful objective

Bernie represented Oscar in the sale of Oscar's home. They signed an exclusive right-to sell-listing agreement. If Oscar were able to find his own buyer, would he owe Bernie a commission?

Yes, because "exclusive right to sell" means Bernie gets paid no matter who finds the buyer