PoR CH 10 REAL ESTATE CONTRACT LAW

CH 10. - 1. An important legal feature of a contract is a. it represents a "meeting of the minds." b. it must use precise wording in a document. c. it is not voidable. d. it can be created only by an attorney.

1. a. it represents a "meeting of the minds." (122)

CH 10. - 10. A seller immediately accepts a buyer's offer but waits eight days before returning the accepted document to the buyer. Meanwhile, the offer has expired. Which of the following is true? a. The buyer is bound to the contract since it was accepted immediately. b. The buyer has no obligations to the seller whatsoever. c. The buyer may not rescind the expired offer. d. The seller may sue for specific performance.

10. b. The buyer has no obligations to the seller whatsoever. (128) Offer termination: acceptance: -> contract rejection: the offeree rejects the offer revocation: the offeror withdraws the offer before acceptance lapse of time: the offer expires counteroffer: the offeree changes the offer death or insanity of either party

CH 10. - 11. A buyer agrees to all terms of a seller's offer except price. The buyer lowers the price by $1,000, signs the form, and mails it back to the seller. At this point, the seller's offer a. is void. b. becomes an executory contract. c. becomes a counteroffer. d. has been accepted.

11. a. is void. (127) Offer termination: counteroffer: the offeree changes the offer acceptance: -> contract rejection: the offeree rejects the offer revocation: the offeror withdraws the offer before acceptance lapse of time: the offer expires death or insanity of either party

CH 10. - 12. A buyer submits an offer to a seller. Two hours later, the buyer finds a better house, calls the first seller, and withdraws the offer. Which of the following is true? a. The buyer may not revoke the offer in such a short period of time. b. The first seller may sue the buyer for specific performance. c. If the seller accepted the offer, the buyer must perform. d. The original offer is legally extinguished.

12. d. The original offer is legally extinguished. (128) Offer termination: revocation: the offeror withdraws the offer before acceptance counteroffer: the offeree changes the offer acceptance: -> contract rejection: the offeree rejects the offer lapse of time: the offer expires death or insanity of either party

CH 10. - 13. Real estate contracts that are not personal service contracts a. may be assigned. b. are not assignable. c. must be in writing. d. are exempt from the statute of frauds.

13. a. may be assigned. (128) A real estate contract that is not a personal contract for services can be assigned to another party unless the terms of the agreement specifically prohibit assignment.

CH 10. - 14. Which of the following contracts must be in writing to be enforceable? a. A parol contract. b. A six-month lease. c. A two-year lease. d. An executory contract.

14. c. A two-year lease. (129) Leases for a period exceeding one year must be in writing to be enforceable (Statute of Frauds) An oral lease is a tenancy at will and terminates on the death of either party An executory contract has not yet been fully performed or fully executed, both sides still have important performance remaining. Parol contract: not in writing. In some cases, it may be partially in writing. Also known as oral contract, parol agreement or verbal contract.

CH 10. - 15. A good example of a unilateral contract is a. an option to purchase. b. a listing agreement. c. a personal services agreement. d. a sale contract.

15. a. an option to purchase. (130)

CH 10. - 16. A contract is discharged whenever a. there is a cooling period. b. both parties have signed it. c. it is performed. d. the parties agree to their respective promises.

16. c. it is performed. (130)

CH 10. - 17. A contract may be defensibly terminated without damages if a. it is abandoned by one party. b. it is impossible to perform. c. it is deemed to be valid. d. both parties breach its terms.

17. b. it is impossible to perform. (130) Performance. Infeasibility. Mutual agreement Cooling-period rescission. Revocation. Revocation is cancellation of the contract by one party without the consent of the other. Abandonment. Abandonment occurs when parties fail to perform contract obligations. Lapse of time. Invalidity of contract. Breach of Contract. Also called default

CH 10. - 18. A landlord suddenly terminates a tenant's lease in violation of the lease terms. The tenant takes action to compel the landlord to comply with the violated terms. This is an example of a suit for a. rescission. b. specific performance. c. damages. d. forfeiture.

18. b. specific performance. (132)

CH 10. - 2. According to contract law, every valid contract is also a. void. b. enforceable. c. enforceable or unenforceable. d. voidable.

2. c. enforceable or unenforceable. (123)

CH 10. - 3. The guardian for a mentally incompetent party enters into an oral contract with another party to buy a trade fixture. This contract a. does not meet validity requirements. b. is possibly valid and enforceable. c. must be in writing to be valid. d. is valid but unenforceable.

3. b. is possibly valid and enforceable. (124)

CH 10. - 4. 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, the status of the offer is a. an accepted offer, therefore a valid contract. b. an invalid contract. c. a counteroffer. d. an invalid offer.

4. c. a counteroffer. (128)

CH 10. - 5. As part of a construction contract between a contractor and a buyer, the contractor promises to complete construction by November 20. This promise can be construed as a. competency on behalf of the contractor. b. mutual consent. c. good faith. d. valuable consideration.

5. d. valuable consideration. (125)

CH 10. - 6. An unscrupulous investor completes a contract with a buyer to sell a property the investor does not own. The sale contract for this transaction a. is voidable. b. must be in writing. c. is void. d. is illegal yet potentially enforceable.

6. c. is void. (126)

CH 10. - 7. A homeowner encourages an agent to aggressively persuade a buyer to purchase his house by overinflating historical appreciation rates. The agent and the seller agree that 25% annual appreciation would work, even though this figure is four times actual rates. The pitch succeeds, and the seller accepts the buyer's resulting offer. This contract is a. enforceable. b. voidable. c. void. d. valid.

7. b. voidable. (123) For example, a party who was the victim of duress, coercion, or fraud in creation of a contract, and can prove it, may disaffirm the contract.

CH 10. - 8. The statute of limitations requires that parties to a contract who have been damaged or who question the contract's provisions a. must act within a statutory period. b. must select a specific, limited course of action for recouping their losses. c. must arbitrate prior to taking court action. d. must wait a statutory period before they may take legal action.

8. a. must act within a statutory period. (126)

CH 10. - 9. The purpose of the statute of frauds is to a. invalidate certain oral contracts. b. require certain conveyance-related contracts to be in writing. c. nullify oral leases and listing agreements. d. eliminate fraud in real estate contracts.

9. b. require certain conveyance-related contracts to be in writing. (126) Statute of frauds requires that certain contracts must be in writing to be enforceable. Real estate contracts that convey an interest in real property fall in this category, (a lease of one year's duration or less may be oral!) . All other contracts to buy, sell, exchange, or lease interests in real property must be in writing to be enforceable. (Listing agreements in most states, NOT IN FLORIDA)