Practice Exam- Contracts

Acceleration Clause

A clause that makes the entire debt due immediately in the case of borrower default.

When one party to a contract transfers the contractual rights and obligations to another but remains liable for the contract terms, it's called ______ of contract.

Assignment

In a real estate transaction, which of the following is established when the parties enter into an agreement voluntarily with full understanding of the contract terms?

Consent

UETA supports the use of electronic documents and leaves the decision whether to use an electronic medium for agreements up to the _______.

Parties

Optionee

The holder of the option. Buyer

When a borrower has paid the loan in full, it is the _______ responsibility to execute and record a deed of reconveyance.

Trustee

Net Listing

Type of contract in which sellers specify the amount they will accept from the sale, with brokers keeping all proceeds in excess of that amount.

Statute of limitations on contracts in CA:

Written: 4 years Unwritten: 2 years

Option Contract

is an offer to purchase a specific piece of real estate with out obligation to buy it.

Consideration

is something of value exchanged for something else of value

a mortgagee is the

lender

consent

occurs only when the parties enter into the agreement voluntarily with full understanding of the contract terms.

Exclusive Agency Agreements

only pay commission to the listing agent if a real estate professional procures the buyer. If the seller procures the buyer, no listing commission is owed

Value Consideration

something of economic value

assignment

the transfer of contractual rights to a third party. Original party remains liable unless released in writing.

Reconveyance Clause

Is the method used to transfer title for a property following full payment of a loan. Reconveyance is typically used with a deed of trust.

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?

A. 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.

Express Contract

A contract in which the terms of the agreement are fully and explicitly stated in words, oral or written.

Implied Contract

A contract that comes about simply from actions of the parties.

Good Consideration

A gift

Exclusive right to sell

A written agreement between owner and agent giving the agent the right to collect a commission if the property is sold by anyone during the term of his agreement.

In the listing agreement, how is the responsibility for marketing and showing the property described?

Both seller and broker are responsible.

Which mortgage clause requires the lender to discharge the mortgage lien once the borrower has paid in full?

Defeasance

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

Department of Real Estate

Exclusive Buyer Representation (BRE)

Entitles the licensee to compensation when the buyer purchases a property and prohibits the buyer from establishing an agency relationship with another broker.

Amy is working with seller clients who have suggested they would like the property to go to another African-American family. Which section of the listing agreement would help Amy convey why she cannot market the property this way?

Equal housing opportunity

Non-Exclusive, not-for-pay buyer representation (BRNN)

Forms an agency relationship that either party can break at any time and that doesn't require the buyer to compensate the agent. Since most buyer agents are compensated through a cooperating broker agreement, this allows the buyer to work with an agent without being obligated to pay if that doesn't happen.

Non-Exclusive Representation (BRNN)

Gives the licensee the right to compensation in exchange for showing the buyer properties. It allows the buyer to work with another agent and to compensate only the agent who represents the buyer in the transaction.

Novation vs. Assignment

Novation produces a new contract. Assignment just transfers the current contract. Original Party is still liable unless released.

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.

Non-exclusive listing

The seller can have open listing agreements in place with multiple licensees. Only the licensee who procures the buyer earns the commission.

Optionor

The seller of the option.

Novation

The substitution, by agreement, of a new contract for an old one, with the rights under the old one being terminated.

power of sale clause

a clause authorizing a private foreclosure sale that does not require court action

Defeasance Clause

a clause stating that the lien on the property is defeated when the debt is repaid

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

a mutual agreement

What are the four elements of a contract?

agreement, consideration, capacity, legality

Alienation Clause

allows the lender to make the entire loan due and payable immediately if the property is sold or otherwise transferred.

Non-exclusive listing is also known as

an open listing

advance fee

any upfront fee a licensee charges for certain services, such as advertising or processing a loan application.

a mortgagor is the

borrower

Contract Rescission

canceling of contract by parties through mutual agreement or legal action. If one party breaches agreement, the other may legally have the right to rescind the agreement.

promissory note should include

date, initial principal and interest rate, terms of repayment, loan period, late fees, and pre-payment penalties.

alienation clause is also known as

due-on-sale clause