RE PExam Contracts
What is the statute of limitations on filing an action for encroachment?
3 years
A buyer must bring a lawsuit for breach of written contract against a seller within:
4 years.
Four months ago a seller accepted an offer from a buyer to purchase her home. The contract was in writing. Later, the seller refused to complete the transaction. Under the Statute of Limitations, so his right to sue does not "outlaw," the buyer must file an action within:
4 years.
Which of the following may a minor be able to undertake without court approval?
Acquisition of real property through gift or inheritance
Listings are often confused with options. Which of the following is a correct statement concerning these contracts?
All of the above are correct, A listing creates a fiduciary relationship, an option does not, An option requires consideration to be a valid contract and the listing also requires consideration, The owner may be sued for performance on an option but a suit for specific performance cannot be instituted on a listing
Which of the following would identify a rider?
Amendment
Which of the following contracts must be in writing to be enforceable?
An agreement by a buyer to assume an existing loan secured by a deed of trust
An offer on a home listed under an exclusive agency listing was presented to a seller and immediately accepted and communicated to the buyer. Before the deal could be placed in escrow, the seller found another buyer with all cash and notified the broker that the original deal was off. Which of the following statements are true?
Broker has an excellent legal basis to collect a commission
Once an offer has been communicated to the offeree, it does not stay open forever. Which is NOT a way to terminate an offer?
Capacity of either party
Which of the following statements of fact best matches the term "alienation?"
Contract of conveyance
Which of the following statements of fact best matches the term surrender?
Contract of leasing
In which of the following would "privity" most likely exist?
Contractual relationship
Which of the following would not terminate an offer to purchase real property?
Death or insanity of either party after acceptance
You agree to lease a property for 10 years for $12,000 total rent, at $100 per month. You pay the first and last months' rent of $200. Which of the following terms would be inappropriate in the lease?
Escalator clause geared to the cost of living
Which of the following must have a termination date?
Estate for years
What listing requires an owner to pay a commission, even though she sells the property herself?
Exclusive right to sell listing
Which one of the following clauses is always in a deposit receipt?
Executory clause
Paul sends Gary a letter that states, "I offer to purchase your house for $290,000, closing to take place by December 31." Gary writes back, "I accept your offer, but escrow must close before November 30." Which of the following is true?
Gary's letter is a counteroffer that Paul can accept or reject.
A minor, 16 years of age and married, wants to purchase a home. Which of the following statements is true?
He can purchase and own a home
Which of the following is true of a counteroffer?
It is not a valid contract until it is signed by the last party.
In what document is a "safety clause" found?
Listing
In which of the following instruments would you find a safety clause for the protection of the real estate broker?
Listing
A broker is preparing a deposit receipt. Which of the following can be disregarded for the moment and be decided during the escrow period?
Manner of taking title
An option is different from other contracts, such as conventional or conditional sales contracts. The difference is due to what characteristic of an option?
Non-mutuality of obligations of the parties
"A" enters into an agreement to sell a property to "B." "A" deposits a grant deed naming "B" as grantee in escrow. Escrow is closed and the deed delivered to "B." "A" and "B" then decided to rescind the sale. What is the proper procedure to be followed to effect the rescission?
None of the above, "B" should endorse the deed and return it to "A", "B" should reopen escrow and have the deed certified as "canceled" and have the escrow redeliver it to "A", "B" need only destroy the deed after return of his consideration
Suits for specific performance or damages and unilateral rescission are legal remedies for breach of contract. Of the following statements referring to these remedies, which is correct?
None of the above, In a breach of contract for the purchase of a residence, a suit for specific performance is the most practical procedure for the broker to follow, In a breach of contract for the sale of land after the discovery of major oil resources, the most likely procedure to be followed by the purchaser would be a suit for damages, In a breach of contract to purchase a residence, liquidated damages is a seldom used remedy
Title to real property would immediately pass to the purchaser under which of the following contracts?
None of the above, Land contract of sale, Installment sales contract, Agreement of sale
Which of the following is correct?
None of the above, Maximum lease on city property is 51 years, Maximum lease on agriculture property is 99 years, Maximum lease on non-agriculture is 51 years
If the deposit receipt and the escrow instructions fail to mention the date the buyer is to take possession of the property, which of the following would prevail?
On the close of escrow
Buyer Patricia presented an offer to Seller Sam for the purchase of Sam's 10-year-old home in a quiet neighborhood. Patricia gave Sam three days from the date of the offer to respond. Sam had another offer to consider, but finally accepted Patricia's offer four days later and asked his broker to communicate his acceptance to Patricia. Under these circumstances:
Patricia has no obligation under her original offer.
Which of the following is not necessary to create a contract?
Performance
What is NOT necessary for a valid contract?
Recordation
In a lease whose duration is greater than one year, what is not required?
Signatures from both the lessor and the lessee
An owner gave an open listing to broker Rose and broker Daisy, who have both shown the property to Ms. Lily. Broker Rose gets an offer from Ms. Lily and a signed acceptance. Which of the following is correct?
The commission will be paid to Rose
Which of the following is not legally required of a lease?
The legal expression "to let and demise"
In a real estate contract, the promise to use "due diligence" is made by whom?
The listing broker
What happens to an original offer if a counteroffer is made?
The person making the original offer is no longer bound by it.
A lessor and lessee agree to the terms and the lessor draws up a 5-year lease, signs it, and mails it to the lessee. The lessee does not sign it, but moves in and pays 2 months' rent. After 2 months, the lessee decides to move out and informs the lessor. Which of the following is true?
There is a valid lease as lessee had moved in and paid 2 months' rent
Mr. and Mrs. Flowers made an offer to purchase a house, which was accepted. The escrow was to close in 30 days. Just before the closing, the owner changed his mind and decided not to sell. Which of the following is not an alternative for the buyer?
They may file a writ of execution
The following terms are closely associated with real estate. Which does not belong with the others?
Title
A listing contract has the statement, "The undersigned broker agrees to use diligence in procuring a buyer." This is used for what following reason?
To make it a bilateral contract
An exclusive authorization and right to sell listing to sell a home, just entered into, can be described as:
a bilateral executory contract.
Mr. "A" gave Mr. "B" an option to buy his ranch. This burdened the ranch with:
a contract to offer to sell.
In the preparation of an exclusive listing contract, a licensee may be disciplined if he fails to include:
a definite expiration date.
Ms. Adams made a deposit on the purchase of a property. During the escrow the seller learned of a highway rerouting which would greatly enhance the value of her property. She instructed the broker to return the deposit to the buyer. Ms. Adams refused to accept the deposit. Her most unlikely course of action would now be:
a unilateral rescission.
A buyer asks an agent to hold a deposit check for 30 days. The agent should:
accept the check and advise the seller that the buyer requests the hold.
A valid written lease must include:
all of the above, agreement to let, agreement to take delivery, and acceptance, term, consideration, and description of the premises, a landlord and tenant with the legal capacity to enter a binding contract.
A solemn declaration by a person whose religious beliefs forbid the taking of an oath is:
an affirmation.
The term et ux means:
and wife.
Valid consideration in a contract can be:
any of the above, money, service, promises
A contract between the seller of real property and a licensee whereby the seller agrees to pay the licensee a commission if he produces a "ready, willing, and able" buyer and the licensee agrees to use due diligence in procuring a buyer, is called:
bilateral executory contract.
Failure to perform a duty to fulfill a promise made is considered:
breach
When damages are not adequate, each of the following may request specific performance, except the:
broker from the principal.
An option to buy is enforceable if:
consideration is less than $10.00 but actually has passed.
The promise given in return for an offered promise in a bilateral contract is:
consideration.
An executory contract is a:
contract where something remains to be done by one or both parties.
An attorney-in-fact can do all of the following things, except:
deal in real property without recording his general power of attorney.
A non-illusory instrument is a:
definitive instrument which becomes a binding contract when executed.
A buyer and seller initial the liquidated damages clause in a deposit receipt and then the buyer defaults. The deposit is:
divided equally between the seller and the listing agent.
The majority of leases end by:
expiration of term.
All of the following are contracts except:
grant deed.
Buyer Baker presented an offer to Seller Sam for the purchase of a 10-year-old home in a quiet neighborhood. Seller Sam made a counteroffer to buyer Baker. Under these circumstances, buyer Baker:
has no obligation under his original offer.
In order to have a binding contract between the buyer and seller, it must:
have been offered and accepted.
A real estate broker included the following clause in her standard listing contract: "In consideration of execution of the foregoing, the undersigned broker agrees to use diligence in procuring purchaser." This is:
important to the creation of a bilateral contract.
An executory contract is a contract that:
is to be executed.
When a minor signs a contract, it is:
legal if purchased through a guardian with consent of the court.
A sublease is:
less than the entire leasehold.
If a lease is to be recorded, it must be acknowledged before a proper official by the:
lessor.
Broker Jones secured an agency listing in writing from the Johnson Co. on a commercial building that had been vacant for some months. The listing broker entered into a verbal agreement to share his commission with a cooperating broker. The cooperating broker procured a buyer, but Broker Jones refused to split the commission. The cooperating broker:
may recover his share in court.
Seller Chris listed a vacant lot with a broker at $111,400. Prospective buyer Jordan submitted an offer of $111,000 that was to expire in three days. The next day, Chris made a counteroffer of $111,200. When Jordan did not respond within the three-day period, Chris signed an acceptance of Jordan's $111,000 original offer and instructed the broker to deliver it to Jordan. Jordan told the broker that he had decided not to purchase the property, but Chris insisted they had a deal. Based on these circumstances, there is:
no contract.
A void contract is one that is:
not enforceable by law.
When an existing contract is replaced by an new contract, with the intent to replace the existing contract, it is called:
novation
Two people entered into a long term real estate contract. After one year had elapsed, they decided to write a new contract replacing the old one. This would be an example of:
novation.
A contract need not be in writing to be enforceable under the law. A verbal contract is called:
parol contract.
The phrase, prima facie, means:
primary evidence.
Only the __________ can amend or change a contract.
principal
Licensees should:
read contract forms thoroughly to ensure no minute detail is overlooked.
For a real estate broker to be entitled to a commission if the property sells after the expiration of the listing, the broker should place into the listing agreement a:
safety clause.
A minor is:
someone under l8 years of age.
A remedy in court compelling a vendor to execute a deed in pursuance of a valid written contract is known as:
specific performance.
The penalty for failing to identify a definite termination date in a listing is:
suspension or revocation of the agent's real estate license.
When a lease is assigned, the assignee becomes a(n):
tenant
Deposit money never belongs to:
the broker.
All of the following statements concerning an option are correct except:
the optionee has the legal right to enter and use the property right after the option has been entered into.
All of the following are essential to the validity of a contract, except:
the payment of money.
A counteroffer is:
the rejection of an original purchase offer and the submission of a new and different offer.
A real estate agent has earned a commission when:
there is a "meeting of the minds" between buyer and seller on price and other terms of a transaction.
A negligent or intentional wrongful act arising from breach of duty created by law and not contract is a:
tort
An option without consideration is:
unenforceable
A listing:
usually reflects the highest price an owner believes he can obtain for his property.
A licensee sells property to a young married couple and later learns they are both 17 years of age. This transaction could best be described as:
valid
An 18-year-old wife bought property with her separate funds and instructed escrow to vest title in her 17-year- old husband and herself as community property. The purchase contract was:
valid
Ms. Olden received an option from Mr. Green on a piece of property valued at $1,000,000. As consideration for this option, Ms. Olden gave Mr. Green $10.00 in cash. The option is:
valid.
Lessee is to lease as:
vendee is to land contract.
Exculpatory clauses are generally unsuccessful at protecting a licensee from liability to the buyer because they:
violate public policy.
A licensed real estate broker is successful in securing a buyer for a property who is ready, willing, and able to buy. The offer is accepted and signed by both parties and escrow is opened. During the escrow period, the title company discovers that the seller is a single minor under the age of 18 and notifies the broker and the escrow holder. Under these circumstances the contract is:
voidable.
An agreement to sell community property, signed by the husband alone, is:
voidable.
All of the following are essential to create a valid contract, except:
writing
The most essential element to create an enforceable broker-principal relationship is a:
written employment contract.
