Real Estate Contracts and Agency

Chevy is an optionee. What's his sole responsibility?

Pay the option fee.

Which of these is an example of a non-agency relationship?

Dutton was previously a licensee. He's selling his home, and he wants Wanda to just assist him with the paperwork (In a non-agency relationship, the agent can perform only limited tasks. The consumer is a customer and isn't represented by the agent, so the agent is generally prohibited from performing any tasks of a fiduciary nature, including advising, interpreting, or analyzing. The agent can perform ministerial or clerical tasks.)

Which of these is the most accurate definition of equitable title as it relates to a real estate purchase contract?

Equitable title is the right to obtain full ownership of a property when a certain condition has been met.

Marcus listed his property with Home Sweet Home Realty and one of its listing agents, Ron Savage. About a month later, Ron filed for bankruptcy. Which of the following statements about this situation is true?

The agency agreement only terminates if the broker or the principal declares bankruptcy.

Vinnie included a financing contingency in his offer to the seller. The seller accepted his offer. Which of these about the contingency is true?

The purchase contract should specify how the contingency is to be met and what happens if it's not.

Which of these statements about contract termination is true?

Either party to a contract may terminate the contract at any time, but termination could be a breach of contract. (Either party can terminate a contract at any time but depending on circumstances, the termination may be considered a breach of contract and the terminating party may owe services, compensation, or damages to the other party.)

Nick and Chris tine own a Taco Bell franchise. They built the restaurant on land they've leased from the Fargood Foundation. What type of lease do they have?

Ground lease

Bart is under contract with Steven to purchase Steven's home. Bart is having second thoughts and intentionally misses a couple of contingency deadlines. Which of these statements is true?

One of Steven's options is to move forward with the contract.

Katelyn really wants to include an inspection contingency in her purchase offer. Her agent explains that the inspection contingency will document which of the following?

The dates by which all inspection issues must be addressed

Roger's offer on Trenton's property was accepted. At what point in the transaction does Roger first get equitable title to Trenton's property?

When the contract is accepted (When Roger's offer was accepted, he received equitable title to the property. He has the right to full ownership when the sales closes (dependent that the equitable title is transferred to the lender as security on the mortgage loan).)

Starla, 35, and Gwen, 32, are going into business! Gwen is buying a share of Starla's franchise. Their attorneys drew up a contract that had Gwen providing $45,000 to Starla in return for 50% ownership. Gwen and Starla happily signed the contract, Gwen paid Starla the $45,000, and Starla presented Gwen with a notarized certificate showing Gwen's 50% ownership in the company. What type of contract is this?

Valid

If a contract is for an illegal purpose, it's ______.

Void

Warren signed a contract with the Samsons for the sale of property he didn't own. What type of contract is this?

Void

Someone who has agency representation with the licensee is a ______.

Client

A licensee has several tasks to perform for seller clients. One of these tasks is to ______.

Communicate all offers and counter-offers to the sellers

Which of the following is an example of a universal agent?

Conservator (A universal agent has broad authority to act on behalf of the principal, such as a person with a power of attorney or a conservator.)

Dean and Michael have an oral contract. Dean said he would sell Michael his bike in return for Michael's vinyl album collection. What does the record collection represent?

Consideration

Lisa is holding an open house for her client, Tim. Several couples stop by. Aarthi and Ram don't interact with Lisa at all. Gina and Reggie talk with Lisa about the property; they're not working with another licensee. Marcus and Marvin stop by and talk with Lisa about the property; they're working with another licensee. Which parties are considered only consumers at this point?

Aarthi and Ram

Kenneth entered into a contract to sell his home to Valerie, who put down a $5,000 earnest money deposit. At the last minute, Valerie backed out of the deal and Kenneth kept the earnest deposit. This is an example of ______.

Accepting liquidated damages

Martha made an offer to buy Drake's home, and he accepted it. Under the terms of the agreement, Martha was supposed to make an earnest money deposit of $10,000, but she only put down $5,000. Drake accepted the lesser deposit, and the sale was ultimately finalized. This is an example of ______.

Accepting partial performance

Someone who's been given the authority to act on behalf of someone else is a(n) ______.

Agent

Homestead Realty had a listing agreement with Gertrude. The listing expired, and Gertrude moved the listing to another firm. Another licensee at Homestead Realty has a buyer client who's interested in Gertrude's property. What restrictions are in place for Homestead Realty?

Homestead may represent the buyer, must disclose material facts about the property, and must maintain Gertrude's confidentiality.

You represent Ember as her listing agent. Ashley is the buyer, and Trinity represents her. What duties do you owe Trinity?

Honesty and fairness

Kirby is found to be in breach of contract in the sale of his house to Marta. Kirby's contract doesn't limit Marta's remedies. Which of these remedies is LEAST likely to be awarded by a court?

Punitive damages (Courts rarely award punitive damages in a real estate contract dispute.)

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.

An assignment of a contract means to ______.

Transfer rights, but not necessarily obligations, to a new party

Sylvan, the seller, and Eric, the buyer, have signed an option agreement, which is an offer to purchase a specific piece of real estate without the obligation to buy it. Until Eric exercises his option to buy, only Sylvan is bound by the option agreement; he may not sell the property to anyone else during the option period. What type of contract is this?

Unilateral

Burt terminated his exclusive right-to-sell listing agreement with Scott, his listing broker, without cause. Burt may legally do this as long as he's ______.

Willing to pay Scott's commission anyway

In which of these situations is Ronna's fiduciary duty of reasonable skill and care at odds with her duty of obedience?

Jefferson insists that Ronna interpret the implications of him breaching his contract with a buyer.

Which of these circumstances does NOT require agent disclosure?

Marty is representing Dwayne in both the sale of his current home and the purchase of his new home. (A licensee must disclose any situation that presents a conflict of interest. There's no inherent conflict of interest with one licensee representing a client in both the sale and purchase of property.)

Mary has a contract to buy her mother's house when her mother is finally ready to move to a senior living community. This way the house stays in the family. After her mother finds a suitable senior apartment and moves, Mary writes a check for the agreed-upon amount and her mother transfers the deed to Mary. What is happening in this scenario?

Performance (This is an example of contract performance. Performance means that the two parties have met the terms under the contract and the contract is considered executed (complete).)

DeeAnna thought she purchased an investment property, but the seller refused to deliver the title to her. DeeAnna met all of her obligations per the written contract she and the seller signed. She decided to take the seller to court in an effort to force him to hand over the title. This is an example of ______.

Suing for specific performance

Renee listed her property on March 13. After several months, lots of marketing and effort from the agent, a price adjustment, and several showings but no offers, Renee decided to list the property with another firm. Based on this situation, under which of these conditions can Renee list the property with another firm without breaching her agreement?

The listing agreement expired.