Real Estate "Contracts" Test JULY '20

Your neighbor hires a middle school student to mow his lawn every two weeks. He draws up a written contract in which he clearly outlines the student's mowing responsibilities and the payment the student will receive in return. Which of the following is true in this situation? Because a minor can't enter into a contract, the student's parents are legally obligated to uphold the student's obligation under the contract. Because a minor can't enter into a contract, this contract is void and the neighbor could be subject to legal action if the authorities were alerted. Because this contract binds the student to an obligation that's legal for a minor to perform (mowing lawns), the contract is valid and enforceable. If the neighbor and the student are content to uphold their agreement, the fact that it's not legally binding doesn't matter.

If the neighbor and the student are content to uphold their agreement, the fact that it's not legally binding doesn't matter.

Which of the following statements best describes a sales contract? A legally binding, oral contract between a property's potential buyer and a listing agent A legally binding, oral contract between a property's potential buyer and seller A legally binding, written contract between a property's potential buyer and seller A legally binding, written contract between a property's seller and a listing agent

A legally binding, written contract between a property's potential buyer and seller

Which of the following describes a contract that exists based not on words, but on the parties' actions or behaviors? Executed Executory Express Implied

Implied

Which of these agreement terms is typically a standard part of the sales contract? Buyer's option to purchase a home warranty Selection of a closing agent Specific closing instructions Transfer of warranty on built-in appliances and HVAC systems

Buyer's option to purchase a home warranty

You're a new licensee who's thrilled to be working with five different buyer clients. Under what circumstances is it appropriate for you to determine the earnest money amount for your clients? If the buyer is a first-time buyer. If the buyer is elderly. In none of these circumstances. When the buyer's target is a second home.

In none of these circumstances.

Hannah wasn't able to get the financing to open her boutique, so her mother came on as a silent partner and provided additional cash. Hannah and her mother have an agreement that states Hannah's mother can't be held financially or legally liable if there are any problems with the store. What type of contract clause is this? Arbitration Choice of law Damages block Indemnification

Indemnification

Irene and Harold are buying a home. Which document will be used for this transaction? Buyer agency agreement Listing agreement Option contract Sales contract

Sales contract

Which of the following is used to document a buyer's offer to a seller? Listing agreement MLS listing Promissory note Sales contract

Sales contract

Two intoxicated co-workers sign a contract in which they agree to marry each other if they're both still single when they reach age 40. Which of the following is true about this contract? This is an enforceable contract because it has a time period in which it must be completed. This is a valid contract because the parties are adults and the consideration (marriage) is legal. This is a voidable contract because the parties were intoxicated at the time they signed it. This is a void contract because it is illegal for co-workers to enter into a relationship-related agreement.

This is a voidable contract because the parties were intoxicated at the time they signed it.

You're talking to a co-worker at lunch and she mentions she has a box of baby clothes her kids have outgrown that she needs to get rid of. You have a baby on the way, so you offer to pay her $25, and she agrees to bring the box to work the next day and give it to you. Which of the following is true in this situation? This is an express contract because you defined in words the specific terms of the agreement and consideration to be exchanged. This is an implied contract because it is not written down and nobody signed anything. This is an invalid contract because it is not written down and nobody signed anything. This is a unilateral contract because only one party is providing anything of value.

This is an express contract because you defined in words the specific terms of the agreement and consideration to be exchanged.

What's the purpose of a sales contract? To document the agreement between a buyer and seller in a real estate sales transaction To notify the public that an offer has been made on a specific property To serve as an agreement between the seller and the licensee that the seller intends to sell the house To verify that the seller has the legal right to sell the property

To document the agreement between a buyer and seller in a real estate sales transaction

You receive an offer in the mail that says you're eligible to win a cash prize if you place some stickers on a form and return it to the sender. What type of contract is this? Implied contract Invalid contract Unenforceable contract Unilateral contract

Unilateral contract

Rex needs to handle some money he acquired during an "unsavory" business deal. He agrees to sign his boat over to his colleague, Ben, if Ben can launder the money and return it to Rex as part of a legal business dealing. What kind of contract do Rex and Ben have? Executed Executory Void Voidable

Void

You sign a contract to purchase a machine that will allow you to travel back in time and meet Abraham Lincoln. Assuming that time machines don't actually exist (for now), what type of contract is this? Enforceable Unilateral Void Voidable

Void

In a contract, the element of consent is also called _____. Absence of fraud Fraudulent invalidation Reality of agreement Voluntary agreement

Voluntary agreement

Your brokerage firm uses preprinted sales contract forms, but your seller, Marcus, wants to add some language about staying in the house and renting from the buyer for a month after closing. What should you use to add this information? Addendum Amendment Annotation Appendix

Addendum

Your buyer, Billy, wants to make an offer on the craftsman house he saw today, but he wants the sellers to start the paperwork for a tax reassessment before closing. This isn't part of the standard sales contract in your area. What will you use to accomplish this request? Addendum Amendment Annotation Appendix

Addendum

A buyer requests that the warranty for the home's HVAC system be included as part of the agreement of sale. This is called a(n) ______. Additional provision Contingency Extraneous clause Standard provision

Additional provision

Buyer Daphne and seller Kurt signed a sales contract with a definite closing date of May 15. Daphne then learned that she needs to move the closing date to June 15. She'll accomplish this with an ________ to the sales contract. Addendum Amendment Annotation Appendix

Amendment

Camille, a buyer, wants to change the price already agreed to in a sales contract. She should use a(n) ______. Addendum Amendment Bill of sale New contract

Amendment

The appraisal on Jean's property came in at $22,000 less than the agreed-upon sales price, so the buyer, Thomas, wants to renegotiate the terms. If they can come up with a new price that is satisfactory to both parties, what will they use to document this? Addendum Amendment Annotation Appendix

Amendment

In the eyes of the law, why do people under age 18 lack contractual ability? Because they have insufficient resources. Because they lack intelligence. Because they're immature. Because they're minors.

Because they're minors.

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

Consent

Bill and Mindy, who are neighbors, get into a disagreement about late-night noise. The two come to an agreement: Bill promises to stop having loud parties and Mindy promises to keep her dogs inside after 10 p.m. Their promises represent the ______ in their agreement. Consideration Flaw Legal competency Undue influence

Consideration

Glynnis is ready to close on her new house, but her agent told her that they have to wait for the homeowner to fix the electrical box as agreed. What clause in her contract allowed her to request the repair? Appraisal contingency Financing contingency Home sale contingency Inspection contingency

Inspection contingency

Which of the following statements about a sales contract signed by both parties is true? It can also be called the consumer notice. It consists of two pages: a brief description of the agreement and a signature page. It's a legally binding contract. It's the document buyers and their agents use to enter into a business relationship.

It's a legally binding contract.

Which of the following is synonymous with a sales contract? MLS listing Mortgage Offer to purchase Promissory note

Offer to purchase

Kendra made an offer on Sam's property. Sam rejected Kendra's offer, but made a counter-offer. Kendra is now considering the counter. What role does Kendra have in this scenario? Examiner Executor Offeree Offeror

Offeree

Brynn's listing agent told potential buyers that all offers on Brynn's property would be considered at 5 p.m. on May 3. By that date and time, there were four offers. The persons making these offers are the _______. Examiners Executors Offerees Offerors

Offerors

Which residential sales contract provision specifies the date by which the buyer will have unfettered access to the property? Fixtures and personal property Inspection Possession Property

Possession

Whose responsibility is it to understand the ins and outs of the sales contracts? Brokers Buyer agents Real estate professionals and their clients Seller agents

Real estate professionals and their clients

Before sitting down to write a purchase agreement, a licensee should ______. Determine whether the licensee should make a competing offer Have the brokerage's standard form reviewed by an attorney Review the contract for understanding of each section Run a credit check on the buyer

Review the contract for understanding of each section

Rose, represented by Sandy, and Tina, represented by Julie, entered into a sales contract for Rose to purchase Tina's home. Rose intended to ask Tina to repair the water heater, but the inspection deadline came and went. Now Rose has to buy the property as-is. Whose responsibility was it to convey Rose's wishes to Tina? Julie Rose Rose and Sandy Sandy and Julie

Rose and Sandy

When might an additional provision be needed in an agreement of sale? The buyer can't obtain financing within a specific period of time. The buyer requests terms of sale that aren't part of the standard contract. The home inspector discovers defects that require repair and the seller agrees to pay for the repairs. The seller provides disclosures about the property.

The buyer requests terms of sale that aren't part of the standard 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? How much money the sellers will spend on fixing inspection issues The date by which all inspection issues must be addressed The name of the inspector Katelyn will use Whether Katelyn will ignore some of the inspection issues

The date by which all inspection issues must be addressed

What's the best definition of legal purpose? Attorney consideration Mentally capable of entering into a contract Written for a lawful objective Written for an illegal purpose

Written for a lawful objective

Robert and Sarah enter into a contract for Sarah to purchase Robert's home. Robert decides he doesn't want to sell, and is elated when he finds out that Sarah's only 17 years old. Can Sarah force Robert to sell? No, because Sarah can't legally enter into a contract. No, she can purchase the house if Robert doesn't object, but can't do so if he objects. Yes, as long as she gets a legally competent party to co-sign the contract with her. Yes, Sara can require that Robert fulfill the contract terms.

Yes, Sara can require that Robert fulfill the contract terms.

If you're working with a seller client who's agreed to pay for the cost of a home warranty during negotiations, do you need to add an additional provision to the sales contract? No, because purchase of a home warranty is always part of the sales contract. No, because the cost of a home warranty is irrelevant to the sale. Yes, because home warranties are never included in the sales contract. Yes, unless it's already included in the contract.

Yes, unless it's already included in the contract.