CH - 6 WA
1. A real estate licensee may draw up a contract for a party to a transaction without engaging in the unauthorized practice of law: A. when acting as a dual agent B. when preparing a standard preprinted purchase and sale agreement form C. when charging a separate fee for the services D. if that party is being represented by a different licensee
B. when preparing a standard pre-printed purchase and sale agreement form Explanation: A licensee may draw up a contract for a buyer or seller if he is filling out a purchase and sale agreement form. He may not charge a separate fee for this service.
A counteroffer: A. acts as a rejection of the offer B. is used to rescind a previously existing contract C. is used only to make an offer contingent on a particular event D. is used when a buyer wants to make an offer where the seller has already accepted an offer
A. acts as a rejection of the offer Explanation: A counteroffer is a rejection of the previous offer. Either a buyer or seller may make a counteroffer, in response to either the initial offer or a previous counteroffer.
A rescission form contains an extender clause. What is the purpose of this clause? To notify a subsequent buyer that the first sale has failed B. To request that a buyer waive a contingency or the transaction will terminate C. To guarantee that the listing agent will receive a commission if the parties complete the transaction within a number of months after the termination date D. To create a cooling-off period in which the parties may revive the transaction before it terminates permanently
C. To guarantee that the listing agent will receive a commission if the parties complete the transaction within a number of months after the termination date Explanation: An extender clause, also known as a safety clause, states that an agent is entitled to a commission if the parties enter into an agreement in the months following the rescission of the agreement.
Which of the following is not a requirement for a valid offer? A. It must be in writing B. It must be definite and certain in its terms c. It must contain an attorney's fee provision D. It must express a willingness to contract
C. it must contain an attorney's fee provision Explanation: A provision requiring payment of attorney fees (if a lawsuit is necessary to enforce the agreement) is optional, though generally a good idea.
20. North Point Realty works with a large number of Asian-American buyers, and always instructs il agents to show them properties in neighborhoods with large Asian-American concentrations, assuming that the buyers would be more comfortable there. This practice is known as: A. blockbusting B. steering C. redlining D. commingling
B. steering Explanation: Steering is the practice of channeling buyers toward or away from particular neighborhoods based on their minority status.
7. A transaction collapses after the buyer makes an offer and the seller accepts the offer. Which of the following forms would be appropriate to use to ensure that the parties' legal duties to each other have terminated? A. Contract amendment B. Contract rescission C. Counteroffer D. Contingency
B. Contract of recission Explanation: A rescission form is used when both parties wish to terminate their agreement, either because they have changed their minds or a contingency cannot be met.
Which of the following is the preferred form for an earnest money deposit? A. Cash B. Personal check C. Promissory note D. Bill of sale
B. Personal Check Explanation: Earnest money deposits are most commonly made by personal check. Cash creates additional responsibilities for agents, while a seller must sue to recover on a promissory note.
If an earnest money deposit is $10,000 or less, it must be placed into a: A. pooled trust account with interest payable to the broker B. pooled trust account with interest payable to the state C. separate trust account with interest payable to the buyer D. separate trust account with interest payable to the seller
B. pooled trust account with interest payable to the state Explanation: Deposits of $10,000 or less must be placed into a broker's pooled trust account. Interest from such an account is paid to the state treasurer.
A buyer may revoke an offer to purchase until the point when: A. the Offer has been submitted to the seller B. the seller decides to accept the offer C. the seller tells the buyer or buyer's agent that she's going to accept the offer D. the seller's acceptance has been properly communicated
D. the seller's acceptance has been properly communicated Explanation: A buyer may revoke an offer until the seller's acceptance has been properly communicated to the buyer. At that point, a binding contract has been formed.
13. A buyer offers to purchase a house in Spokane for $200,000 and provides a $12,000 earnest money deposit. The seller accepts the buyer's offer. Later the buyer defaults. Without considering that the seller may owe a commission to his agent, how much is the seller entitled to keep? A. Only 5% of the earnest money deposit B. No more than $5,000 of the earnest money deposit C. more than $10,000 of the earnest money deposit D. The entire $12,000 earnest money deposit
C. No more than $10,000 of the earnest money deposit Explanation: In Washington, a buyer's deposit can be any amount, but no more than 5% of the purchase price can be forfeited as liquidated damages in the event of default. In this case, 5% of the purchase price is $10,000.
Which of the following practices would not be an illegal discriminatory action? A. Using a different, longer pre qualification form for African-American buyers under the assumption that they are more likely to default B. Always assigning minority buyers to work with minority agents C. Referring a buyer to a Spanish-speaking colleague after the buyer expressed a preference to work with a Spanish-speaking agent D. Failing to transmit an offer from an Asian buyer to the seller of a property in an all-white neighborhood
C. Referring a buyer to a Spanish - Speaking colleague after the buyer expressed a preference to work with a Spanish speaking agent Explanation: It is unlawful to treat certain types of buyers less favorably than others based on discriminatory reasons. However, there is nothing illegal about honoring a buyer's request to work with an agent of a particular ethnicity or national origin.
5. An agent advises a seller who has accepted an offer from a buyer to breach the contract and accept a higher offer from another buyer. The agent will receive larger commission as a result. The agent could be: guilty of tortious interference with a contractual relationship liable for any financial harm caused by his actions C. subject to disciplinary action D. All of the above
D. All of the above Explanation: An agent should not encourage a seller to break an existing contract to accept a better offer; he could be civilly liable for his actions as well as subject to disciplinary action. If a seller is intent on breaching a contract, an agent should recommend that the seller obtain legal counsel first.
14. An agent representing a Latino family of buyers overhears that a particular seller is strongly prejudiced and will reject any offer from a minority family. Not wanting a to provoke a confrontation, the agent does not tell them that the house is available. Which of the following statements is true? A. The agent's actions were legal, since he was trying to avoid putting them into a situation where they would be discriminated against B. The agent's actions were legal, since he did not specifically tell them that he could not show them the house C. The agent's actions were illegal; this is an example of redlining D. The agent's actions were illegal, since he refused to show a property based on discriminatory considerations
D. The agent's actions were illegal, since he refused to show a property based on discriminatory considerations Explanation: The agent's actions were illegal; an agent may never refuse to show a property for discriminatory reasons.
2. In which of the following situations would the buyer not be entitled to a return of his earnest money deposit? A. The sale is contingent on the buyer receiving financing, but no lender will provide a loan B. The buyer is unable to sell his previous home in time to satisfy the contingency C. The home inspector finds that the house is infested with termites, and the buyer is unwilling to waive the inspection contingency D. The buyer iS transferred by his employer to a new position in a different city, and must withdraw from the transaction
D. The buyer is transferred by his employer to a new position in a different city, and must withdraw from the transaction Explanation: The buyer is entitled to get his earnest money deposit back if the sale fails through no fault of the buyer. This occurs if a contingency is not fulfilled and the agreement becomes void.
A buyer would make a backup offer if: A. the seller had already accepted an offer from another buyer B. she wanted the offer to be contingent on sale of the house she currently owns C. she wants to respond to the seller's counteroffer D. she was waiving a contingency from her original offer
A. the seller had already accepted an offer from another buyer Explanation: A buyer makes a backup offer when a seller has already accepted an offer from another buyer. The backup buyer's hope is that the first sale will fail to close, allowing her to buy the property.
17. The purchase and sale agreement states that notices must be sent by. registered mail or hand delivered. The buyer sends a waiver of a contingency via email with a valid electronic signature. Which of the following is true? A. The notice is valid B. The notice is invalid c. Federal law requires that parties accept email notifications as valid D. State law forbids email notifications in home purchase transactions
B. The notice is invalid Explanation: The purchase and sale agreement controls what form of communication the parties may use when sending notices. Since the agreement did not authorize email, the buyer's notice is invalid. In other words, the seller may ignore his waiver.
4. If a purchase and sale agreement calls for the listing brokerage to hold the earnest money check uncashed until acceptance then deposit it, the brokerage: A. must deposit the check in the trust account anyway B. should deposit the check if the seller accepts the offer C. should deposit the check even if the seller refuses the offer and apply the funds towards the commission D. must refuse to accept the check
B. should deposit the check if the seller accepts the offer Explanation: A buyer may request that an earnest money check remain undeposited until the seller accepts his offer.
12. Bill phones Sandy and orally offers her $300,000 for her property. Sandy says that would be acceptable. Bill fills out a purchase and sale agreement and signs it. Before he can deliver it, though, Sandy phones Bill and says that she has accepted a better offer instead. Which of the following is true? A. Sandy formed a contract with Bill upon her oral acceptance of his offer B. Sandy has formed contracts with both Bill and the second buyer, and is liable to both C. Bill's offer and Sandy's acceptance were not valid because they were not in writing, so she may accept another offer D. Bill's offer was valid, but Sandy's oral acceptance was not valid, so she may accept another offer
C. Bill's offer and Sandy's acceptance were not valid because they were not in writing, so she may accept another offer Explanation: Both an offer and an acceptance of an offer to purchase real estate must be in writing. As a result, no contract was formed, and Sandy may accept another offer, assuming that it is in writing.
15. Which of the following is NOT a potential disadvantage of accepting a very small earnest money deposit? A. The buyer will not be deterred from walking away from the sale if a better opportunity arises B. The seller will have to sue in order to recover a significant amount of money from the buyer in the event of default C. The seller will not have a large deposit as consolation if the transaction fails D. The buyer will lose money if he causes the transaction to fail
D. The buyer will lose money if he causes transaction to fail Explanation: The purpose of the earnest money deposit is to discourage the buyer from walking away from the transaction, since the buyer will forfeit his deposit if he does so. A larger deposit acts as a greater deterrent.
A listing agent receives three offers on a house on the same morning. The first two offers are for $4,000 and $5,000 less than the listing price, while the third offer is $20,000 less than the listing price. The agent should: A. submit the offers to the seller in the order they were received submit the offers to the seller according to how attractive they are C. discard the third offer since it will De unattractive to the seller D. submit all three offers to the seller at the same time
D. submit all three offers to the seller at the same time Explanation: An agent must present new offers to a seller immediately, regardless of how many offers he has received or whether or not the offers are attractive.