Chapter 11 - Review Questions

if you post flyers offering a $100 reward for return of your lost dog, you are offering which type of contract?

Unilateral Contract.

A real estate licensee if legally allowed to prepare all of the following types of documents, EXCEPT: a. purchase and sale contracts b. Listings c. Leases d. Option contract

c. Leases

Which of the following is an example of a unilateral contract: a. Purchase and sale contract b. Contract for deed c. Open listing contract d. Oral contract

c. Open listing contract

All of the following are required elements in a written listing contract, EXCEPT a. a definite termination date b. the price of the property and the terms that are offered c. a renewal provision d. the broker's fee or commission and the signature of the property owner.

c. a renewal provision

What is the difference between a commercial RE listing and a Residential RE Listing?

commercial has a lien against the seller's net sales proceeds upon performance by the broker under a written listing contract.

What is the term used to describe the party who receives an offer?

offeree

what is the difference between and open listing and an exclusive agency listing?

open listing is unilateral, the other one is bilateral open listing can have many brokers the other one can only use one broker

A broker charges a commission of 7% of the gross sales price. A sales associate sells a property for $108,500, and receives 60% of the broker's commission. What is the total commission due, and what is the sales associates share of commission?

$4,557

What is the legal term that is used to designate the transfer of rights in a contract from one party to another?

Assignment

What has occurred when one party fails to meet the obligations of the contract or does not perform as agreed in the contract?

Breach of contract

What is option money?

Definite valuable consideration that an optionee gives to an optionor in exchange for the right to buy a property under an option.

Which term best describes a contract in which all of the terms and conditions have been fully performed?

Executed

When all parties acknowledge that the terms of a contract have been met, what is the status of the contract?

Executed.

A buyer who negotiates a contract to purchase property, takes possession and pays the property purchase price in installments, but does not receive the legal title until the full purchase price has been paid. What is this agreement called? (a) An obvious attempt to defraud the buyer (b) A lease-option (c) A violation of the Statute of Frauds (d) An installment contract, contract for deed, or land contract

(d) An installment contract, contract for deed, or land contract

If an owner revokes an exclusive right of sale listing and sells the property during the remaining time the listing would have been in effect, what is the broker entitled to?

A full commission

What is an option contract?

A right to buy a property during a specified period of time at a specified price.

What is a listing contract?

An employment contract between a broker and the owner of real estate

Which term refers to a type of contract where all terms and conditions are NOT fully expressed?

Implied

When you patronize a restaurant, you expect the restaurant to serve safe, edible food, and the restaurant expects you to pay for the food that you order. this is an example of which type of contract?

Implied and bilateral contract.

What are the required elements of all valid contract?

Lawful Subject, agreement, consideration, and two or more competent parties.

A buyer and seller entered into a purchase and sale agreement. The buyer chose not to close and defaulted on the agreement. The seller claimed the escrow deposit. What type of damages can be sought?

Liquidated damages to the seller

To which does the Phrase "Meeting of the minds" Refer?

Offer and acceptance

What are liquidated damages?

Penalties that are specified and agreed upon in the contract.

What are unliquidated Damages?

Penalty that is not specified in the contract and is determined by a court

Which statute requires a purchase and sale contract to be in writing to be enforceable?

Statute of Frauds

Which establishes the time period for enforcement of a contract

Statute of Limitation

Which remedy for breach of contract asks the court to keep the contract in force?

Suit for specific performance

What does the Statute of Frauds provide?

That a contract for the transfer of a right or interest in land must be in writing to be enforceable.

What does the statute of Limitation provide?

Time limits in which parties are allowed to bring legal action to enforce their rights under oral or written contracts.

A sales associate negotiated a contract to sell a property for $239,000. The broker charges a commission of 5% on the first $100,000 of the sales price, 6% on the next $75,000, 7.5% on the next $25,000, and 10% on the balance. What are the total commission due and the sales associate's share if the broker retains 45% of the total commission?

Total Commission $15,275 Sales associate Share: $8,401.25

all of the following are remedies for a breach of contract, EXCEPT: a. Suit for declaratory judgement b. suit for damages c. Suit for specific performance d. Suit for Cancellation (rescission)

a. Suit for declaratory judgement

All of the following statements about an option contract are accurate, EXCEPT: a. an option contract may be accompanied by a token consideration to be valid b. an option contract must state the price and terms of the transaction, specify the time period, and contain a full legal description of the property. c. when the optionee exercises the option, the option contract becomes a purchase and sale contract d. an option contract must be in writing to be enforceable.

a. an option contract may be accompanied by a token consideration to be valid

All of the following statements correctly describe a suit for damages, EXCEPT: a. it is a suit seeking cancellation of the contract b. it requires the injured party to seek court action to enforce his or her rights. c. It is a suit seeking compensation for unliquidated damages d. it typically involves a request to the court to be financially compensated for damages.

a. it is a suit seeking cancellation of the contract

What is an express contract?

all terms and conditions are specified and agreed to by the parties

What is the term used to describe the consideration given by a buyer to indicate serious intent to buy a property?

an earnest money deposit

What is a Parol Contract?

an oral contract

All of the following statements about an offer are accurate, EXCEPT: a. Acceptance of an offer results in a contract b. A counteroffer is considered acceptance of the original offer with modifications c. If either party to an offer dies, or is deemed insane, the offer is terminated d. if a property that is the subject of an offer is destroyed, the offer is terminated

b. A counteroffer is considered acceptance of the original offer with modifications

Which of the following best describes a contract? a. a written instrument b. legally binding c. void unless accompanied by earnest money d. always bilateral

b. legally binding

all of the following statements correctly describe an exclusive right of sale listing contract, EXCEPT: a. the listing contract must be in writing b. the property owner owes no commission if he/she sells the property himself c.it is a bilateral contract d. the property owner agrees to pay a commission even if a different broker sells the property

b. the property owner owes no commission if he/she sells the property himself

A typical real estate purchase and sale contract is which type of contract?

bilateral

Who is procuring cause of sale?

broker who successfully performs by locating a willing, ready and able buyer.

All of the following are ways in which a contract can be terminated, EXCEPT: a. completion of the terms of the contract by all parties b. renunciation of the contract by all parties. c. Legal revocation of the contract by one of the parties d. Change of mind on the part of the offeree

d. Change of mind on the part of the offeree

All of the following are necessary elements for a contract to be valid, EXCEPT: a. A lawful purpose that is not contrary to the public b. Two or more competent parties c. an offer made by one party and accepted by the other party d. Written under seal

d. Written under seal

All the following may terminate an offer, EXCEPT a. Expiration of a reasonable or specified time period b. The death of the offesor c. A counteroffer d. a failure to obtain a binder deposit

d. a failure to obtain a binder deposit

All of the following statements correctly describe a contract for deed, EXCEPT: a. the buyer is given possession and use of the property and typically nakes payments to the seller over a period of time. b. Florida law considers an installment contract transaction as a type of financing device. c. the property owner agrees to deliver a deed to the purchaser after certain conditions have been met. d. the property owner agrees to deliver title to the buyer upon execution of the contract.

d. the property owner agrees to deliver title to the buyer upon execution of the contract.

Option Contract

gives the buyer the right to purchase for a specified time at a specified price

What type of contract exists when the court determines that a contract existed due to the actions of the parties?

implied contract

In which circumstance is a broker's commission subject to forfeiture?

the broker violates a fiduciary duty

Who are the parties in a showing agreement?

the licensee and the buyer