Contracts

Which of the following is an acceptable termination date for an enforceable exclusive listing of residential real property:

90 days after listing agreement is signed In an Exclusive Listing only one agent can be hired. It requires a specific termination date (not 90 days from the completion of construction, rather 90 days from signing). If two exclusive listings are signed, the seller may be liable for two commissions.

Which of the following is NOT required for a contract to be legally binding?

A "proper writing."Not all contracts need to be in writing to be legal and enforceable. However, certain types of contracts -- including those for real estate transactions -- do need to be in writing. In part because of the amounts typically involved, but more importantly to maintain clear, documented title history.

A contract between the seller of real property and a real estate 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 the buyer, is called:

A bilateral contract A listing is a bilateral employment contract between principal and broker whereby the broker is employed by the principal to find a buyer and accept a deposit.

A contract between the seller of real property and a licensee, in which 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 the buyer, is called:

A bilateral executory contract.Both parties are bound, making it bilateral. Executory indicates that the contract is yet to be performed.

Bob gave Bill an option for the purchase of Bob's property. In law, such an option is regarded as:

A contract to keep the offer open An option is a contract to keep an offer to sell or lease real property open for a set period of time.

Any advance fee contract used in connection with a real estate or business opportunity listing must include all of the following except:

A guarantee that the sale, lease or exchange will be completed;Advance Fee Contract contains no guarantees of success with respect to the sale or rental of a property

In accordance to the Statute of Frauds which of the following must be in writing:

A lease for a period of longer than one year.The Statute of Frauds sets forth what contracts are required to be in writing in order to be enforceable. Any contract that is not to be performed within one year must be in writing;

Usually a broker has a right to a commission only on the basis of negotiations which he completes during the term of the listing agreement, unless:

A protection period clause is included in the agreement A Protection Period Clause (safety clause) in a Listing will allow a Broker to collect a commission for a specified period of time after the term of the Listing has expired. It is a designated period of time to close deals with prospects that the licensee has been working with during the term of the listing. This is not a time to find a new prospect. They must put the name of the prospects in writing at the end of the listing period in order to earn a commission during the protection period clause.

The seller must provide the buyer with a real estate transfer disclosure statement in which of the following transactions:

A sale of a four unit residential building Transfer Disclosure Statement is required of the seller even if sold "as is" for sale of a four unit residential building .If the TDS is amended the buyer has 3 days to rescind out of the contract. If the TDS is defective the buyer has 2 years to sue the seller. The Seller should reveal all known defects but not repairs that are up to building code on the TDS. The Licensee can never complete the Seller's portion of the TDS.

When leasing commercial property that is merely a "shell" space, the landlord often agrees to spend a specific amount for a qualified tenant. This amount is designated as:

A tenant improvement allowance;A tenant improvement allowance monies, labor, supplies or other consideration given by a Landlord to a Tenant to Construct the Premises for occupancy. Allowances address the improvements to be done "above the ceiling" (eg HVAC, ducts, electrical lines) and "below the ceiling" (eg, doors, walls, floor covering). Also called "TI Allowance", "TI's", or a "Construction Allowance".

Broker Lou took a listing on commercial acreage and also received the right to purchase the property within 30 days. On the 28th day of the listing, the broker decided to buy the property. Before buying the property, he must:

All of the other answers are correct Option on a listing - If a broker wants to exercise an option that he has on a property on which he also has a listing, he must: Disclose to the Seller any offers and obtain the written consent of the seller.

Which is true concerning an option:

All of the other answers are correct.An Option is a contract to keep an offer to sell or lease real property open for a set period of time. The Optionor cannot revoke the offer to sell during the designated period of time. An Optionee is under no obligation to buy the property in question. [The Optionee is NOT bound by the Option.]

Consideration may be which of the following:

All of the other options may be considered consideration A consideration is the inducement to a contract. It is the cause, motive, or compelling influence which induces a contracting party to enter into a contract. Consideration means something of value in the eye of the law and considered as such by both parties. It may be money, services, or a promise, and consists of either a benefit to the promisee or a loss or detriment to the promisor.

In which of the following contracts does one of the parties agree not to revoke an offer for a certain period of time:

An Option An Option is a contract to keep an Offer to sell or lease real property open for a set period of time. The Optionor cannot revoke the offer to sell during the designated period of time. An Optionee is under no obligation to buy the property in question. [The Optionee is NOT bound by the Option.]

A contract which authorizes a real estate agent to sell a property during a specified time and allows that person to collect a commission if the sale is made by anyone, including the owner, is:

An exclusive right to sell An exclusive right to sell listing agreement is between a broker and a seller in which the broker is given the exclusive right to sell the property. In this type of listing, the broker earns his fee regardless of who sells the property including the owner.

Which of the following statements BEST shows the difference between an exclusive right to sell and either an open or an exclusive agency?

An exclusive right-to-sell guarantees the listing broker a commission if he/she, or any other cooperating broker, procures a ready, willing and able buyer under the seller's terms and conditions; exclusive agency and open listing do not provide the same Exclusive agency, in fact, means that the seller will owe no commission if he finds his own buyer. Open listings are even riskier for brokers because they will lose the commission if the buyer or any other broker or salesperson provides a buyer.

A contract which, according to the Statute of Frauds, must be in writing in order to maintain a court action for enforcement is:

Any agreement one year or longer.The Statute of Frauds sets forth what contracts are required to be in writing in order to be enforceable. Any contract one year or longer must be in writing

By signing an exclusive right to sell listing, the seller is creating a contract between himself and the:

Broker A Listing is a Bilateral Employment Contract between principal and broker whereby the broker is employed by the principal to find a buyer and accept a deposit. It is the most essential element of an enforceable broker-principal relationship. The duration for a listing may be for any length of time agreed to by both the broker and the seller

Where a buyer withdraws his offer to purchase real property prior to acceptance by the seller, the:

Buyer is entitled to the refund of the earnest money deposit There must be some type of offer and acceptance by the parties for the contract to be binding.

"Valuable," "good," " sufficient," and "adequate" are terms most closely associated with:

Consideration Consideration: One or more thing(s) of value that is/are exchanged in the contract (not necessarily money); ["Sufficient", "Valuable", "Good" and "Adequate" are all words that are often used to describe Consideration.]

Which of the following is necessary for a real property conditional installment sales contract to be valid?

Consideration, offer and acceptance, lawful object, competent parties, legally sufficient writing.The four legal essentials in any contract are: (1) consideration, (2) an offer and acceptance (i.e., a meeting of the minds), (3) a lawful object, and (4) competent parties. Some contracts, like a land contract (a type of conditional installment sales contract), require writing as well.

In order for an agreement for a transfer of real property to be binding on the buyer and seller it must:

Contain an offer and acceptance There must be some type of offer and acceptance by the parties for the contract to be binding. [For Example, the transfer of real property by contract must have an offer and acceptance to be binding.]

Which of the following prevents a person from adopting a position, which is in conflict with a previous position or a previous action?

Doctrine of estoppels The Doctrine of estoppels prevents a person from adopting a position, which is in conflict with a previous position or a previous action.

A listing agreement is essentially a/an:

Employment contractA Listing is a Bilateral Employment Contract between Principal and broker whereby the broker is employed by the Principal to find a buyer and accept a deposit.

The basic protection of a lender on a purchase-money second trust deed would be:

Equity of the borrower;Lenders basic Protection is the equity of the borrower.

What listing requires an owner to pay a commission, even though she sells the property herself?

Exclusive right to sell listing Exclusive Authorization and Right to Sell Listing is a contract where the Owner agrees to sell the property in question through the Listing Broker. The Listing Broker does not need to show that he is the "Procuring Cause" of the buyer- the broker gets paid no matter who brings the buyer.

Under which of the following listings must an owner pay a commission, even though he sells entirely through his owns efforts:

Exclusive right to sell listing Exclusive Authorization and Right to Sell Listing is a contract where the owner agrees to sell the property in question through the Listing Broker. The Listing Broker does not need to show that he is the "Procuring Cause" of the buyer. They get paid no matter who brings the buyer.

During escrow, if an unresolved dispute should arise between the seller and buyer preventing the close of escrow, the escrow holder may legally:

File an interpleader action in court As the result of an existing conflict between the Buyer and Seller, and the Deposit is turned over to the Court, this is referred to as an Interpleader.

The prospective purchaser may withdraw the offer at any time before the seller's acceptance of an offer:

For any reason Buyer may cancel for any reason prior to acceptance.

When zoning changes, but owners are allowed to continue with non-conforming uses, this is a:

Grandfather clause A grandfather clause is the clause in a law permitting the continuation of a use, business, etc., which, when established, was permissible but, because of a change in the law, is now not permissible.

An optionor and an optionee make a contract for an option on a commercial piece of property. If the optionee decides to exercise his option, when must he perform?

He must exercise his option under the terms of the option contract.Options are generally concerned with only two things: time and price. Whatever the parties agree to in those regards defines the terms of the option and the obligations of the parties.

When the letters "HVAC" appear in a commercial or industrial lease, it normally refers to:

Heating, Ventilating, and Air ConditioningHeating, ventilating, and air-conditioning (HVAC) system. The unit regulating the even distribution of heat and fresh air throughout a building.

Broker Oscar brought in an offer but the listing agreement did not include an authorization to accept a deposit. Which of the following is correct?

If Oscar accepts the deposit, he/she would do so as the agent of the buyer.If the scope of authority of a real estate broker is limited to just producing a buyer, the broker does not have the authority to collect a deposit on behalf of the seller. When an agent does collect a deposit in this case, the agent is acting as agent for the buyer (offeror) and not the seller.

When must all the listings in an office be renegotiated?

If the broker dies There are many reasons a listing CAN be negotiated. But it MUST be renegotiated when a broker dies because a listing is held by the broker.

Which of the following would not make a contract voidable:

Illegal purpose A contract that has no legal effectiveness. For example, a contract that has an illegal purpose is simply Void, NOT Voidable

Which of the following is created when possession and title do not occur at the same time?

Interim Occupancy Agreement An Interim Occupancy Agreement is created when possession and title do not occur at the same time

A contract that is a voidable contract :

Is valid and enforceable on its face, but it may be rejected by one of the parties.A voidable contract is that which is capable of being adjudged void, but is not void unless action is taken to make it so.

A voidable contract is one which:

Is valid now but can be voided by an interested party for due cause Voidable Contract is valid until it is rescinded. Examples of Voidable Contracts include contracts signed under duress, or contracts entered into with threat or menace.

What is a "liquidated damages" clause in a contract and is it legal?

It is a clause that specifies a certain dollar amount that will be paid in "damages" if a party breaches a contract. It is legal.Although legal, liquidated damages clauses aren't viewed with much favor by California courts because of the inherent vagueness about the true costs of "damages" and a tendency towards abuse.

An Option contract:

Keeps an offer open for a specified period of timeAn option is a contract to keep an offer to sell or lease real property open for a set period of time.

A written agreement in which an owner allows an individual to use a property in exchange for rent, and also gives that individual the right to buy the property for a specified price within a specified period. This contract would most likely be a:

Lease option A lease option contract is an alternative financing option that allows home buyers to lease a home with an option to buy. Each month's rent payment may consist of not only the rent, but an additional amount which can be applied toward the down payment on an already specified price.

A safety clause is found in a:

Listing agreement A Protection Period Clause (safety clause) in a listing will allow a broker to collect a commission for a specified period of time after the term of the Listing has expired. It is a designated period of time to close deals with prospects that the licensee has been working with during the term of the listing. This is not a time to find a new prospect. They must put the name of the prospects in writing at the end of the listing period in order to earn a commission during the protection period clause

A broker's authority to accept a deposit on behalf of the seller comes from which of the following:

Listing agreement.A Listing is a Bilateral Employment Contract between a principal and broker whereby the broker is employed by the principal to find a buyer. This agreement also allows the broker to accept a deposit on the seller's behalf.

Which of the following is NOT a type of listing contract?

MLS contract An MLS contract is simply an agreement by which a recognized real estate firm agrees to pay a fee for the privilege of advertising properties in general. Listing agreements are between the firm and a specific seller concerning a specific property.

The seller accepted an offer for the purchase of real property and an escrow was opened. Later the seller discovered misrepresentation on the part of the buyer. The contract:

May be voided by the seller.Such a situation would create a voidable contract. In other words it would give the seller the right to invalidate the contract because of the misrepresentation.

A broker and seller terminate the listing contract. An offer is received in the mail by the broker after the termination of the listing contract. The offer is for full price and includes all of the terms and conditions of the seller. Why is this NOT a valid contract?

No acceptance has been given.It has not been presented to or accepted by the owner. Remember, contracts aren't valid until both parties agree. However, even though the listing agreement has expired, the offer should be presented. If it's accepted and the transaction closes, the broker will generally be entitled to his or her full commission.

Broker Dave has an exclusive agency listing to sell a $200,000 home for owner Jones. Before the listing expires, the home was sold through Jones' own efforts to a friend, and Dave was refused payment of any commission. Dave is legally entitled to receive from Jones:

No commission Exclusive Agency listing is a contract where the seller agrees to pay the listing agent a commission if the property in question sells through the agent. However if the owner sells it themselves the agent gets no commission.

When part of an agreement is changed, or an agreement is replaced by a new one, it is a:

Novation is a term used in contract law and business law to describe the act of either replacing an obligation to perform with a new obligation, or replacing a party to an agreement with a new party. A novation must be agreed upon by all original parties to the original agreement.

When one party is substituted for another party in a contract, the process is appropriately called a:

Novation.A novation is the substitution of a new person for one of the parties to an agreement, on consent of all people involved.

Which of the following is not a necessary element in the formation of a contract:

Performance The four essentials of a valid contract is Meeting of the minds, Capable parties, Lawful object and Consideration

Which of the following is not a necessary element in the formation of a contract:

Performance The four legal essentials in any contract are: (1) consideration, (2) an offer and acceptance (i.e., a meeting of the minds), (3) a lawful object, and (4) competent parties. Some contracts require writing as well.

Broker Bob entered into an oral listing with the seller without subsequent written verification. As to the payment of a commission to broker Bob, it would be

Permissible if the seller elects to do so The payment of a commission to a Broker who took an oral listing would be permissible if the seller chooses to make such a commission payment.

Carol signs a listing agreement, what is included under the section "Terms of the Sale" on Carol's agreement?

Price, method of payment, and personal propertyThe "Terms of the Sale" section in a listing agreement lists the price and how the price is to be paid. It also discusses any personal property which is included in the price.

All of the following are essentials of each and every contract, except:

Proper writing A valid contract does not necessarily have to be in writing, nor does it necessarily have to require performance to be valid. The four essentials are Mutual consent, Lawful object, Capable parties, Consideration

Where are you most likely to find the words "time is of the essence?"

Receipt for deposit "Time is of the essence" is found in almost all Deposit Receipts.

None of the following would automatically terminate an offer to buy real property except:

Rejection of the offer by the offeree Rejection of Offer by Offeree terminates an offer.

A voidable contract remains binding upon the parties until the contract is:

Rescinded A voidable Contract is a contract that may be rejected by either of the parties. It is valid until it is rescinded. Examples of voidable contracts include contracts signed under duress, or contracts entered into with threat or menace. Any time you are forced to enter into a contract when you do not want to do, the contract is voidable.

If a principal no longer desires the broker to act for him during the period of an exclusive right to sell listing, he may:

Revoke the agency created by the listing contract but may be liable for damages A Seller can terminate a Broker before the expiration of the Listing, but he may be liable for damages to the Broker in this instance.

Which of the following requires real estate listings to be in writing?

Statute of Frauds The Statute of Frauds generally requires all contracts for the sale of land or any interest therein (including listings) to be in writing.

Where in a Real Estate Listing are the seller's exact terms and conditions?

Terms of sale clause The terms of sale contain the seller's exact terms and conditions.

Which of the following is NOT true about an option?

The Optionor can revoke the offer to sell during the designated period of time.The Optionor CANNOT revoke the offer to sell during the designated period of time. The optionor is bound to perform in the optionee decides to exercise his/her option, it is a unilateral contract.

One of the main benefits of a sale-leaseback transaction would be;

The ability of the seller to deduct all of his future rent payments as business expenditures.In a Sale-Leaseback the seller becomes a tenant, thus allowing the seller to deduct all of his future rent payments as business expenditures.

The effective date of a real estate purchase contract is the date that:

The acceptance is communicated to the buyer Mutual agreement is a 3 step process. Offer, acceptance and communicate back the acceptance.

In which of the following situations could a broker receive no commission?

The broker proves that he is the procuring cause of the buyer in a net listing In all of the other listings, if the broker proves that he is the procuring cause, they would earn a commission. However a net listing is an employment contract in which the broker receives, as commission, all excess monies over and above the minimum sales price agreed on by broker and seller. Therefore if he brings in an offer at or below the sales price then he would get no commission. This is why net listings are illegal in many states, because of the inherent conflict of interest.

Broker Pam Wilson sold Matt Cohen a small "starter" home. During the closing process it was discovered that Matt was not nineteen as he claimed, but a seventeen year old unemancipated minor. What is the status of the contract?

The contract is voidable.If a minor contracts to buy a house, the contract can be voided by the minor because of lack of sufficient age. If, however, the minor elects to enforce the contract, the contract is valid and the other party cannot assert the minor's lack of age as a defense. The contract is "Voidable" by the minor but not by the other party

Mr. Daniels made a written offer to purchase a home through Broker Starr. However, Daniels died in a car accident before Broker Starr could notify him of a qualified, signed acceptance by the seller. Which of the following statements is most correct?

The death of Daniels constituted a termination of the offer.In the event that a buyer dies prior to any notification of the acceptance, the offer is terminated.

Henry made an offer to purchase real property. However, he died of a heart attack before the listing broker could notify him of an unqualified, signed acceptance by the seller. Based on these facts, which of the following is true:

The death of Henry constituted a revocation of the offer.In the event that a buyer dies prior to any acceptance by the seller, the offer is terminated.

Regarding a promissory note when getting financing:

The deed of trust secures the promissory note.The deed of trust secures the promissory note and the property. If payment is not made according to the terms of the note and deed of trust, the beneficiary may instruct the trustee to foreclose as set forth in the deed of trust.

When a counteroffer is made:

The offeree becomes the offeror;In a counteroffers the offeree becomes an offeror, it is a brand new offer. The one making the offer is the offeror, the one receiving the offer is the offeree. The original offer gets terminated and a new offer gets made "the offeree becomes the offeror"

Which of the following statements about options is false?

The option binds the optionee to the performanceAn optionee is under no obligation to buy the property in question. It is their "option" to buy it.

All of the following are essential elements of every valid contract, except:

The payment of money The four essentials of a valid contract is Meeting of the minds, Capable parties, Lawful object and Consideration

Salesperson Rose has several listings and is an agent of Broker Leigh. These listings are:

The property of Broker Leigh The listing agreement is a contract between the broker and the seller. It remains the property of Broker Leigh if Salesperson Rose changes brokers and the listing remains valid.

Salesperson Carol has several listings and is an agent of Broker Vivian. These listings are:

The property of Broker Vivian The listing agreement is a contract between the broker and the seller. It remains the property of Broker Vivian if Salesperson Carol changes brokers and the listing remains valid.

Assume a broker took an open listing, he then made an oral agreement with another broker to share the commission on the property. The second broker procured an offer resulting in the sale of the property. The first broker refused to share his commission on the sale;

The second broker would stand a good chance of winning a court suit for his share of the commission If a Broker who had already taken a listing then made an Oral Agreement with a Second Broker to share the commission, but then refused to share the commission when the Second Broker had procured an offer resulting in the sale of the property, there is a good chance that in a lawsuit, he would be liable to the Second Broker for their share of the commission.

Most real estate contracts contain preprinted clauses or spaces for information to be added in writing. In the interpretation of such contracts:

The written parts take precedence over the printed parts.Written parts always take precedence over the preprinted parts.

Stephen signs a real estate contract. Most real estate contracts contain preprinted clauses or spaces for information to be added in writing. In the interpretation of Stephen's contracts:

The written parts take precedence over the printed parts.Written parts always take precedence over the preprinted parts.

To assign a contract for the sale of real estate means to:

Transfer one's rights under the contract.Assigning a contract means to transfer it to another.

A contract based on an illegal consideration is:

Void Legal Purpose: contract that has no legal effectiveness. For example, a contract that has an illegal purpose is simply Void, NOT Voidable

Tenant Albert agrees to perform certain property repairs for owner Bob. Despite repeated promises, Albert fails to perform the repairs. Bob then writes up a contract, and compels Albert to sign it by threatening to evict him if he doesn't. Such a contract would be:

Voidable A voidable Contract is a contract that may be rejected by either of the parties. It is valid until it is rescinded. Examples of voidable contracts include contracts signed under duress, or contracts entered into with threat or menace. Any time you are forced to enter into a contract when you do not want to do, the contract is voidable.

Albert is a tenant and agrees to perform certain repairs for Bob who is the owner. Despite repeated promises, Albert fails to perform the repairs. Bob then writes up a contract, and compels Albert to sign it by threatening to evict him if he does not. Such a contract would be:

Voidable Examples of Voidable Contracts include contracts signed under duress, or contracts entered into with threat or menace.

If a person obtains a contract through duress, that contract is:

Voidable Examples of voidable contracts include contracts signed under duress, or contracts entered into with threat or menace.

The duration of a listing agreement is:

Whatever is negotiated between the Broker and seller The duration for a listing may be for any length of time agreed to by both the Broker and the Seller.

Janice Riceland is shown a home by her agent, Richard. She makes an offer and gives Richard a check. At what point does her offer become an enforceable contract to buy?

When Janice is notified the seller accepts the offer.Offers are serious business. Once accepted, they cannot be withdrawn without penalty, such as loss of the deposit.

Susan is shown a home by her agent, Selwyn. She makes an offer and gives Selwyn a check. At what point does her offer become an enforceable contract to buy?

When Susan is notified the seller accepts the offer.Offers are serious business. Once accepted, they cannot be withdrawn without penalty, such as loss of the deposit.

A contract is said to be fully executed when:

When both parties have completely performed their designated tasks A contract is considered "Executed" once both parties have completely fulfilled performed each of their obligations under the contract. As opposed to "Executory" which means elements of the contract have yet to be performed.

When may a real estate broker, serving as agent of the seller, refuse to transmit an offer to the principal:

When the broker is acting on the express instructions of the principal in his refusal;An agent is employed to carry out the instructions of the principal, they can advise the principal in what to do, but at the end of the day they work for the principal and must carry out the principal's instructions as long as those instructions are lawful.

A bilateral contract is a contract that:

a promise by one party is given in exchange for a promise by another party.A contract in which each party promises to perform an act in exchange for the other party\'s promise to perform.

A listing agreement is a legal:

contract between the seller and a broker that establishes their agency or non-agency relationships.A listing agreement is a contract between the broker and the seller laying out their agency relationship.

Which of the following events does NOT usually terminate a listing?

death of either the selling broker or buyerThe old joke, "death is no excuse," has some validity in real estate transactions. In this particular case, however, the matter is straightforward. Listing agreements are with firms and so survive the death of an individual, and the death of one buyer has no direct bearing on the listing agreement at all.

Mr. Seller signs an open listing on his home with five different brokers. In this case:

each broker has an opportunity to earn the entire commission.An open listing is one given to any number of brokers who can work simultaneously to sell the owner's property. The first broker, to secure a buyer who is ready, willing and able to purchase at the terms of the listing, earns the commission.

A family rents a house from January 1st to June 30th. This is considered a(n):

estate for years An estate for years is a leasehold created by landlord and tenant for a particular period of time. The period of time could be a fixed number of years, months, weeks, or even days. An estate for years always will have a definite termination date.

In order to be entitled to a commission, a broker must show that he/she was the procuring cause of the sale under all of the following types of listings, except:

exclusive authorization and right to sell.Exclusive Authorization and Right to Sell Listing is a contract where the Owner agrees to sell the property in question through the Listing Broker. The Listing Broker does not need to show that he is the "Procuring Cause" of the buyer- they get paid no matter who brings the buyer.

All of the following listings require that the broker be the "procuring cause" of the sale if he/she is to be entitled to a commission, EXCEPT:

exclusive right to sell listing.Under an Exclusive Authorization and Right to Sell Listing, the listing broker is entitled to a commission if the property sells through the efforts of the broker or any other person. The broker is not required to produce a buyer or be the procuring cause to be entitled to a commission.

A contract in which all parties have fulfilled their promises is a(n):

executed contract An executed contract is a contract which has been completely carried out by the parties

The basic purpose of a listing agreement is to authorize the broker to:

find a buyer.A listing agreement is a contract between an owner (as principal) and a real estate broker (as agent) by which the broker is employed as an agent to find a buyer for the owner's real estate on the owner's terms, for which service the owner agrees to pay a commission.

Four months ago, a seller entered into a legally binding written contract to sell his property. Later, the seller refused to complete the transaction since he felt the value of the property would increase in the near future. Under these circumstances, the Statute of Limitations could affect the rights of the buyer to prevail in a civil action due to a breach of the written contract within:

four years.A right rising out of a written contract must be pursued in court within four years of the default (breach), according to the Statute of Limitations.

Broker Seddon takes an exclusive listing on a property owned by three different people. Broker Seddon takes the listing contract to each of their places of business to get it signed. Broker Seddon must:

give a copy to each owner when he/she signs.When there are multiple owners, the broker is required to provide a copy of the listing contract to each owner when they sign.

The buyer of a home was not informed that the house was on a septic tank system. The buyer:

has the right to rescind the contract.A Licensee must reveal Material Facts about a house such as a leaky roof or poor insulation. A failure to disclose Material Facts concerning a property may allow the innocent Buyer to rescind the contract. [For Example, if a Buyer was not told that a large septic tank system was part of the property, the Buyer could rescind the contract.]

A broker used the following clause in his exclusive listing contract: "In consideration of the execution of the foregoing, the undersigned broker agrees to use diligence in procuring a purchaser." This clause:

is important to the creation of a bilateral contract Bilateral Contract is a promise given by one party in exchange for a promise by a second party; the contract is binding on both parties to perform. An example of a clause that, if included in a broker's listing, would create a Bilateral Contract is: "In consideration of the execution of the foregoing, the undersigned broker agrees to use diligence in procuring a purchaser."

Broker Kim took a 90-day exclusive agency listing to sell a property that was owned by Joe. After 30 days, Kim had not sold the property, so Joe sent her a certified mail letter canceling the listing. One week later Joe listed the property with several brokers using open listings. Two weeks later, one of the brokers who had an open listing on the property completed a sale to new owners. In this situation Joe most likely:

is liable for payment of commission to Kim as well as to the selling broker.If two listings are signed and one is an exclusive listing, the seller may be liable for two commissions.

Under a lease, the leasehold interest is with the:

lessee.A "leasehold interest" is the right to exclusive possession and use of real property for a fixed period of time held by the lessee. Remember: lessor(landlord), lessee (tenant).

The document that defines the relationship between the broker and the seller is the:

listing agreement .While disclosure statements, purchase contracts, and even exclusive agency contracts are also legal documents that the broker or salesperson enters into with the clients, it is the listing agreement that clearly defines the relationships and agreements between the broker and principal.

Mr. Seddon who is an owner of a property enters into an exclusive listing with Broker Sparks. One week later, Broker Sparks brings in a full price offer, but Mr. Seddon refuses the offer. Seeking an action of Specific Performance would be an option for:

neither the buyer nor broker Sparks.Specific performance is an action brought in a court of equity in special cases to compel a party to carry out the terms of a contract. There never was a contract between the buyer and seller since the offer was refused. Specific performance is not used to specifically enforce a contract to perform personal services, such as a broker's agreement to find a buyer.

A tenant signs a lease that stipulates that the lessee pays the property tax. This lease is probably a:

net lease.Net Lease: A lease, usually commercial in which the lessee not only pays the rent for occupancy but also pays maintenance and operating expenses such as taxes, insurance, utilities and repairs. The rent paid is said to be "net" to the lessor.

A property owner lists his property for sale with a broker. During the negotiations, the owner told the broker that the owner wanted $138,000 for the property, and anything above that amount the broker could keep as his commission. The listing with this type of provision is known as the:

net listing.Net listing agreements are illegal in many states, and frowned upon in the others. That\'s because of the potential for unfair advantage and conflict of interest they create. For example, let\'s say a seller believes his home is worth $138,000 and is happy with that amount. However, the broker thinks he can get $175,000 and does. That means that, instead of a more typical $9,500 or so in commissions, the broker realizes $37,000. Of course, it can also work the other way. The homeowner may have been right and the home sells for only $138,000--leaving the broker with a commission of $0 for his costs and efforts.

A parcel of vacant land is listed for $100,000, requiring 20% down with the seller to carry back the balance. The broker brings in a full-price cash offer, but the owner refuses. The broker is entitled to:

nothing.Since the offer does not meet the exact terms of the listing, the broker is not entitled to any commission.

What is it called when one person is substituted for another in a real estate contract?

novation The most general definition of novation is the substitution of a new obligation for an old one. It also means substitution of new parties to an existing obligation, as when the parties to an agreement accept a new debtor in place of an old one. For example, in the assumption of a loan, the lender may release the seller and substitute the buyer as the party primarily liable for the mortgage debt.

Susan who is a buyer, has entered into an agreement with more than one buyer's agent at the same time but owes compensation only if she uses the services of a buyer's broker. Susan's arrangement is known as a(n)

open agreement Susan's open buyer agency agreement is similar to an open listing seller agreement. A open listing is a contractual agreement under which the listing broker acts as the agent or as the legally recognized non-agency representative of the seller(s), and the seller(s) agrees to pay a commission to the listing broker only if the property is sold through the efforts of the listing broker

Under a lease for a commercial property, a tenant agrees to pay $4,000 per month plus 3% of the gross monthly sales. This type of lease is called a:

percentage A percentage lease is a lease in which all or part of the rental is a specified percentage of gross income from total sales made upon the premises.

An offeree has the right to:

reject an offer.The "offeree" is the person to whom an offer is made, usually the seller, and he or she is free to accept or reject it for any reason.

The primary purpose of a listing agreement is to:

serve as a contract of employment between the owner and the broker.A listing agreement is, in fact, a form of employment agreement in which Party A agrees to perform such and such tasks for Party B in exchange for a defined amount of compensation

Andrew has holographic will. Holographic wills cannot be:

signed with an "X"Since a holographic will is handwritten, it is assumed that the person is capable of signing his/her full name.

The law that requires real estate contracts to be in writing to be enforceable is the:

statute of frauds.Contrary to popular belief, the statute of frauds is not about specific actions defined as fraud, but the requirement in every state that certain documents be in writing, especially those pertaining to real estate. It\'s called the statute of frauds because it was first enacted in England in 1677 to prevent fraudulent claims of title.

In a real estate purchase contract, the liquidated damages clause is initialed and the buyer defaults. The deposit should be:

used to cover liquidated damages for both the seller and listing broker.If a buyer defaults and the liquidated damages clause is initialed, the deposit should be used to cover damages for both the seller and the listing agent (after expenses are paid). However, the listing agent will never get more than his agreed-upon commission.

Seller Smith sold a home to buyer Jones under contract. Shortly before close of escrow, it was judicially determined that Jones was incompetent prior to entering into the contract with Smith. The contract between Smith and Jones is:

void If Jones was legally incompetent before entering into the contract with Smith, the contract was void at its inception. A void contract cannot be enforced by law. Void contracts are different from voidable contracts, which are contracts that may be nullified.

Undue influence or duress applied to one party to a contract makes the contract:

voidable.Because all parties must enter a contract willingly and believe that doing so is in their best interests, attempts to influence an unwilling or reluctant participation can render the contract void. The court must be petitioned and agree before the contract becomes void.