National practice exams
Casey signed a contract form offering a purchase price of $309,000 on a home, and gave his agent a $5,000 earnest money deposit. The owner is out of town and her agent can't reach her. At this point, what does Casey have?
An offer Until the terms are negotiated and the contract is signed by both parties, acceptance hasn't occurred and the sales contract is considered an offer.
Which of these statements about equitable title is true?
Equitable title refers to the borrowers future rights.
Justin is representing the seller in a transaction. Which of the following tasks is he permitted to perform for the unrepresented buyer as a non-agent?
Explain to a buyer the purpose of the seller's property disclosure. must avoid providing any type of information that isn't strictly fact-based.
Stacey, a buyer, is working with Rebecca, a licensee, in a state that doesn't recognize or permit implied agency. Rebecca doesn't represent Stacey, however, and is performing only ministerial tasks for her. Which of the following statements about this situation is correct?
Stacey is Rebecca's customer.
To meet the requirements of the statute of frauds, an agreement must clearly identify the contract's subject matter, present the contract's essential terms and conditions, and ______ to be enforceable.
Identify the contracting parties
Larry is assisting a buyer who's making an offer on his client's listing. If Larry is too helpful to the buyer, what might occur?
Implied agency and undisclosed dual agency
In a buyer agency relationship, whom does the licensee represent?
The buyer
Which of the following statements is true if the seller elects to accept the deposit as liquidated damages?
The buyer is relieved from any further liability to or legal action from the seller.
In which of the following listing agreement terminations is there LEAST likely to be a penalty for terminating the agreement?
The client and agent mutually agree to terminate the listing.
A client terminates a listing agreement before its expiration date. What happens now?
The client may owe a commission anyway.
When a contract doesn't provide specific dates for when the terms need to be met, what should the parties assume regarding performance of the contract?
Performance must take place within a "reasonable time."
If a buyer makes an offer that the seller finds lacking, which of the following actions is the seller most likely to take?
Respond with a written counter-offer.
As a licensee, you'll have several tasks you must perform for your buyer client. One of these tasks is to ______. T
Review transaction documents with the buyer, clarifying anything that could be confusing, without stepping outside the scope of your license
Marsha leases a ranch house in a bedroom community. When the owner decided to sell the house, Marsha was given the opportunity to purchase it but declined. What does Marsha have?
Right of first refusal With a right of first refusal, the holder of the right waits until the owner wants to sell and then can exercise that right or let the property go
Garrett wanted to move his real estate closing to a date after his wedding. His broker and attorney encouraged him not to do it because of which contract clause?
Time is of the essence
What is the difference between a lease option and a lease purchase agreement?
A lease purchase agreement is a stand alone contract.
Grace found herself in a breach of contract situation where the other party met some of the terms but not others. Grace thought it would cost a lot of time and money to sue, so she decided to accept the work that had been done and call it good. This is an example of ______. To
Accepting partial performance
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
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?
Amendment
Which of the following begins as a unilateral contract and can become a bilateral contract?
An option agreement
Hank leases 150 acres from Sara and Jesse. He has an option contract attached to his lease, with an option to purchase which can be exercised within the next two years. How large does the option fee need to be in order to
Any amount agreed to by the parties
Buyer April is interested in Wayne's condo. Steve represents April, and Wanda represents Wayne. Who are the principal(s) in this sales transaction?
April and Wayne
Desmond has a signed listing agreement with his clients, the Harpers. In exchange for helping the Harpers list, market, and sell their home, the Harpers have agreed to pay Desmond a commission. What type of agreement do Desmond and the Harpers have?
Bilateral
Hank leases 150 acres from Sara and Jesse. He has an option contract attached to his lease, with an option to purchase which can be exercised within the next two years. He just told Jesse that he's ready to purchase the land, and they've negotiated a purchase price and closing date. What kind of contract is this?
Bilateral
Which of the following is an example of an escalator offer?
Buyer offers $650,000 with clause that buyer will beat all competing offers by $3,000 up to $675,000.
You have an agency agreement with Sam to list his property for sale. Because of this, what is Sam's relationship to you?
Client
One week before closing is scheduled, Zach decides he's changed his mind and refuses to buy Kim's house. Kim sues Zach, and the courts agree that Zach should compensate Kim for the loss of other potential sales while the property was under contract to Zach. What kind of damages are these?
Compensatory damages
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
What's the role of the mortgage contingency in a sales contract?
Documents the type of and timeline for financing, and outlines what to do if financing falls through.
Phil is a property manager, which means he serves as a _______ agent to his landlord/client.
General
Which statement best describes the criteria that would permit Tristan to legally engage in dual agency?
His firm and the state permit it and he obtains the proper consent.
Max has a written agency agreement with Rufus in which Max will receive all of the listings in the subdivision that Rufus purchased (with Max's representation) and is developing. One day when Rufus is visiting the site of the subdivision, a work truck accidentally runs him over and he's seriously injured. Rufus can no longer run the development of the subdivision. What happens to Max's agency coupled with interest?
It's still in place because it doesn't terminate on the death or incompetence of the principal.
Which of these situations is an example of designated (appointed) agency?
Jacob, a broker, acts as the dual agent and appoints Mark to represent the buyer and Todd to represent the seller in the same transaction.
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.
Select the situation that correctly represents a true conflict of fiduciary duties.
Nikki's seller client has instructed her not to present offers that are less than the listing price. This is a conflict of Nikki's duty of disclosure, which requires her to present all offers, and her duty of obedience.
Nevina may be creating an implied agency agreement if she does which of these?
Performs a CMA for an acquaintance and provides advice on setting a listing price based on other comparable properties in the area.
Leigh Ann is a licensee. Her cousin, Carly, is interested in buying a house. Leigh Ann shows Carly how to look for properties online and runs some CMAs for her. When Carly finds a property she likes and asks Leigh Ann to help her make the offer, Leigh Ann decides she should ratify the agreement with Carly. What are Leigh Ann's options for accepting an agency relationship after the fact?
Prepare an agency agreement or continue to assist Carly with the purchase.
Reggie has thoroughly reviewed the sales contract with his clients, the Arnolds, and has confirmed that they understand all of the terms and provisions. In order for Reggie to adhere to the agency duty of reasonable skill and care and avoid the unauthorized practice of law, what should Reggie do next?
Recommend that the Arnolds review the sales contract with an attorney before signing it.
Which of these tasks that Jenna performs does NOT represent the fiduciary duty of accounting?
She discloses the terms of the listing agent's compensation to her client.
What is the definition of a legally competent party?
Someone who has the legal and mental capacity to enter into a contract
Which fiduciary duty may continue even after the transaction closes?
The duty of accounting
When a licensee represents a seller, which one of the following statements is true about the licensee's ability to list other properties that are for sale?
The licensee is permitted to list other properties for sale, even if they're competing properties.
Trina's property is listed with Avalon Homes. The market is a little slow, and Trina's listing is a high-end home, where sales are even slower. She's had several showings, but no offers. The term of the listing agreement is nearly over. What happens when the termination date is reached?
The listing expires and is automatically terminated. A listing agreement automatically terminates on the end date noted in the agreement unless the seller agrees to extend it
Rachel is talking with a co-worker, Shawna, about homebuying. Rachel shares some general market trends and talks about the impact of rising interest rates. She notes that the listing price of Shawna's neighbor's house seems lower than it should be, and then they talk about the importance of getting pre-approved for a loan early in the process. Which of her statements might have created an implied agency situation?
The listing price of the neighbor's property
Tom and Jim are neighbors. Jim wants to buy Tom's rental property. In the contract they sign, Jim is identified only as "the neighbor." Which statute or contract element does this violate?
The statute of frauds
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
Sondra thinks the new business contract she signed with her business partner is valid. Both parties are legally competent, the contract has a legal purpose, an offer was made and accepted, and a fee has been negotiated and documented. Which essential element of a valid contract has Sondra not yet considered?
Whether consent was voluntary
Savvy's buyer client made an offer on a property but is having second thoughts. Savvy tells her client that she'll ask the seller's agent for an extension on the inspection period "to gather more bids," and use that time to look at other properties to avoid losing out on the current property. Savvy's client found a property she liked better, so they made an offer. The offer was accepted, so Savvy contacted the first property's agent to terminate that offer. Is this wrong?
Yes, she did not treat the other party honestly, or act in good faith. Licensees can't let duties to their client blur the duties of honesty and fairness to others
What happens when your client asks you to do something that's against the law?
You must break your duty of obedience.