Section 3 Real estate

During the period of time after a real estate contract is ratified, but before title actually passes to the buyer, the status of the contract is: Select one: a. Voidable. b. Executed. c. Executory. d. Implied.

Before the contract is completed, it is said to be executory. Once it is complete, it has been executed. The correct answer is: Executory.

Money paid upon the signing of a contract is known as principal. Select one: a. True b. False

he statement is false. Money paid at contract signing is an earnest money deposit.

Salesperson Susan sells to buyer Pete, a home belonging to seller Tom. At the same time she writes a six month option for Pete to buy an adjoining lot, also from Tom. When does Susan earn her commission on the option contract? Select one: a. When she is paid her commission on the sale of the home. b. When the optionor and the optionee are brought together. c. When local custom dictates, she has earned it. d. None of the above

Susan will earn her commission on the optioned property if and when Pete decides to exercise his right to buy the property and does so within the six month period of the option. The correct answer is: None of the above.

A real estate sales contract does not survive the death of one of the parties. Select one: a. True b. False

False, A real estate sales contract survives the death of either party. A listing contract would not survive the death of either party.

The statute of frauds does NOT require a written contract for: Select one: a. Ingress or egress. b. Purchase and sale of real property. c. Legal estates or equitable interests. d. Contract for deed.

. Ingress or egress

A licensed real estate salesperson can receive compensation for real estate activities from: Select one: a. The principal, be it the buyer or seller. b. The listing broker or a cooperating broker. c. The principal or the listing broker. d. The employing broker only.

Salespersons can receive compensation for real estate activities from their employing broker only. The correct answer is: The employing broker only.

An option contract is a __________ contract until the option is exercised and is then a __________ contract. Select one: a. Bilateral/unilateral. b. Unilateral/bilateral. c. Bilateral/bilateral. d. Unilateral/unilateral.

The option is a unilateral contract at first, because only the seller has made a promise -- to sell the property. Once it is exercised it becomes a bilateral contract because the buyer promises to pay the purchase price and the seller promises to deliver title The correct answer is: Unilateral/bilateral.

The legal process by which a landlord removes a tenant from leased premises when there has been a breach of the lease terms is known as an ejectment. Select one: a. True b. False

The statement is false. Ouster of a lessee for breach of lease is known as eviction.

A client is obligated to her agent for... Select one: a. indemnification against loss not caused by the agent. b. reimbursement. c. performance. d. all of the above.

a. indemnification against loss not caused by the agent.

The buyer in a contract for deed is known as the: Select one: a. vendor. b. vendee. c. obligor. d. obligee.

b. vendee.

Which of the following real estate related contracts is considered an employment contract or agreement? Select one: a. A listing agreement. b. An offer to purchase. c. An option. d. None of these choices.

a. A listing agreement.

A buyer's agent's commission would most likely come from the buyer: Select one: a. In a For Sale By Owner (FSBO) transaction. b. In most transactions. c. In all transactions. d. In no transactions.

Buyer's agents are normally paid by the seller through the payment to the listing broker being shared with the buyer's agent. In the case of a FSBO transaction there is no listing broker so the commission would come from the buyer. The correct answer is: In a For Sale By Owner (FSBO) transaction.

the protection clause in a contract: Select one: a. Protects the buyer and seller from breach of contract. b. Assures the broker will be paid a commission. c. Ensures the broker a commission if the seller and buyer enter into a contract after the listing has expired. d. Safeguards the borrower from foreclosure by a lender.

If, after a listing expires, the seller enters into a contract with a buyer that was introduced to the property during the listing period, a commission is due and payable to the listing broker. Usually there is a time limit included in the clause. The correct answer is: Ensures the broker a commission if the seller and buyer enter into a contract after the listing has expired.

When someone assigns his contract to buy real estate to a third party, he, the assignor, is no longer liable for the performance of the contract. Select one: a. True b. False

The statement is false. An assignor remains secondarily liable on the contract unless released by the original party.

Which of the following is true of a contract under novation? Select one: a. A new contract replaces the old one. b. The old contract is void. c. The original parties to the contract remain jointly and severally liable with the new parties. d. A new party is assigned the rights of an old party

a. A new contract replaces the old one.

Casper is planning to sell his house and desires the broadest possible exposure. He gives Bert an exclusive right-to-sell listing, Gail an exclusive agency listing and Mark an open listing. Mark sells the house. Under these circumstances, which of the following statements is true? a. Mark must split his commission with Bert and Gail. b. Casper owes two commissions, one to Mark and one to Bert and Gail to be split between them. c. Casper owes 3 commissions. d. Mark is the only one who will receive a commission.

bert's listing means that regardless of who sells the property, Bert will get a commission. Gail's listing means that if anyone, other than the owner, sells the property, she will get a commission. Mark's listing means that if he sells the property he gets a commission. Casper therefore, is obligated to pay 3 full commissions. The correct answer is: Casper owes 3 commissions.

A purchase contract has been agreed to by the buyer and seller of a home. The contract calls for closing to occur in 45 days. Later, the closing is actually scheduled for the 47th day. The contract could be rescinded if the contract included which of the following phrases? Select one: a. "Exact times required." b. No special wording is required. c. "Time is of the essence." d. "Time limits are specific."

c. "Time is of the essence."

What is the difference between a novation of a contract and an assignment of a contract: Select one: a. The party that initiates the action. b. A novation is legal while an assignment is not. c. A novation replaces the old contract with a new one while an assignment replaces one party to the contract with another. d. An assignment replaces the old contract with a new one while a novation replaces one party to the contract with another

c. A novation replaces the old contract with a new one while an assignment replaces one party to the contract with another.

Which of the following contracts is voidable? Select one: a. One of the parties to the contract is legally insane. b. One of the parties did not sign the contract. c. One of the parties was drunk at the time the contract was signed. d. The subject of the contract was for an illegal purpose.

c. One of the parties was drunk at the time the contract was signed

In the event of a breach of contract, the injured party may: Select one: a. Sue for damages only. b. Sue for specific performance only. c. Sue for either damages or specific performance. d. Sue for both damages and specific performance.

c. Sue for either damages or specific performance.

A contract to hire someone to commit an illegal act would be... Select one: a. Voidable. b. Subject to rescission. c. Void. d. Valid as to the employer, voidable by the person hired.

c. Void.

How can a contractual relationship be created? Select one: a. Written documents. b. Action of the parties. c. Words of the parties. d. Any of these choices.

d. Any of these choices.

If a broker has an exclusive right-to-sell listing, which of the following statements is INCORRECT? Select one: a. There must be a definite termination date in the listing. b. All money given, by the seller to the broker, must be accounted for. c. The broker may cancel the listing if he chooses. d. The broker is legally obligated to sell the property.

d. The broker is legally obligated to sell the property.

When a seller and licensed salesperson agree to a listing, on terms acceptable to the broker, an agency relationship is established between: Select one: a. The seller agent and the seller. b. The listing salesperson and the seller. c. The listing broker and the buyer. d. The listing broker and the seller

d. The listing broker and the seller.

A listing agreement must contain all of the following information EXCEPT: Select one: a. The signature of the owner of the property. b. The percentage of commission or fee. c. An expiration date. d. The net amount that the seller will receive.

d. The net amount that the seller will receive.

If an optionee does NOT exercise his option rights during the option period, which of the following would occur? Select one: a. The optionee can ask for a return of any consideration paid. b. The optionee can be sued by the optionor. c. The optionor can be sued by the optionee. d. The optionee gives up the consideration paid for the option right.

d. The optionee gives up the consideration paid for the option right.

On the last day of a valid one year lease, the tenant gave the landlord a check for the next month's rent, which the owner accepted. What is created by the actions of the two parties? Select one: a. An estate for years. b. An estate at sufferance. c. An estate at will. d. A periodic estate.

The action of accepting the next month's rent legally creates a new lease for one month or a periodic tenancy. The correct answer is: A periodic estate.

The Parol Evidence Rule controls which of the following: Select one: a. An oral agreement leading to a written contract. b. A dispute between cooperating brokers. c. A settlement which occurs while a licensee is imprisoned. d. None of the above.

a. An oral agreement leading to a written contract. The Parol Evidence Rule states that a written agreement will override any previous oral agreement.

An offer is made to a seller and the seller makes a counteroffer. Prior to the buyer accepting the counteroffer, the seller receives a better offer from another prospective buyer. Under these circumstances, the seller: Select one: a. May withdraw the counteroffer. b. Should advise the second offeror to wait. c. Can accept the second offer without recourse. d. Is bound by the terms of the counteroffer

a. May withdraw the counteroffer

If an option to purchase real estate expires July 15th without the optionee exercising his option, what must the owner do to release the property from option? Select one: a. Nothing b. Obtain a release from the optionee c. File a lis pendens d. File a lien

a. Nothing

A listing agreement may be terminated by: Select one: a. The seller b. The buyer's broker c. The salesperson that obtained the listing d. Death of the salesperson

a. The seller A listing agreement is one type of agency agreement and may be terminated by the client (seller), agent (broker) or by mutual consent. The salesperson cannot terminate the listing. Answer B addresses the buyer's broker. If it had said the LISTING broker, then it too would have been correct

When a property is sold with an existing lease... Select one: a. the entire lease interest is transferred. b. the original lessor remains primarily liable on the lease. c. the original lessee has no liability under the lease. d. the assignee would pay the rent to the assignor.

a. the entire lease interest is transferred.

A legal procedure or action initiated by either buyer or seller to enforce the terms of a sales contract is known as: Select one: a. An option. b. A suit for specific performance. c. A suit for quiet title. d. A statute of frauds.

b. A suit for specific performance

If a person pays for the right to purchase property at a specified price, within a specified time, the person has: Select one: a. A right of first refusal. b. An option. c. A sales contract. d. A lease.

b. An option

Which of the following is NOT required in an open listing? Select one: a. Signature of the client. b. Definite termination date. c. Agreed upon commission or fee. d. Description of the property.

b. Definite termination date.

Mr. Badguy owns a house which he rents to Mr. Chump. Mr. Badguy tells Mr. Chump that at the end of the 2 year lease Mr. Chump will have the right to purchase the property for a specified price. One year into the lease, Mr. Chump pays to replace the roof and is complimented by Mr. Badguy. At the expiration of the lease Mr. Badguy refuses to sell the house to Mr. Chump. What legal doctrine might require Mr. Badguy to sell the house at the specified price? Select one: a. Mens rea. b. Estoppel. c. Statute of Frauds. d. Statute of Limitations

b. Estoppel.

Two brokers from different firms agree that they will charge the same commission rate for all property listed by their offices. Such action: Select one: a. Is common practice. b. Is in violation of antitrust laws. c. Is prohibited by RESPA. d. Violates the Fair Housing Law.

b. Is in violation of antitrust laws.

A contract for the sale of land in which the buyer makes regular payments, takes possession, but does not receive title is known as a(n): Select one: a. Mortgage. b. Land contract. c. Lease. d. Option.

b. Land contract What is described could be either a land sales contract, an installment contract or a contract for deed. In each of these the buyer makes payments, takes possession but the seller retains legal title until all payments are made.

A buyer and seller entered into a valid contract. The buyer, for personal reasons, asked to be released from the contract. The buyer located someone else to buy the property. The seller entered into a new contract with the other person and released the first buyer from any obligation. This would be an example of: Select one: a. Assignment. b. Novation. c. Implied consent agreement. d. Redemption.

b. Novation. The difference between assignment and novation is that one party agrees to substitute another party and relieve the first party from liability. With an assignment the first party remains at least secondarily liable.

Which of the following statements about options is true? Select one: a. The optionor can void the option if another offer is submitted. b. The optionee can allow the option to expire. c. The optionee can extend the option period automatically. d. Options only involve raw land.

b. The optionee can allow the option to expire.

A listing broker has an agency relationship with his client (the seller). The broker also has a moral and statutory obligation to all prospective customers (buyers). One way to describe the relationship with the buyer would be: Select one: a. To obey the letter of the law. b. To do what is right. c. To do those things that are required. d. To do anything that is aske

b. To do what is right.

A unilateral contract is executed: Select one: a. When the offeror signs the contract. b. Upon completion of the requested act. c. When the offeree signs the contract. d. After a reasonable period of time.

b. Upon completion of the requested act

To be a professional property manager of a large apartment complex, one would need to know about all of the following EXCEPT: Select one: a. Property maintenance. b. Property insurance. c. Human relations. d. Appraisal techniques.

d. Appraisal techniques.

When a contract is breached, the injured party: Select one: a. May not sue for money damages. b. May not sue for specific damages. c. May rescind the contract bilaterally. d. May rescind the contract unilaterally.

d. May rescind the contract unilaterally.

When a lessee assigns his or her leasehold interest in a property, all of the following statements are true, EXCEPT: Select one: a. The assignor transfers all of his or her rights in the property to the assignee. b. The assignee pays the rent directly to the landlord. c. The lessor has the right to require prior approval of the assignment. d. The assignor remains primary liable for the rental payment

d. The assignor remains primary liable for the rental payment

It would NOT be considered commingling of funds, if: Select one: a. The broker holds a deposit check at the request of the offeror until acceptance by the offeree. b. The broker holds a deposit check at the request of the offeror after acceptance by the offeree. c. The broker holds an earnest money deposit in his personal account until the offer is accepted or rejected. d. The broker holds an earnest money deposit in his brokerage operating account because the deal is going to be all cash.

a. The broker holds a deposit check at the request of the offeror until acceptance by the offeree. Holding a check at the request of the offeror (buyer) until acceptance by the offeree (seller) is a normal practice and is NOT commingling. Once the offer is accepted, the money must be placed in the escrow account by the 5th business banking day following contract ratification. The broker NEVER puts money, belonging to others, in his personal or brokerage account.

A buyer enters into a contract for the purchase of property, agreeing to make a specified down payment, and further agreeing to regular monthly payments to the seller, who is holding legal title, for a specified period of time. This describes what type of contract? Select one: a. Installment contract. b. Purchase money mortgage. c. Option contract. d. Agreement contract.

This situation describes as an installment contract. The seller holds legal title. With a purchase money mortgage the seller is acting as the lender and holds only "bare or naked" title as a pledge to pay the debt. An option is a contract for the right to purchase property in the future. The term "agreement contract" is meaningless. The correct answer is: Installment contract.

The loan contingency clause in a valid sales contract will contain all of the following except: Select one: a. the amount of the loan. b. the name of the lender. c. the date of the commitment. d. the interest rate of the loan.

b. the name of the lender

A homeowner tells a broker that he would like to sell his house. The broker agrees to sell the house. This agreement would be considered: Select one: a. An express contract. b. An implied contract. c. An illegal contract as it requires a writing. d. An equilateral contract.

a. An express contract.

What is a silent lease? Select one: a. A lease that is not in writing. b. A lease that states nothing about a particular issue or circumstance. c. A lease that is not recorded. d. A sublease where the landlord has not been notified.

b. A lease that states nothing about a particular issue or circumstance.

When a real estate broker is retained to perform one specific act for a client, it is known as: Select one: a. general warranty. b. special agency. c. general agency. d. special warranty

b. special agency.

Which of the following agency responsibilities most likely would be limited in dual agency representation? Select one: a. Fairness. b. Reasonable care. c. Disclosure. d. Accounting.

c. Disclosure.

Which of the following is (are) true regarding the Multiple Listing Service? Select one: a. It can only accept residential listings. b. It can establish minimum and maximum commission rates. c. It can refuse to accept open listings. d. All of these choices.

c. It can refuse to accept open listings.

All of the following will automatically terminate a listing by operation of law, EXCEPT: Select one: a. Bankruptcy of the client. b. Destruction of the property. c. Condemnation of the property. d. Client's decision.

d. Client's decision. A decision by the client to terminate the listing would be an act of one of the parties, rather than by law.