Chapter 10: Sales Contracts and Related Procedures
If a buyer defaults on payments under an installment land contract involving a one- to four-family dwelling, the buyer must be given _______ days to cure the default.
30
Buyers Jack and Jill are ready, willing, and able to go to settlement by the settlement date. However, sellers Melissa and Juan will be unable to complete some of the agreed-upon repairs by that date. The standard Offer to Purchase and Contract allows the sellers to delay settlement for up to _______ days without being considered in breach of contract.
7
During the due diligence period, buyer Darius had the property inspected. Which addendum is used to identify any repairs that the seller agrees to complete?
Additional Provisions Addendum
The standard addendum that is used to specify the date and time an offer expires is the
Additional Provisions Addendum.
Jack and Jill signed the original offer on August 12. The next day, their agent, broker Owen, delivered the offer to the listing agent, broker Suzanne. On August 15, Melissa and Juan accepted and signed the offer. Later that day, Suzanne called Owen to notify him of Melissa and Juan's acceptance. On August 16, Owen delivered a copy of the signed contract to the Greens. What is the effective date of the contract?
August 15
Buyer Barbara, who is represented by XYZ Realty, makes an offer on Cody's house, which is listed by ABC Realty. If Cody accepts the offer, who are the parties to the sales contract?
Barbara and Cody
A broker who is negotiating a transaction involving a contract for deed should use a standard Offer to Purchase and Contract, a Buyer Possession Before Closing Agreement, and an Additional Provisions Addendum.
False
An option contract does NOT need to be recorded in the public records.
False
Broker Hallie's buyer client, Caleb, wants to make an offer on Claudia's house. Under the Real Estate Commission Rules, Hallie must use the Offer to Purchase and Contract Standard Form 2-T.
False
Broker Manual works for ABC Realty. Manual's buyer client is interested in a house that is listed with broker Natalie, who works for XYZ Realty. If Manual uses a preprinted offer to purchase and contract form, the offer should include a provision stipulating that ABC Realty's commission will be paid by XYZ Realty.
False
Elena is interested in purchasing Graham's property. If the offer is drafted by Elena's attorney, the offer must include the information listed in Commission Rule A.0112(a).
False
Ella has a right of first opportunity to purchase Paul's house. Before Paul can offer to sell to Ella, he must have a bona fide offer from a third party.
False
If Jack and Jill Green pay a due diligence fee of $1,000, the fee belongs to the Greens until settlement.
False
If a metes and bounds description is needed for the offer, broker Owen could complete the description and attach it to the contract as an exhibit.
False
If a sale involves new construction that has been completed, a broker should use the Offer to Purchase and Contract—Vacant Lot/Land Standard Form 12-T with the New Construction Addendum Standard Form 2A3-T.
False
On March 27, Benson submits a written offer to purchase Emily's property. Benson's offer will expire on March 31. Benson dies on March 29, before Emily accepts the offer. In this situation, the offer is binding on Benson's estate.
False
Seller Theo's property is listed with broker Inez. Inez receives two offers, one from Margaret and one from Reed, and she submits both offers to Theo. The fact that there are two offers is a material fact that Inez must disclose to both buyers.
False
Stella has a right of first refusal on Stan's house. Diane offers to buy Stan's house for $200,000. In order for Stella to purchase the house, she must be willing to beat Diane's offer.
False
The Mineral and Oil and Gas Rights Mandatory Disclosure Statement applies to transfers involving vacant land.
False
The Offer to Purchase and Contract—Vacant Lot/Land Standard Form 12-T includes a sale of other property contingency clause.
False
The Real Estate Commission publishes preprinted, standard contract forms that may be used by brokers who are not members of the North Carolina Association of REALTORS®.
False
Under an installment land contract, the seller holds equitable title to the property.
False
Which of the following is NOT an element of the definition of a short sale?
Foreclosure proceedings have been initiated.
Which statement regarding the handling of a due diligence fee is TRUE?
If a broker is given cash for the fee, it should be deposited into the broker's trust account.
In the Offer to Purchase and Contract, Melissa and Juan disclose that there is a proposed special assessment for $2,000 that will not be approved until after settlement. Who is most likely to be responsible for paying this assessment?
Jack and Jill, the buyers
Molly accepts Alisa's counteroffer, initials and dates the change, and provides a copy of the contract to Alisa. A week later, Alisa wants to push back the settlement date by 30 days. If Molly agrees, how should they make this change to their agreement?
Molly and Alisa should sign an amendment.
Which Offer to Purchase and Contract form includes sewage system and private drinking water well permits in the Seller Representations paragraph?
Offer to Purchase and Contract—Vacant Lot/Land Standard Form 12-T
Which of the following standard addenda is identified in Standard Form 12-T as one that may be attached and made a part of the contract?
Owners' Association Disclosure Addendum Standard Form 2A12-T
Buyer's agent Alan B. Clark with ABC Realty is completing an offer for a property located at 123 First Street. The listing agent is Philip D. Quinn at PDQ Realty. If the earnest money deposit will be held by the listing broker, how should broker Alan identify the escrow agent in the Offer to Purchase and Contract?
PDQ Realty
There are several bookcases in the living room in Melissa and Juan's house. Jack and Jill, who are interested in buying the house, are not sure how the bookcases are attached or if they will be included in the sale. If Melissa and Juan intend to keep the bookcases and do NOT want them to be included in the sale, where should they indicate their intentions?
Paragraph 2(e)
If Melissa and Juan agree to include a stand-alone refrigerator with the sale of their house, where should this be indicated in the Offer to Purchase and Contract?
Paragraph 3
Which of these paragraphs appears in both the Offer to Purchase and Contract—Vacant Lot/Land Standard Form 12-T and the Offer to Purchase and Contract Standard Form 2-T?
Prorations and Adjustments
Which statement about an option to purchase is TRUE?
The optionor is obligated to sell if the optionee exercises the option.
What happens if a buyer defaults on payments under a land contract?
The seller may reclaim the property.
A building deposit is an amount paid to a seller (builder) for the completion of minor additional improvements to a newly constructed dwelling.
True
A short sale may take additional time to close because the seller's lender must approve the sale.
True
According to the Real Estate Commission Rules, a preprinted offer or sales contract form must include a legal description of the real property sufficient to identify and distinguish it from all other property.
True
Although there was a delay due to some agreed-upon repairs, closing of the sale of Melissa and Juan's house to the Greens takes place on October 3. At this point, Lorenzo's back-up contract is null and void.
True
An option to purchase agreement is considered a unilateral contract.
True
Broker Hallie's buyer client, Caleb, wants to make an offer on Claudia's house. Under the Real Estate Commission Rules, Hallie is permitted to modify an electronically generated form by marking a change if directed to do so by Caleb.
True
If the Greens decide to go forward with the sale, even though the property was materially damaged, the Greens are entitled to relevant insurance proceeds from the sellers.
True
Seller Theo's property is listed with broker Inez. Inez receives two offers, one from Margaret and one from Reed, and she submits both offers to Theo. If Inez discloses to Margaret that there is another offer, Inez must also disclose this fact to Reed.
True
Seller Willie has entered into a binding contract to sell his house to buyer Penny. Before the sale closes, another buyer, Brady, submits a back-up offer, which Willie accepts. In this situation, Brady may terminate the back-up contract before his back-up contract becomes the primary contract.
True
To obtain a legal description of the property, broker Owen could contact the listing broker or get a copy of the seller's recorded deed.
True
Under an installment land contract, the buyer is typically responsible for property taxes, property insurance, homeowner dues, and assessments.
True
The NCAR/NCBA contract that is intended for unimproved real property that the buyer will purchase for personal use only is the
Vacant Lot/Land Offer to Purchase and Contract.
If a buyer's agent fails to forward a Residential Property and Owner's Association Disclosure Statement to the buyer during the due diligence period, could the licensee be subject to disciplinary action?
Yes
An exhibit that may be attached to and made part of a contract to cover provisions that are not in the standard contract is referred to as a(n)
addendum.
Seller Dana has accepted buyer Stephen's offer to purchase her house, and they have entered into a binding contract. If they later mutually agree to change the purchase price or other terms of the agreement, they should sign a(n)
amendment
A buyer's agent is preparing an offer using a preprinted offer to purchase and contract form. According to the Real Estate Commission Rules, the preprinted form must include
an identification of the brokers and the party each represents.
Broker Sampson is the listing agent for seller Baxter. Sampson receives a written offer for $399,000 from a selling agent. According to the License Law and Rules Comments document, published by the Real Estate Commission, Sampson should deliver a copy of the offer to Baxter
as soon as possible
Which of the following charges is listed in the Purchase Price paragraph of Standard Form 2-T but is NOT included in Standard Form 12-T?
building deposit
A buyer and seller have entered into a binding contract using the standard NCAR/NCBA Offer to Purchase and Contract. Closing is scheduled for December 7, but the buyer's current lease ends on November 30. The seller agrees to allow the buyer to take possession of the property on November 30, and they sign a Buyer Possession Before Closing Agreement. Under this agreement, who is responsible for maintaining the property?
buyer
A buyer sends an electronic offer to the seller, and the seller uses a digital signature to sign the offer. The offer would be considered a binding contract when the
buyer receives the electronic document with the digital signature and key.
Broker Anthony's buyer client, Brenda, is interested in purchasing Colin's house, which is listed by broker Dawn. What information is NOT required to be included in the offer if Anthony uses a preprinted offer to purchase and contract form?
closing attorney
Another name for an installment land contract is
contract for deed
A listing broker receives two offers on the same property, which she presents to the seller. In this situation, the seller can do all of the following EXCEPT
counter both offers.
Broker Laila receives an option fee that is paid in cash. Laila must
deposit it in her firm's trust account within three banking days of receipt.
According to the Offer to Purchase and Contract, Melissa and Juan should provide the buyers with notice of the delay in settlement. Paragraph 20, Conduct of the Transaction, allows Melissa and Juan to give this notice to
either the Greens or the Greens' agent.
In the previous example, the offer became a binding contract when the
email containing the offer, signed by the seller, was received by the email server of the buyer's agent.
Which provision is included in the Additional Provisions Addendum Standard Form 2A11-T?
expiration of offer
All of the following items are addressed in the Buyer's Due Diligence Process paragraph of Standard Form 12-T EXCEPT
fuel tank inspections
Seller Peyton's property is listed with broker Sanjay. Sanjay receives an offer along with a check for the due diligence fee made payable to Peyton. How should Sanjay handle the check?
hold it until the offer becomes a binding contract then turn it over to Peyton
A broker's buyer client is interested in making an offer on a property. If the broker uses a preprinted offer to purchase and contract form, all of the following information must be included EXCEPT
identification of the closing attorney.
Broker Dylan's buyer client intends to purchase a home using an FHA loan. Dylan completes the FHA/VA Financing Addendum, which allows the buyer to back out of the contract without penalty
if the value of the property is less than the purchase price.
Jim made an earnest money deposit of $2,000 when entering into a contract to buy Allen's house. The contract indicated that Allen would get the earnest money in the event of a breach by Jim. The day before settlement, Jim backs out of the contract, citing health issues, and Allen gets a check for $2,000. This is an example of
liquidated damages
Which provision is included in the Additional Provisions Addendum Standard Form 2A11-T?
manufactured homes
Under Standard Form 12-T, who is responsible for obtaining a home warranty?
no one
In an option to purchase real estate, the potential seller is the
optionor
The right to buy or lease property before others is a(n)
preemptive right.
A real estate sales contract may be referred to as a(n)
purchase agreement
All of the following must be included in an option to purchase agreement EXCEPT
refundable option fee.
A statement of fact that is made to influence a person's decision to enter into a contract is referred to as a(n)
representation
What must be included in an option to purchase agreement?
sales price to be paid for the property if the optionee exercises the option
Under Standard Form 12-T, who is responsible for clearing the portion of the property required by the county to perform tests, inspections, or evaluations to determine the suitability of the property for a sewage system and/or private drinking water well?
seller
A short sale may take additional time to close because the
seller's lender must approve the sale.
Which of the following items is addressed in the Buyer's Due Diligence Process paragraph of the Offer to Purchase and Contract—Vacant Lot/Land Standard Form 12-T?
soil and environmental reports
Under the NCAR/NCBA Offer to Purchase and Contract, the seller is responsible for which of the following financial obligations?
special assessments approved prior to settlement
Jack and Jill are responsible for all of the following financial obligations EXCEPT
special assessments approved prior to settlement.
All of the following provisions are included in the Short Sale Addendum EXCEPT
statement that the buyer is not entitled to conduct any due diligence.
Buyer Connie is interested in purchasing Clark's house, which is listed by broker Harry. The sales contract will likely serve all of these purposes EXCEPT
the compensation agreement between Clark and Harry.
An option to purchase is a unilateral contract because
the optionee is not obligated to buy, but the optionor may be obligated to sell.
Prior to closing, a property being sold by the Browns to the Blacks is materially damaged during a storm. According to the terms of the standard Offer to Purchase and Contract, if the Blacks decide to proceed with the transaction, they will be entitled to
the relevant insurance proceeds.
The buyer under an installment land contract involving a one- to four-family dwelling has the right to cancel the contract until midnight of the _______ business day following execution of the contract or delivery of the contract, whichever occurs later.
third
Seller Edward's property is listed with broker Warren. Warren receives an offer along with a check for the earnest money deposit made payable to Warren's real estate firm. The check must be deposited no later than
three banking days following acceptance of the offer.
Seller Peyton's property is listed with broker Sanjay. Sanjay receives an offer along with a check for the earnest money deposit made payable to Sanjay's real estate firm. The check must be deposited no later than
three banking days following acceptance of the offer.
Broker Dre's buyer client made an offer on a house. The seller signs the offer and provides a copy to Dre. Dre must deliver a copy of the signed contract to his buyer client within
three days
Broker Roy's buyer client made an offer on a house. The sellers sign the offer, and the listing broker provides a copy to Roy. Roy must deliver a copy of the signed contract to his buyer client within
three days after Roy's receipt of the executed contract.
The NCAR/NCBA Offer to Purchase and Contract—Vacant Lot/Land Standard Form 12-T is used for transactions involving
unimproved real property that the buyer will purchase only for personal use.
Which of the following items is addressed in the Buyer's Due Diligence Process paragraph of the Offer to Purchase and Contract—Vacant Lot/Land Standard Form 12-T?
utilities and access
When can a buyer exercise a right of first refusal?
when the owner gets an acceptable offer from another prospective buyer
Which of the following items are considered personal property?
window air conditioning units
If Jack and Jill Green want to make an offer on the property owned by Melissa Black and Juan Blue, how should broker Owen identify the property?
with the street address and the legal description
Broker Sampson is the listing agent for seller Baxter. Sampson receives a written offer for $399,000 from a selling agent. The Real Estate Commission Rules specifically state that Sampson must deliver a copy of the offer to Baxter
within three days of Sampson's receipt of the offer.