Chapter 14 Quiz

A real estate sale contract is an executory contract until

a. the completed sale transaction is recorded. b. the buyer and seller have agreed to all provisions and have signed the contract. c. all the obligations and promises are performed and the transaction is closed. d. the buyer's earnest money deposit and down payment have been delivered to and accepted by the seller. Answer C

A contingency in a sale contract is

a. a promise by buyer or seller to perform a specific action. b. a condition that, if unmet, renders the contract unenforceable. c. one of several alternative actions that buyer or seller may take to satisfy contract requirements. d. an optional, unilateral action that either party may take at the request of the other party. Answer B

To create an enforceable option-to-buy contract, there must be an exchange of

a. a promise to sell and a promise to buy. b. valuable consideration and a right to buy. C. valuable consideration and a promise to buy. d. a down payment and post-dated contract for sale, Answer B

Among the items that usually must be disclosed in a sale contract or its addenda are

a. buyer's and seller's citizenship status. b. buyer's source of funds for the down payment. c. certification for occupancy. d. agency relationships and property condition. Answer D

To be enforceable, a contract for the sale of real estate must

a. contain clearly defined contingencies. b. be written. c. be recorded, d. have an expiration date. Answer B

buyer signs an carnest money agreement and gives it to the broker who showed her the property she is buying. After leaving the broker's office, she reconsiders and decides she prefers a different property. How long does she have to take back her offer?

(a Until the seller communicates acceptance of the offer. b. Twenty-four hours. c. She can take it back at any time, but must forfeit the earnest money. d. She cannot take it back until after the expiration date of the offer. Answer A

An option-to-buy is

a, not assignable unless the contracts specifically allows assignment. b. never assignable. c. assignable, with seller permission. d. assignable unless the contract prohibits assignment. Answer D

Which of the following is true of a contract for deed transaction?

a. At the end of the contract period, the vendee receives equitable title, provided all required periodic payments have been made. b. The vendee has no right to possess or occupy the property during the contract period. c. At the end of the contract period, the vendor conveys legal title, provided the vendee has fulfilled all obligations. d. The vendor may cancel the contract at any time before the final payment has been received. Answer C

What kind of interest does the buyer own after a real estate sale contract is signed by the principal parties?

a. Legal title. b. Lienholder interest. c. Remainder interest. d. Equitable title. Answer S

5. A buyer makes an offer to purchase a house, and the seller accepts the offer. Both parties sign the sale contract, but the buyer fails to provide an earnest money deposit. What are the seller's obligations to the buyer?

a. None. There is no valid contract. b. The seller must give the buyer an opportunity to make a new offer. c. The seller must perform under the terms of the contract d. The seller must notify the buyer in writing that the buyer is in default. Answer A

What parties must be identified in a sale contract?

a. Only a seller. b. Seller and buyer. c. Seller, buyer, and agent(s). d. Seller, buyer, and title company. Answer B

Which of the following is an essential element of a valid contract for the sale of real estate?

a. Price based on certified appraisal. b. Signature of the listing broker. c. Offer and acceptance. d. Social Security numbers of seller and buyer. Answer C

option, but finds that Schmidt has received an offer of $12,000 vacant lot for $10,000 within one year, A few months later. Carboy informs Mary Carboy buys a house from Jim Schmidt and at the same time obtains an option to Schmidt that she is ready to exercise her purchase the adjoining accept the offer unless Carboy is willing to match the $12,000 offer. Which of the following is true of this situation? from another party. Schmidt states that he will

a. Schmidt must sell to Carboy for $10,000. b. Carboy must pay $12,000 or lose the property. d. If the other party delivers payment before Carboy does, the option is canceled. c. Schmidt may sell to Carboy or the other party, but the price cannot exceed $10,000 Answer A.

On Wednesday, Fred offers to sell his property to Jack for $275,000, with the offer to remain open until 5 p.m. the next day. On Thursday morning, Sally offers Fred $280,000 for the property and Fred accepts. At 1 p.m. on Thursday afternoon, Jack accepts. Which of the following is true of this situation?

a. The acceptance by Sally creates a contract and terminates Fred's offer to Jack. b. Fred has entered into contracts with both Jack and Sally to sell the same property. c. Fred's acceptance of Sally's offer is invalidated by Jack's acceptance, because Fred's offer to Jack was made prior to Sally's offer to Fred. d. No contract has been created because it is impossible to have two valid sale contracts for the same property. Answer B

If a married couple own a property that is for sale, and only one of them signs a sale contract, what is the legal status of the contract?

a. The contract is invalid. b. The contract is unenforceable. c. The contract may be valid. d. The contract is executed. Answer C

A "termite" clause in a sale contract states seller must provide suitable evidence that the property is free of infestation. On the day of closing, the buyer learns that the inspection service hired by the seller was not properly licensed. The seller expresses surprise, promises to pay for another inspection and/or extermination, and insists on proceeding with the closing. The buyer refuses, and declares that the sale is off. Which of the following is true of this situation?

a. The seller is in default and is liable for damages. b. The buyer will be in default, and liable for damages, if he does not complete the transaction. c. The buyer may be able to have the contract canceled. d. The contract is automatically void. Answer C

In assisting a buyer or seller to complete an offer to purchase, what should an agent do to reduce the risk of committing an unauthorized practice of law?

a. Use a standard contract promulgated by a state agency or a real estate board. b. Charge no more than a nominal fee for the assistance. c. Offer legal advice only on points of the contract that the agent is absolutely certain about. d. Write contract r rms that are anifestly fair to both buyer and seller Answer A