Level 3 Quiz

When acting as a single agent, to whom do you owe your undivided loyalty?

Your client

A licensee who assists a prospective buyer in finding residential real estate for purchase and is neither the listing broker nor affiliated with the listing broker for any real estate that is shown to the prospective buyer is known as a ___________________.

presumed buyer's agent

In Maryland, a party to a simple contract has ________ from a contract breach to sue the other party.

3 years

Which of the following best describes a bilateral contract?

A contract that involves an exchange of consideration between two parties

What is usury?

A loan's interest rate is higher than the maximum allowable rate

An assignment of a contract means to substitute ________.

A new party for one of the original parties

What is a prepayment penalty?

A penalty charged by the lender when borrowers repay their loans earlier than expected.

How can a lender with a lien that's in second position get into the first position?

A subordination agreement

Which of the following best describes the difference between a void and a voidable contract?

A void contract literally cannot be enforced because it requires an impossible or illegal act; a voidable contract may be enforced, but may also be cancelled without binding any party to act because it does not fit the definition of a valid contract.

Stacy has gone into default on her mortgage. Her lender is demanding that the entire loan balance be paid in full. Which mortgage clause permits her lender to do this?

Acceleration

Which mortgage clause gives the lender the right to make all monies owed due immediately if the borrower defaults?

Acceleration

Grace finds herself in a breach of contract situation. While the other party met some of their obligations, some were not met. Grace thinks it would cost a lot of time and money to sue the other party. Thus, she decides to accept the work that has been done and call it good. This is an example of ________.

Accepting partial performance

What is a sub-agent?

An agent appointed by another agent to assist in serving a seller client

Daniel purchased a townhome and obtained financing from Bank A on February 1, 2014. On April 1, 2015, he took out a home equity loan on the property with Bank B. On August 1, 2015, Daniel refinanced his mortgage through Bank C, which resulted in Bank A's loan being paid off. Bank B signed a subordination agreement related to Bank C's loan. Which lender will be paid first in the event of a foreclosure?

Bank C

Your neighbor hires the middle school student who lives down the street to mow his lawn for him every two weeks. He draws up a written contract in which he clearly outlines the student's mowing responsibilities and the payment the student will receive in return. Which of the following is true in this situation?

Because a minor cannot enter into a contract, this contract is technically voidable. However, if the neighbor and the student are content to uphold their agreement, the fact that it is not legally binding is academic.

In a dual agency situation in Maryland, one licensee is assigned as an ICA to the seller and another is assigned to the buyer. What fiduciary duties does each ICA owe their client?

Both ICAs owe the full set of fiduciary duties (including undivided loyalty) to their respective client.

Which one of the following statements describes informed consent as it relates to dual agency?

Both buyer and seller understand what dual agency is and agree in writing to dual agency representation.

You represent the buyer in one transaction and the seller in a different transaction. What type of agency relationship do you have with the buyer?

Buyer agency

Which agent role is designated by a dual agent and exclusively represents the buyer in a dual agency situation?

Buyer's intra-company agent

Bank of America, Chase, and Citigroup are institutions commonly referred to as ____________________.

Commercial banks

This type of lender is a member-based cooperative that provides credit for auto loans and home loans, and also takes deposits and offers savings vehicles and money markets.

Credit union

Shirley's lender discharged the mortgage lien placed on her property after processing her final payment. Which clause requires the lender to take this action?

Defeasance

Which mortgage clause requires the lender to discharge the mortgage lien once the borrower has paid in full?

Defeasance

You've met a prospective buyer at a holiday party. The buyer is already represented by an agent, but wants to pick your brain about one of your firm's listings. Which of the following are you allowed to do?

Disclose that you represent the seller

In contract law, partial performance occurs when a party ________.

Does some, but not all, of what the party has agreed to do

Janice is a broker who is serving the buyer of a property for which she is the listing agent. What type of agency arrangement is this?

Dual agency

Which one of the following statements about dual agency disclosure and informed consent in Maryland is true?

Dual agency consent and disclosure must be in writing

You represent the buyer and another licensee from your brokerage represents the seller in the same transaction. What type of agency relationship do you and the other licensee have with your clients?

Dual-license dual agency

In which of the following types of contract are one or more of the contract's terms yet to be completed?

Executory contract

Rob and Jill obtained a mortgage from Taylor Bank & Trust in 1998. In 2014, they obtained a second mortgage from Quail Loans. What is the loan with Taylor Bank & Trust considered?

First mortgage

Which type of mortgage has an interest rate that remains constant over the life of the loan?

Fixed rate

What may happen if a property lies in a designated flood plain?

Flood insurance may be required.

In some states, the ____________ process is used wherein the mortgagee/lender will bring a lawsuit against the mortgagor/borrower.

Foreclosure by action in equity and sale

Property managers most often serve as this type of agent.

General

What type of real estate agency relationship usually exists when a licensee has the broad responsibility of handling all of the details of a specific transaction?

General

Which of the following individuals would be a competent party to a contract?

Graciella, a 28-year-old unemployed parolee

In a mortgage, the property is pledged as collateral. This type of pledge is referred to as _______________.

Hypothecation

To meet the requirements of the Statute of Frauds, an agreement must clearly identify the subject matter of the contract, present the essential terms and conditions of the contract, and ________.

Identify the contracting parties

Which type of contract is the opposite of an express contract?

Implied

Which of the following is a contract that exists based on an understanding or assumption, rather than specifically defined terms?

Implied contract

In title theory states, which of the following is a true statement?

It is much easier for a lender to foreclose on a property.

Which of the following is generally true of flood insurance?

It is usually purchased separately or bundled with a homeowners policy, but it's not standard.

If Walter White enters into a contractual agreement with Jesse Pinkman to cook a certain amount of methamphetamine on a weekly basis and offers Jesse 50% of any profit they make, which of the following is true of this contract?

It is void because it is not for a lawful purpose.

Camille has a listing for a townhome and appoints Ivy as her sub-agent. Ivy brings a buyer customer to the transaction and the buyer purchases Camille's listing. What is true about the agency relationships in this situation?

Ivy is Camille's sub-agent and owes loyalty to the seller.

Rob and Jill obtained a mortgage from Taylor Bank & Trust in 1998. In 2014, they obtained a second mortgage from Quail Loans. What is the loan with Quail Loans considered?

Junior mortgage

Which of the following is an example of a sub-agency situation?

Kayla is a licensee with ABC Realty and lists a property for seller Devon. Maurice is a salesperson with XYZ Realty Group, and he has a buyer customer who wants to see the property.

A mortgage is a legally binding document that creates a lien on a piece of property and gives the lender the right to foreclose on property if the borrower defaults. Who or what is the mortgagee?

Lender

Which of the following is true of prepayment penalties?

Lenders must disclose up front if they reserve the right to charge a prepayment penalty, and under what conditions they apply.

Performance of a contract means to _________.

Meet all terms of the contract

Similar to private mortgage insurance, what protects lenders of FHA loans to borrowers who do not have a sufficient down payment?

Mortgage insurance premium

Which element of a valid contract is established by the signatures of all parties?

Mutual agreement

If an agent lists a home for his sister and it sells, can the agent accept his commission directly from his sister?

No, the commission must go through the agent's broker.

What type of foreclosure is commonly used when a deed of trust is the security instrument?

Non-judicial

Which of the following describes subagency?

Norm is a listing agent. He allows Stu, an agent from another firm, to present an offer from an unrepresented buyer.

Your seller client says "no showings" until Monday, which is fine because you believe you have a buyer who will want to make an offer Monday. But on Sunday you get a call from another agent who has a very interested cash buyer who is leaving town that day and must see the property Sunday. What fiduciary duties are in conflict here?

Obedience and Loyalty

Eileen enters into a contract to buy Peter's home. The contract specifies that Peter must leave the refrigerator with the home and he must replace the roof before closing. After closing, Eileen arrives at the home and sees the nice new roof, but Peter took the refrigerator with him. This is an example of ________ of the contract.

Partial performance

Generally, there are covenants between the borrower and the lender within a mortgage document. Which of the following is a mortgage covenant?

Pay any charges and assessments against the property

Which of these is a penalty charged by the lender when borrowers repay their loans earlier than expected?

Pre-payment penalty

Which agent role represents the buyer without having a written agreement in place?

Presumed buyer's agent

What often comprises the sum total of a buyer's mortgage payment?

Principal, interest, taxes, and insurance

What is a promise on the part of the borrower to repay a certain sum of money to another party (the lender or holder of the note) under specified terms?

Promissory note

In a transaction involving an assignment of contract, if the new party fails to live up to the obligations stated in the contract, the original party ________.

Remains responsible for the terms of the agreement, unless specifically stated otherwise in the contract

For farmers and others who live in rural communities, a _________ loan may be available. One benefit of these loans is the option for a longer payback period.

Rural development

When a mortgage holder is released from liability for a mortgage, it's also called ______________.

Satisfaction of mortgage

Orla represents the seller and Pardeep, an agent from a different firm, represents the buyer in the same transaction. What type of agency relationship does Orla have with her client?

Seller agency

Which agent role is designated by a dual agent and exclusively represents the seller in a dual agency situation?

Seller's intra-company agent

Manette works for a single-agency firm. If she wants to represent both the buyer and seller in a transaction, what must she do?

She cannot do this at her firm.

A licensee represents the buyer and seller in the same transaction. What type of agency relationship does the licensee have with their clients?

Single-license dual agency

When working with a client on a real estate sale, a real estate licensee is usually what type of agent?

Special

Which of the following requires that contracts transferring ownership of real property be in writing to be enforceable?

Statute of frauds

Betty hires a workman to replace her gutters. Within days, the gutters leak and flood her basement. She complains to the workman, who replaces the gutters again. The next time it rains, the gutters leak and flood Betty's basement a second time. Frustrated, Betty decides to file a lawsuit against the workman in an attempt to recover the money she's lost. This is an example of ________.

Suing for damages

What is interest?

The amount a lender charges for the use of its money

Which one of the following statements about dual agency in Maryland is true?

The broker must assign one agent to represent the seller and one to represent the buyer.

In a buyer agency relationship, who does the licensee represent?

The buyer

In a buyer agency relationship, who is the licensee's client?

The buyer

In a seller agency relationship, what relationship does the buyer have to the licensee?

The buyer is the licensee's customer.

Mutual agreement is not present when __________________.

The contract is signed under duress or undue influence

If a contract is void, which of the following is true?

The contract is unenforceable.

What generally determines the priority of a lien?

The date it is recorded

Ingrid, a licensee in Maryland, is helping a client to prepare a lease. The term of the lease is less than one year. Given the situation, which one of the following statements is true?

The lease must be put into signed written form.

When a mortgage is used as a security instrument, who holds the mortgage and the promissory note?

The lender holds the mortgage and the note

When a licensee is representing 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 are competing properties.

Kim is a subagent in a transaction involving: a buyer customer, a seller and a listing agent. Who is Kim a subagent for?

The listing agent and seller

Randy, a licensee, is in a seller agency relationship with Burt, a seller. The buyer is Tim. Who is Randy's client?

The seller (Burt)

To whom do subagents working with buyer customers owe their duties?

The sellers and the seller's agents

When a deed of trust is used as a security instrument, who holds the deed and the note?

The trustee holds the deed, the lender holds the note

Sellers should be advised of an important drawback of subagency. What is this?

They will be vicariously liable for the actions of the subagent

Two intoxicated co-workers sign a contract in which they agree to marry each other if they are both still single when they reach age 40. Which of the following is true about this contract?

This is a voidable contract because the parties were intoxicated at the time they signed it.

You're talking to a co-worker at lunch and she mentions she has a box of baby clothes her kids have outgrown that she needs to get rid of. You have a baby on the way, so you offer to pay her $25, and she agrees to bring the box to work the next day and give it to you. Which of the following is true in this situation?

This is an express contract because you defined in words the specific terms of the agreement and consideration to be exchanged.

What might a borrower's escrow account or reserve fund pay for?

This type of lender specializes in taking in savings deposits and then lending money out to consumers through mortgages and other loans.

How many parties does a deed of trust involve?

Three: the borrower, lender, and trustee

How many parties does a mortgage involve?

Two: the borrower and lender

Which fiduciary duty is impossible with dual agency?

Undivided Loyalty

You receive an offer in the mail that says you're eligible to win a cash prize if you place some stickers on a form and return it to the sender. What type of contract is this?

Unilateral contract

As a court-appointed guardian, Marion serves as this type of agent.

Universal

If a buyer assumes the seller's mortgage, which of the following is a true statement?

Unless the lender releases the seller, the seller remains responsible for the mortgage and note.

What is a discount point?

Upfront charges to make up for difference between the rate the borrower is receiving and the rate the lender normally requires

Which of the following is a true statement about VA loans?

VA loans are guaranteed for either 100% of the sales price or 100% of the CRV, whichever is less.

You sign a contract to purchase a machine that will allow you to travel back in time and meet Abraham Lincoln. What type of contract is this?

Void

Why might a lender charge a prepayment penalty?

When buyers pay off their mortgages early, lenders receive less money in interest than expected