Unit 9 : Basic Law Contract

After the auctioneer accepts the offer, or bid, the buyer and the seller formalize their oral agreement with a written document to satisfy A)the real estate commissioner. B)the statute of frauds. C)the attorney general. D)the auction company.

B

A contract that exchanges a promise for performance is A)bilateral. B)executory. C)implied. D)unilateral.

D

A contract has been completed with all signatures provided. A buyer asks for a change to one piece of information in the contract and the seller verbally agrees. Who must sign off on this change? A)Both parties who originally executed the contract B)The seller C)The seller's real estate agent D)The buyer

A

A contract has been completed with all signatures provided. A buyer asks for a change to one piece of information in the contract and the seller verbally agrees. Who must sign off on this change? A)Both parties who originally executed the contract B)The seller's real estate agent C)The seller D)The buyer

A

A real estate auctioneer requires two licenses to auction real estate. One is a real estate license and the other is A)an auctioneer's license. B)a negotiator's license. C)a special agent license. D)an arbiter's license.

A

A real estate auctioneer requires two licenses to auction real estate. One is a real estate license and the other is A)an auctioneer's license. B)a special agent license. C)an arbiter's license. D)a negotiator's license.

A

A real estate license gives the broker the right to A)fill in the blanks on pre-printed standard forms. B)perform as a notary public. C)draft offers to purchase for a client. D)act as a principal to the contract.

A

A written real estate contract is presumed to be the complete agreement of the parties to a contract because of A)the parol evidence rule. B)the statute of limitations. C)the doctrine of caveat emptor. D)the statute of frauds.

A

All of the following are essential to the validity of a purchase contract EXCEPT A)earnest money in good funds. B)consideration in money, promises, or something of value. C)lawful objective. D)communication of acceptance to the offeror.

A

If, upon the receipt of an offer to purchase a property subject to certain conditions, the seller makes a counteroffer, the prospective buyer is A)relieved of the original offer. B)bound by the original offer. C)bound by whichever offer is lower. D)bound to accept the counteroffer.

A

In an auction without reserve, the seller agrees to accept the high bid, no matter what the terms of that bid are. In North Carolina, this is also called A)an absolute auction. B)a no fail auction. C)a drop dead auction. D)an auction of finality.

A

In which of the following situations has reality of consent been reached? A)Seller lied about her motivation for selling. B)Seller signed sales contract at gunpoint. C)Buyer's spouse threatened divorce if buyer did not buy property. D)Listing agent lied about completion dates of recreational amenities.

A

Linda and John are attending an auction to purchase 35 acres of farmland. They were the high bidders, even though their bid was very low. The type of auction Linda and John attended was an auction A)without reserve. B)run by an online auction service. C)without a licensed auctioneer. D)without a licensed listing broker in attendance.

A

Smithson signed a purchase agreement to buy Cornell's home. Cornell then decided not to sell his home. Smithson sued him and ended up with the house. Which remedy did Smithson choose? A)Specific performance B)Mutual agreement C)Damages D)Unilateral rescission

A

The typical real estate agent or broker rarely has the ability to accept an offer in place of A)the seller. B)the brokerage. C)the bank. D)the title company

A

Upon acceptance and communication of acceptance, the offer is now considered A)a contract. B)valid. C)unilateral. D)a counteroffer.

A

When preparing documents for a sales transaction, if there are no available standard or preprinted forms drafted by a North Carolina attorney, then the broker should refer the parties to A)an attorney. B)another broker. C)the Real Estate Commission. D)an office supply store.

A

Which of the following gives the BEST evidence of the buyer's intention to carry out the terms of the real estate purchase contract? A)The earnest money deposit B)The provision that "time is of the essence" C)The "subject to" clause D)The agreement to seek mortgage financing

A

A buyer wishing to assign the standard Offer to Purchase and Contract (NCAR/NCBA) in North Carolina will be allowed to complete the assignment if the contract has A)been acknowledged and assigned within 72 hours of closing. B)no clause prohibiting assignment. C)been properly notarized. D)been accepted and recorded.

B

A real estate license gives the broker the right to A)act as a principal to the contract. B)fill in the blanks on pre-printed standard forms. C)draft offers to purchase for a client. D)perform as a notary public.

B

According to the statute of frauds, a contract for the sale of real estate, a long-term option, and a four-year commercial lease A)needs to be written and signed within appropriate time frames to be legal and enforceable. B)must be in writing to be enforceable. C)must be in writing to be legally binding. D)should be executed within a certain time or it will automatically expire.

B

According to the statute of frauds, a contract for the sale of real estate, a long-term option, and a four-year commercial lease A)should be executed within a certain time or it will automatically expire. B)must be in writing to be enforceable. C)needs to be written and signed within appropriate time frames to be legal and enforceable. D)must be in writing to be legally binding.

B

After the auctioneer accepts the offer, or bid, the buyer and the seller formalize their oral agreement with a written document to satisfy A)the attorney general. B)the statute of frauds. C)the real estate commissioner. D)the auction company.

B

After the auctioneer accepts the offer, or bid, the buyer and the seller formalize their oral agreement with a written document to satisfy A)the auction company. B)the statute of frauds. C)the attorney general. D)the real estate commissioner.

B

All of the following persons would have the potential of creating a voidable contract EXCEPT A)a seller that drank a bottle of champagne prior to signing the contract. B)a buyer that does not read well. C)a seller that was taking strong pain medication after surgery. D)a buyer that will turn 18 after closing the transaction.

B

Brokers are permitted to use electronic, computer, or word-processing equipment to store preprinted approved forms. Stored forms may not be altered in any way before the form is presented to A)the closer. B)the parties to the contract. C)the appraiser. D)the printer queue.

B

During the period of time after a valid real estate sales contract is created, but before title actually passes, the status of the contract is A)unilateral. B)executory. C)executed. D)void.

B

If text in a preprinted contract is not applicable to the transaction the broker is performing, the broker should A)inform the client they may not proceed with the transaction. B)rule out the unwanted words with a line through them. C)draft a contract without the words. D)find a contract that doesn't have those words.

B

In a standard sales contract, several words were crossed out or inserted by the parties. To eliminate future controversy as to whether the changes were made before or after the contract was signed, the usual procedure is to A)write a letter to each party listing the changes. B)have both parties initial or sign and date in the margin near each change. C)redraw the entire contract. D)have each party write a letter to the other approving the changes.

B

The seller unintentionally misrepresented that the soil of a lot was suitable for the construction of a building at the time a buyer was negotiating the purchase of the lot for the site of a new home. After entering into a contract to purchase, the buyer learned that, contrary to the seller's statement, the soil was unsuitable for construction. This is an example of a contract that is probably A)binding on the buyer due to the doctrine of caveat emptor. B)voidable by the buyer because of the seller's mistake. C)voidable by neither party because this was a harmless error. D)voidable by the seller because of the mistake.

B

When the seller accepts any bid at any auction, no matter what type, the property is sold. In an absolute auction in North Carolina, no matter what the terms, the seller agrees to accept A)the cash offer only. B)the highest offer. C)the first offer. D)the wire transfer offer only.

B

Which of the following requires that real estate sales contracts be in writing? A)The Truth in Lending Act B)The statute of frauds C)The caveat emptor law D)The statute of limitations

B

A contract has been completed with all signatures provided. A buyer asks for a change to one piece of information in the contract and the seller verbally agrees. Who must sign off on this change? A)The buyer B)The seller C)Both parties who originally executed the contract D)The seller's real estate agent

C

A minor inherited a large old mansion from his uncle. A cousin offered to purchase the house, and the minor agreed and sold the house. In this situation, was a valid contract formed? A)No, the minor may not enter into a contract but may legally convey title and sign the deed. B)Yes, the contract was voidable by the cousin who did not rescind, so the sale became legal when the deed was passed. C)No, the contract to sell was voidable by the minor, who can rescind the sale. D)Yes, the minor is allowed to sell property to relatives but cannot purchase property until reaching legal age.

C

A real estate license gives the broker the right to A)perform as a notary public. B)act as a principal to the contract. C)fill in the blanks on pre-printed standard forms. D)draft offers to purchase for a client.

C

All of the following would make a real estate contract voidable EXCEPT A)the broker misrepresented the property. B)a minor has signed the document. C)it is not in writing. D)the buyer is under duress.

C

Linda and John are attending an auction to purchase 35 acres of farmland. They were the high bidders, even though their bid was very low. The type of auction Linda and John attended was an auction A)run by an online auction service. B)without a licensed listing broker in attendance. C)without reserve. D)without a licensed auctioneer.

C

North Carolina Real Estate Commission Rule requires that brokers include all required data when completing preprinted contracts but prohibits the inclusion of brokerage compensation or a ____________ in a sales contract. A)document fee B)sales agent name C)liability disclaimer D)expiration date

C

The buyer has requested that an item of personal property be included in the sale, and the seller orally agreed to include it. The buyer agent forgets to add the item to the offer and does not review the offer with the buyer. The omission is not discovered until closing, and the seller refuses to leave it. In this instance, which is FALSE? A)The seller is not bound by the oral agreement to include the object because it was not included in the written contract. B)The buyer's agent may have to buy the item and could be disciplined for lack of competency. C)The item must be left with the property because personal property conveys unless excluded. D)The broker should have included the personal property in the offer.

C

There are two types of real estate auctions. In one, the seller has the right to stop the bidding if it becomes apparent that the high bid will be unacceptable, or too low, to the seller. This is A)an auction in abstention. B)an auction with safe stop. C)an auction with reserve. D)an auction bait and switch.

C

There are two types of real estate auctions. In one, the seller has the right to stop the bidding if it becomes apparent that the high bid will be unacceptable, or too low, to the seller. This is A)an auction with safe stop. B)an auction in abstention. C)an auction with reserve. D)an auction bait and switch.

C

To assign a contract for the sale of real property is to A)require the seller and the buyer to record the contract. B)permit another broker to act as a subagent for the principal. C)transfer one's rights and responsibilities under the contract. D)record the contract with the appropriate register of deeds office.

C

To be enforceable, contracts for the purchase and sale of real estate would need all of the following EXCEPT A)to be in writing and signed by all parties to be charged. B)mutually acceptable terms of the agreement. C)earnest money deposit that accompanies the contract. D)mentally capable parties that understand the terms of the contract.

C

Which of the following gives the BEST evidence of the buyer's intention to carry out the terms of the real estate purchase contract? A)The "subject to" clause B)The agreement to seek mortgage financing C)The earnest money deposit D)The provision that "time is of the essence"

C

A builder/seller advertising a selling bonus to any selling agent is an example of A)a voidable contract. B)a bilateral contract. C)an open listing contract. D)a unilateral contract.

D

A traveler orders a meal in a restaurant. She is obligated to pay for the meal through what kind of contract? A)Express B)Executed C)Voluntary D)Implied

D

After the buyer and the seller have created a sales contract, the seller defaults. The buyer sues the seller to force contract performance. This is known as a suit for A)rescission. B)forfeiture. C)damages. D)specific performance.

D

All of the following are essential elements of a contract EXCEPT A)consideration. B)mutual agreement. C)a lawful objective. D)rescission.

D

Brokers are permitted to use electronic, computer, or word-processing equipment to store preprinted approved forms. Stored forms may not be altered in any way before the form is presented to A)the appraiser. B)the closer. C)the printer queue. D)the parties to the contract.

D

If a real estate client directs a broker to draft contract language, the broker A)is able to have the client sign a waiver so the broker may do this. B)is empowered to draft documents. C)requests his licensed assistant to do this. D)is prohibited from doing so.

D

If text in a preprinted contract is not applicable to the transaction the broker is performing, the broker should A)find a contract that doesn't have those words. B)draft a contract without the words. C)inform the client they may not proceed with the transaction. D)rule out the unwanted words with a line through them.

D

If text in a preprinted contract is not applicable to the transaction the broker is performing, the broker should A)inform the client they may not proceed with the transaction. B)find a contract that doesn't have those words. C)draft a contract without the words. D)rule out the unwanted words with a line through them.

D

If the seller makes a counteroffer to an offer to purchase received on his property, the prospective buyer is A)bound by the original offer. B)bound to accept the counteroffer. C)bound by whichever offer price is lower. D)relieved of all offer obligations.

D

In an auction without reserve, the seller agrees to accept the high bid, no matter what the terms of that bid are. In North Carolina, this is also called A)an auction of finality. B)a no fail auction. C)a drop dead auction. D)an absolute auction.

D

In an auction, when the seller accepts any bid at any auction, no matter what type, the property is A)foreclosed. B)pending. C)in transition. D)sold.

D

North Carolina Real Estate Commission Rule requires that brokers include all required data when completing preprinted contracts but prohibits the inclusion of brokerage compensation or a ____________ in a sales contract. A)expiration date B)sales agent name C)document fee D)liability disclaimer

D

The injured party in a real estate transaction with the right to a suit for specific performance is typically the A)title company. B)lender. C)broker. D)buyer.

D

The typical real estate agent or broker rarely has the ability to accept an offer in place of A)the title company B)the brokerage. C)the bank. D)the seller.

D

A broker has found a buyer for a seller's home. The buyer has indicated in writing a willingness to buy the property for $1,000 less than the asking price and has deposited $5,000 in earnest money with the broker. The seller is out of town for the weekend, and the broker has been unable to inform the seller of the signed document. At this point, the buyer has signed A)an offer. B)a voidable contract. C)an executory agreement. D)an implied contract.

A

A broker listed a property and shortly thereafter discovered that the client had been previously declared mentally incompetent by the court. The listing is now A)voidable by the broker. B)void. C)voidable by the seller. D)binding because the broker was acting in good faith.

A

A contract between two parties who each make a promise to perform certain acts is called A)a bilateral contract. B)an implied contract. C)a unilateral contract. D)a voidable contract.

A

A broker is permitted to fill in the blanks on certain approved preprinted documents (such as sales contracts and leases) when authorized to do so by the parties, provided the broker A)has a lawyer present at the time B)does not charge a separate fee for completing the forms. C)has the client fill in the blanks at the brokers' direction. D)charges a fee for filling out forms.

B

A buyer makes an offer to a seller. The seller in this transaction would be described as the A)grantee. B)offeree. C)assignee. D)minor.

B

A contract is said to be bilateral if A)one of the parties is a real estate broker. B)all parties to the contract are bound to act. C)only one party to the agreement is bound to act. D)the contract has yet to be fully performed.

B

A buyer and a seller enter into a purchase contract for a vacant lot by writing the terms of the purchase on notebook paper. They both sign the paper. The paper is A)an illegal contract because it is not an approved form. B)an option to purchase that becomes a bilateral contract at the time it is transferred to a proper contract form. C)a binding executory purchase contract. D)an illegal but binding contract if both parties close and the deed is passed.

C

A contract created under duress is A)void. B)discharged. C)voidable. D)enforceable.

C

The injured party in a real estate transaction with the right to a suit for specific performance is typically the A)title company. B)lender. C)buyer. D)broker.

C

A broker is permitted to fill in the blanks on certain approved preprinted documents (such as sales contracts and leases) when authorized to do so by the parties, provided the broker A)charges a fee for filling out forms. B)has a lawyer present at the time C)has the client fill in the blanks at the brokers' direction. D)does not charge a separate fee for completing the forms.

D