Ch. 11 Real estate contracts

a real estate licensee must give the owner a copy of a written listing agreement within. ____ ____.

24 hours

homeowners associations are required to register with the ____.

DBPR

Within what period of time must the seller be given a copy of a written listing agreement? A) 3 days B) 5 days C) 48 hours D) 24 hours

The answer is 24 hours. Pursuant to Florida Statute 475.25, a copy of the listing contract must be given to the owner(s) within 24 hours of execution.

Which court case made clear that material defects affecting the value of residential property must be disclosed to prospective buyers? A) Jackson v. Johnson B) Rowe v. Wade C) Johnson v. Davis D) Jones v. Mayer

The answer is Johnson v. Davis. Johnson v. Davis is a legal case that took place in Florida that set legal precedence concerning material defects.

A counteroffer will extend an offer. t/f

The statement is false. A counteroffer kills the original offer.

A real estate licensee must give the owner a copy of a written listing agreement within 48 hours. t/f

The statement is false. A real estate licensee must give the owner a copy of a written listing agreement within 24 hours.

A signed sale contract between the time of signing and the time of title closing is an executed contract. t/f

The statement is false. A sale contract between the time of signing and the time the title is conveyed from the grantor to the grantee is an executory contract.

Florida statute mandates that real estate licensees must disclose to a prospective buyer that a former occupant of the property committed suicide in the home. t/f

The statement is false. Florida statute mandates that the fact that a property was the site of a homicide, suicide, or death is not a material fact in a real estate transaction.

In an option contract, the optionor has an exclusive right to buy the property within a specified period. t/f

The statement is false. In an option contract, the optionee (not the optionor) has the exclusive right to buy the property within a specified period for a specified price and terms.

An option contract is a bilateral contract. t/f

The statement is false. In an option contract, the owner (optionor) is bound to perform the terms of the option if required to do so by the optionee. The optionee, however, may elect to walk away from the contract because the option contract grants the optionee a right, not an obligation to buy the property.

Love and affection is an example of valuable consideration. t/f

The statement is false. Love and affection is an example of good consideration because it cannot be measured in terms of money.

When a wronged party in a breached contract sues for compensatory damages, it is to have the courts force the other party to perform as the contract specifically states. t/f

The statement is false. Specific performance is when an injured party sues to have the courts enforce the terms of a contract. A suit for compensatory damages is a suit that seeks money damages.

Earnest money is required to make the sale contract valid. t/f

The statement is false. The consideration in a sale contract is the promises the buyer and the seller make to each other. Although it is a good idea to include a provision in the sale contract for a binder deposit, a cash deposit is not required to make the contract valid.

The person making an offer is the offeree. t/f

The statement is false. The offeree is the person receiving the offer.

The statute of limitations for an oral contract is five years. t/f

The statement is false. The statute of limitations for an oral contract is four years.

The use of an "as is" provision in a contract for sale eliminates liability for failure to disclose all known material defects that affect the value of residential property. t/f

The statement is false. The use of an "as is" provision in a contract for sale does not eliminate the duty to disclose all known material defects.

A community development district (CDD) is an independent special district created, pursuant to Florida law, to service the long-term specific needs of its community. t/f

The statement is true. A CDD constructs, operates, and maintains communitywide infrastructure and services for the benefit of its residents.

A real estate sale contract is an example of a bilateral contract. t/f

The statement is true. A bilateral contract obligates both parties to perform in accordance with the terms of the contract. A sale contract is a bilateral contract because both the seller and the buyer are obligated to perform.

A buyer brokerage agreement is an employment contract between the brokerage and a buyer. t/f

The statement is true. A buyer brokerage agreement is an employment contract with a buyer.

A valid real estate sale contract a. contains all the essential elements and is in writing b. has been acknowledged c. requires witnessing d. transfers title to real property

a. contains all the essential elements and is in writing

Normally, a sale contract involving real property contains a provision that in case of breach by the buyer, the earnest money deposit will be regarding as a. compensatory damages to the seller b. liquidated damages to the seller c. compensentory damages to the broker d. liquidated damages to be divided between seller and buyer

b. liquidated damages to the seller

Which statement is FALSE regarding counteroffers? a. the original offer is terminated by the counteroffer b. original offer becomes the offeror c. contract is created when the new offer accepts the counteroffer and communicates the acceptance tot he new offeror d. the offeror and the offer remain the same even though the terms are modified

d. the offeror and the offer remain the same even though the terms are modified

The use of an "as is" provision in a contract for sale does ____ eliminate the duty to disclose all known material defects.

not

a ___ agreement relieves the assignor from the liability to perform in a contract.

novated

Which element is NOT required of a valid real estate contract? A) Acknowledgment B) Consideration C) Legality of object D) Offer and acceptance

The answer is acknowledgment. Real estate contracts must include consideration, be for a legal purpose, and include a meeting of the minds (offer and acceptance). Real estate contracts are not required to be acknowledged to be valid.

Which information must NOT be included in a listing agreement? A) Commission structure B) Definite expiration date C) Automatic renewal clause D) Owner's signature

The answer is automatic renewal clause. Chapter 475, F.S., forbids including an automatic renewal clause in a listing agreement.

Which statement is TRUE regarding the Florida Building Energy-Efficiency Rating Act? A) Sellers are required to pay the cost of an energy-efficiency rating on all homes built before 1978. B) Most lenders require that an energy-efficiency rating be conducted before approving a mortgage loan. C) If requested in writing, sellers must furnish buyers with an energy-efficiency rating for the structure. D) Buyers must be given an information brochure notifying the buyer of the right to conduct an energy-efficiency rating on the structure.

The answer is buyers must be given an information brochure notifying the buyer of the right to conduct an energy-efficiency rating on the structure. The Florida Building Energy-Efficiency Rating Act requires that buyers, before signing the sale contract, receive an information brochure notifying the purchaser of the option for an energy-efficient rating on the building.

What is the purpose of the property tax disclosure? A) Explain to buyers how the property taxes are calculated B) Lower property taxes for first-time homebuyers C) Inform homebuyers of how to apply for homestead exemption D) Caution buyers that they cannot rely on the seller's property tax history as an indication of the buyer's future property tax bill

The answer is caution buyers that they cannot rely on the seller's property tax history as an indication of the buyer's future property tax bill. The purpose of the disclosure summary is to caution buyers that they cannot rely on the amount of the seller's property taxes as an indication of the taxes they will be required to pay in the year following purchase of the property.

A buyer has breached a real estate sale contract. The seller wants to recover damages in excess of the earnest money deposit. Which remedy for breach should the seller use? A) Rescission on breach of contract B) Specific performance C) Compensatory damages D) Liquidated damages

The answer is compensatory damages. The party bringing suit seeks an amount of money equal to the extent of loss suffered (compensatory damages).

A seller receives an offer from a buyer to purchase a property for $300,000. The seller changes the price to $320,000 and submits it to the buyer. Which term describes the price change? A) Breach of contract B) Meeting of the minds C) Counteroffer D) Annulment

The answer is counteroffer. When the offeree (the person receiving the offer) alters the terms of the original offer, it creates a counteroffer.

A contract specifies the amount of money that must be paid if the buyer defaults. Which remedy for breach does this describe? A) Compensatory damages B) Liquidated damages C) Good consideration D) Valuable consideration

The answer is liquidated damages. Frequently the parties will stipulate an amount of money, called liquidated damages, to be paid in case of default by the buyer.

Which remedy for breach of contract asks the courts to force the other party to proceed as the contract states? A) Specific performance B) Rescission on breach of contract C) Liquidated damages D) Compensatory damages

The answer is specific performance. If awards of money damages do not afford sufficient relief, the wronged party may sue for specific performance to have the courts force the other party to perform as the contract specifically states.

Who must receive the lead-based paint disclosure? A) Tenants and buyers of all residential property built before 1978 B) Tenants and buyers of all residential property C) Tenants and buyers of all rental property if a family member is younger than age two D) Buyers of all single-family homes

The answer is tenants and buyers of all residential property built before 1978. The lead-based paint disclosure law applies to buyers and tenants of residential property built before 1978.

What does Florida's homeowner associations law require of sellers who own property subject to a mandatory homeowners association? A) Sellers must provide buyers with a disclosure summary regarding the association. B) Sellers are not required to provide any disclosures to buyers, provided the information is available in the public records. C) Sellers must provide buyers with copies of property tax records from the past three years. D) Sellers must inform buyers that they will be required to escrow the association dues.

The answer is the sellers must provide buyers with a disclosure summary regarding the association. Florida law requires sellers of property subject to a homeowners association to provide buyers with a disclosure summary regarding the association, the existence of restrictive covenants, and any assessments that the association imposes.

A key element of a cause for action for fraud is that the party to whom a misstatement was made was damaged as a result of the misstatement. t/f

The statement is true. A key element for a cause of action for fraud is that the party to whom an inaccurate statement was made was damaged as a result.

A real estate contract that includes a radon gas contingency is a voidable contract. t/f

The statement is true. A real estate contract that includes a radon contingency is voidable because if the contingency is not satisfied and released, the offer and acceptance element of an enforceable contract is not met.

An electronic signature can be accepted as part of a real estate contract. t/f

The statement is true. Letters and other written communications, including a signature, may be sent by electronic means or facsimile, and will be considered part of the contract.

Misrepresentation is the misstatement of fact or the omission of a factual matter. t/f

The statement is true. Misrepresentation is the misstatement of fact or the omission or concealment of a factual matter. Misrepresentation can lead to fraud.

In a net listing agreement, the broker retains the proceeds in excess of the seller's net as commission. t/f

The statement is true. The broker retains the proceeds in excess of the seller's net as commission.

The consideration in a sale contract is the promises each party makes to one another. t/f

The statement is true. The consideration in a sale contract is the promises the buyer and the seller make to each other.

Regarding the parties in a contract, novation is the substitution of a new party for the original one. t/f

The statement is true. The effect of novation is to discharge the original party from the obligation.

The signatures of both spouses are required if the property is titled in both spouses' names. t/f

The statement is true. The sale contract on a property that is co-owned by a married couple must be signed by both spouses.

Brokers and sales associates should NOT prepare deeds, mortgages, or promissory notes. t/f

The statement is true. Unless they are also attorneys, brokers and sales associates who prepare such legal documents could jeopardize their real estate licenses.

An implied contract is one in which some or all of the obligations or conditions of a contract are NOT stated expressly. t/f

The statement is true. With an implied contract, the obligations or conditions of the contract may be reasonably implied by the acts of the parties or by the nature of the transaction.

Types of listings (matching) exclusive-right-of-sale, exclusive-agency, open a. an ________ listing involves one broker with the commission going to the listing broker if not sold by the owner b. an ________ listing involves one or more brokers with the commission going to the broker who sells the property c. an _________ listing involves one broker with he commission going to the listing broker no matter who sells the property

a. exclusive agency b. open c. exclusive right of sale

Which contract does NOT come under the jurisdiction of the statute of frauds? a. lease agreements for one year or less b. option contract c. sale contract d. listing agreement for more than one year

a. lease agreements for one year or less

Remedies for Breach (matching) liquidated damages, specific performance, rescission, compensatory damages a. wronged party sues to force other party to perform b. penalty money specified in a contract for default c. wronged party may sue for cancellation of contract d. wronged party sues for amount of loss suffered

a. specific performance b. liquidated damages c. rescission d. compensatory damages

Which statement is FALSE concerning Florida's building code violation disclosure? a. the seller is responsible for the costs associated with the code violation b. seller must inform the code enforcement agency regarding the name and address of the buyer within 5 days of the title closing c. copies of the pleadings and other documents concerning the code violation must be given to the buyer d. the disclosure requires a statement that the buyer is responsible for compliance with the building code

a. the seller is responsible for the costs associated with the code violation

Contract Classifications (matching) executed, executory, unilateral, bilateral, express, implied a. obligates only one party to perform b. all of the obligations have fully performed c. a contract when all the terms are spelled out and there is mutual understanding d. a contract in which one or more obligations have not been stated in words but may be reasonably assumed by the acts of the parties e. obligates both parties to perform f. all of the conditions have not been fully performed

a. unilateral b. executed c. express d. implied e. bilateral f. executory

Canceling a daughter's property indebtedness in a contract because of the love and affection is an example of a.good consideration b. valuable consideration c. insufficient consideration d. inadequate consideration

a.good consideration

A man and a woman enter into a written agreement. The man will mow the womans lawn every week during the mowing season and every third week during the winter. In the middle of the summer, the man has back surgery. He hands over his lawn maintenance contracts to a friend who assumes the responsibility for all of the mans customers for the remainder of the contract period. Which term describes this situation? a. breach b. assignment c. specific performance d. mutual rescission

b. assignment

A contract that is NOT in writing is called a. formal contract b. parol contract c. unilateral contract d. executory contract

b. parol contract

Failure to comply with the statute of frauds a. may not constitute an illegal act but would always invalidate a sale contract b. would have to do with whether a contract is in writing c. concerns adherence to prescribed time frames of enforcement d. is prima facie evidence of the intent to commit fraud

b. would have to do with whether a contract is in writing

when property is co-owned by a married couple, or if it is the homestead and ownership is in only one spouses name, ____ ___ must sign the real estate sale contract

both spouses

A couple have decided to make a written offer to purchase a home built in the 1950s. Which task is NOT required before signing the sale contract? a. the couple must be given a copy of the EPA pamphlet concerning lead based paint hazards in the home b. the seller must disclose any known presence of lead based paint c. couple must have the home inspected for lead based paint d. real estate sale contract must include a discourse concerning lead based paint

c. couple must have the home inspected for lead based paint

The most advantageous type of listing from the brokers point of view is a. open listing b. exclusive agency listing c. exclusive right of sale listing d. net listing

c. exclusive right of sale listing

When a contract has been formed but an undertaking remains to be performed by one or both parties, it is an example of a. implied contract b. express contract c. executory contract d. unilateral contract

c. executory contract

Which group of legal instruments may legally be prepared by a licensed real estate broker? a.listing contracts, buyer brokerage agreements, commercial leases, and deeds b. leases, option contracts, promissory notes and buyer brokerage agreements c. listing agreements, buyer brokerage agreements, sale contracts and option contracts d. mortgages, promissory notes, commercial leases, and option contracts

c. listing agreements, buyer brokerage agreements, sale contracts and option contracts

A woman gave an exclusive-right-of -sale listing to a broker to find a buyer for her residential lot. While the woman was vacationing with her family , a buyer signed an offer to purchase the womans lot at the full price and terms of the listing agreement,. Which statement is TRUE? a. because this is an exclusive right of sale listing, the broker is authorized to accept the offer on the woman's behalf b. the broker may accept the offer on the woman's behalf as long as she gets the woman signature on the contract immediately upon the woman's return c. the exclusive right of sale listing does not give the broker the authority to accept the offer on the woman's behalf d. the broker may accept the offer because it is a full price offer

c. the exclusive right of sale listing does not give the broker the authority to accept the offer on the woman's behalf

a real estate sales associate must disclose to a prospective buyer that a. a former occupant of the property committed suicide in the home b. the seller has been diagnosed with HIV c. the family room addition does not comply with local building codes d. families of other racial groups live in the immediate area

c. the family room addition does not comply with local building codes

a change in price or other terms by the seller to the buyer creates a _____.

counteroffer

Which disclosure regarding radon is required when purchasing or leasing real property in Florida? a. a disclosure statement in the contract indicating that the house has been tested for radon and that the test indicated a safe level of radon b. an estimate of the cost for a required radon test c. disclosure statement in the contract indicating that the seller is required to have the property tested for radon at the sellers expense if requested by the buyer d. a disclosure statement in the contract explaining radon gas

d. a disclosure statement in the contract explaining radon gas

Which applies to exclusive-right-of-sale listings? a. broker is due a commission regardless of who finds the buyer b. listing may be submitted to the MLS by the listing broker c. seller must consent to the terms of the listing agreement d. all of these apply

d. all of these apply

An offer is NOT terminated by a. a counteroffer b. an acceptance c. a rejection d. an extension

d. an extension

An adult contracting with a minor is an example of failure to meet which essential of a real estate contract? a. legality of the object b. offer and acceptance c. meeting of the minds d. competent parties

d. competent parties

a closing is scheduled for next week. the broker would like the closing agent to prepare a check payable to the sales associate for the associates share of the commission. a. the closing agent is required by law to make the check payable to the brokerage company b. the broker may telephone the closing agent with instructions on how to disperse the escrow funds due the sales associate c. the broker may enter into a written blanket authorization with the closing agent to always make theses associates commission payable to the associate d. the broker must give specific written instructions to the closing agent regarding the exact amount of commission due the sales associate for next weeks closing

d. the broker must give specific written instructions to the closing agent regarding the exact amount of commission due the sales associate for next weeks closing

when in doubt, the best course of action is to ____.

disclose

Licensees who are interested in obtaining an option on a property as a true optionee (not for a listing agent) must ___________ themselves of their role as licensee.

divest

an ____ listing is given to one broker; however, the seller reserves the right to sell the property without paying a commission.

exclusive agency

a sale contract after the title closing is completed is an ____ contract.

executed

a contract that is under seal is a ____ contract.

formal

the florida Supreme Court case that obligates sellers to disclose to buyers all known defects that materially affect the value of residential property and that are not readily observable is ____ v ___.

johnson v davis

the Rayner v wise realty company of Tallahassee extended the duty to disclose material defects to real estate _____.

licensees

Damages specified in a contract are _______ damages

liquidated

4 types of contracts that may be prepared by a licensed real estate broker

listing agreement, buyer brokerage agreement, sale contract, option contract

___ is the misstatement of fact or the omission or conceal meant of a factual matter.

misrepresentation

the person making an offer is the ___.

offeror

the person asking for an option of real property is the ____

optionee

the property owner is an option contract is the _____.

optionor

the consideration in a sale contract is the ____ the buyer dn the seller make to each other.

promise

an oral real estate contract, with certain specific expectations is _____.

unenforceable

a contract with an obligation by only one party is a ___ contract.

unilateral

in an option contract, a _____ ____ is paid for the right to purchase the property at a specified price within a specified period of time.

valuable consideration

a contract for an illegal purpose, such as illegal gambling is _____.

void

a sane person tracking with an insane person produces a ____ contract.

voidable