Contracts
REAL ESTATE SALES CONTRACTS 7.1. A seller accepts an offer from a buyer subject to the following: 80% financing, a home inspection, closing on or before October 1, an attorney's approval on marketable title, and possession within 30 days of closing with a daily rental amount from closing to possession. This is a example of: A. A contract subject to contingencies. B. A unilateral contract. C. An offer subject to the seller's approval. D. An offer subject to the buyers approval.
A. A contract subject to contingencies.
3-18. What do the terms offer and acceptance, mutual assent, and meeting of the minds have in common? A. They mean there is an unqualified acceptance of an offer, which is an essential element of a contract. B. They mean there is a qualified acceptance of an offer, which is an essential element of a contract. C. They affect only contracts for the transfer of easement rights in a lease agreement. D. They affect only contracts for the transfer of personal property at a foreclosure sale.
A. They mean there is an unqualified acceptance of an offer, which is an essential element of a contract.
3.6. An adult buyer who is illiterate signs a contract to purchase property from a seller. The buyer understands the nature of the contract because the terms were explained orally. Is the contract binding? A. Yes, because the buyer understands the terms of the contract. B. Yes, because all adults are considered legally competent. C. No, because the buyer is illiterate and, therefore, legally incompetent. D. No, because a guardian must sign for the buyer.
A. Yes, because the buyer understands the terms of the contract.
DISCHARGE OF CONTRACTS 4.1. A buyer made an offer to purchase a property which was accepted by the seller. Prior to closing, the buyer had to leave the country and gave the right to buy the property to a second buyer. Is the action permissible? A. Yes, contracts are assignable unless otherwise stated. B. Yes, provided the second buyer qualifies. C. No, the initial buyer breached the contract. D. No, any changes made to the agreement require the approval of the seller.
A. Yes, contracts are assignable unless otherwise stated.
3.8. Can an offer to purchase with a "time is of the essence" clause be withdrawn by the offeror before the expiration date? A. Yes, provided the offer has not been accepted and communicated. B. Yes, with the expressed consent of the offeree. C. No, offers with an expiration date cannot be withdrawn by the offeror. D. No, an offer with a "time is of the essence" clause cannot be withdrawn by the offeror.
A. Yes, provided the offer has not been accepted and communicated.
MATH 11.1. An owner has a five acre parcel of property and purchases a tract of land one mile square adjoining the five acre tract. If the owner wishes to sell both parcels for $1,200 an acre, the approximate selling price would be: A. $726,000. B. $774,000. C. $786,000. D. $906,000.
B. $774,000. mile square = section = 640 acres 5 acres / 645 acres 645 acres x $1200/acres = $774,000
10.5. A Georgia salesperson is to present a seller's counteroffer to a buyer. To determine the estimated amount of cash the buyer will need, the salesperson will need to know all of the following EXCEPT the: A. Downpayment. B. Loan prepayment penalty. C. Day of closing. D. Unpaid taxes.
B. Loan prepayment penalty.
ESSENTIAL ELEMENTS OF A VALID CONTRACT 3-1. A buyer makes an offer to purchase a property listed for sale and does not state in the offer a specific expiration date. Which of the following statements would be TRUE concerning this situation? A. The offer cannot be withdrawn by the buyer. B. The offer can be withdrawn by the buyer anytime prior to communication of acceptance. C. The offer would be valid for seven business days. D. The offer would not be valid as it did not contain an expiration date.
B. The offer can be withdrawn by the buyer anytime prior to communication of acceptance.
9.3. In a land contract (contract for deed), who agrees to pay real estate taxes, insurance premiums, repairs and upkeep on the property? A. Vendor. B. Vendee. C. Lessor. D. Lessee.
B. Vendee.
3-7. An elderly mother has moved to a nursing home and wants her son to sell her home. To act as the agent of the mother, the son would need: A. a deed signed by the mother. B. a power of attorney signed by the mother. C. a listing agreement signed by the son. D. a power of attorney signed by the son.
B. a power of attorney signed by the mother.
9.2. All of the following are features of a land contract EXCEPT: A. buyer receives equitable title to the property. B. buyer receives a deed to the property at closing. C. buyer makes monthly payments to the seller. D. buyer takes possession of the property.
B. buyer receives a deed to the property at closing.
3-19. A buyer and seller are negotiating the sale of a house through the mail. Acceptance of a mailed offer becomes an effective and binding contract when: A. the offeree signs the offer. B. deposited in the mail by the offeree. C. the offeror signs the offer. D. deposited in the mail by the offeror.
B. deposited in the mail by the offeree.
8.3. Under an option agreement the optionee: A. is obligated to purchase the property at the fixed price. B. must pay the optionor valuable consideration. C. will take possession of the property. D. must include a down payment.
B. must pay the optionor valuable consideration.
GEORGIA REAL ESTATE PRACTICE 10.1. When an offer to purchase has been accepted and signed by all parties, the salesperson is obligated to deliver a signed copy of the purchase agreement to: A. seller only. B. seller, buyer, and broker(s). C. buyer only. D. seller and buyer only.
B. seller, buyer, and broker(s).
5.3. A property is under contract with a sales price of $250,000. Before closing the property value appreciates to $260,000 and the seller breaches the sales contract. The buyer asks the court to force the seller to go through with the sale and transfer the property as previously agreed. This action is a: A. suit for damages. B. suit for specific performances. C. rescission. D. novation.
B. suit for specific performances.
7.5. Prior to closing, mold is discovered during a home inspection. Who pays for the removal of the mold? A. The seller pays for all repairs prior to closing. B. The agreed upon parties in the listing agreement. C. The agreed upon parties in the sales agreement. D. The county because it is an environmental hazard.
C. The agreed upon parties in the sales agreement.
3-3. A buyer makes an offer on the seller's property. The seller changes the price and signs the counteroffer. Which of the following statements regarding this situation is INCORRECT? A. The original offer has been rejected. B. The original offeree is now the offeror. C. The agreement is binding on both parties. D. The counteroffer is a new offer.
C. The agreement is binding on both parties.
6.3. A salesperson completed a listing agreement which the owner signed. When should the salesperson furnish the owners a copy of the listing agreement form? A. After the listing broker has reviewed the form. B. After entering it into the multiple listing service. C. Upon securing the signature of the owners. D. When a written offer to purchase is presented to the owners.
C. Upon securing the signature of the owners.
1-4. An executed contract means: A. only one party to the contract has made a promise. B. at least one party to the contract may still sue for specific performance. C. all of the parties have fully performed their duties. D. one of the conditions of the contract has been completed.
C. all of the parties have fully performed their duties.
3-12. For a real estate sales contract to be valid, it must include: A. options. B. contingencies. C. consideration. D. a rescission clause.
C. consideration.
3-11. A buyer and seller entered into a purchase and sale agreement on a property. At the time of the parties signing the contract, the: A. seller retained legal title and the buyer had the legal right to obtain equitable title. B. seller had equitable title and the buyer had legal title. C. legal title remained with the seller and the buyer received equitable title. D. the buyer and seller held joint legal title until closing.
C. legal title remained with the seller and the buyer received equitable title.
3-16. When an offer is signed by the buyer and then given to the seller's broker with an earnest money check to present to the seller, the: A. transaction constitutes a valid contract in the eyes of the law. B. buyer can sue the seller for specific performance. C. offer can be withdrawn any time prior to acceptance. D. earnest money will be returned if the buyer defaults.
C. offer can be withdrawn any time prior to acceptance.
2-7. An enforceable purchase agreement is formed when: A. both parties have orally accepted the agreement. B. the seller makes a counteroffer. C. the buyer knows of the seller's written acceptance of the offer. D. the earnest money is paid.
C. the buyer knows of the seller's written acceptance of the offer.
11.2. A seller desires to net $20,000 from the sale of her property which has a loan balance of $61,700. The brokerage fee will be 7% of the sales price and the seller must pay $2,000 in other selling expenses. Which sales price would provide her with $20,000 net? A. $83,700. B. $87,419. C. $89,559. D. $90,000.
D. $90,000. 100% Sales Price - 7% Sales Price - $61,000-$2,000 = $20,000 93% Sales Price = $83,700 Sales Price = $90,000
BREACH OF CONTRACT 5.1. In the termination of a real estate sales contract that includes earnest money. Which of the following actions returns the contract's parties to their original position before the contract (status quo), including return of the earnest money? A. Suit for specific performance. B. Rescission. C. Reversion. D. Subordination.
B. Rescission.
3.5. The purpose of the statute of frauds is to: A. require sellers to disclose defects in the property. B. require real estate contracts to be in writing to be legally enforceable. C. protect the public from fraudulent actions by real estate agents. D. make verbal contracts illegal.
B. require real estate contracts to be in writing to be legally enforceable.
2.4. A real estate sales contract with a mortgage contingency would be classified as: A. valid. B. voidable by the seller. C. voidable by the buyer. D. unenforceable.
C. voidable by the buyer.
2.2. A contract that appears valid but was entered into as a result of fraud or misrepresentation is: A. valid and binding on all parties. B. void, it has no legal effect. C. voidable by the defrauded party. D. unenforceable.
C. voidable by the defrauded party.
2-3. Which of the following agreements would be considered void? A. A contract that is contingent upon an appraisal. B. A verbal lease for six months. C. A sales contract that contains a mistake. D. A sales contract signed by an unauthorized person.
D. A sales contract signed by an unauthorized person.
3.4. An owner listed their property for sale with a real estate agent. The agent advertises the property as a "great value" and receives two reasonable offers from different buyers at the same time. What is the best advice the agent could give the owner regarding the two offers? A. Accept both offers. B. Reject both offers. C. Counteroffer to both buyers. D. Accept one offer and make a backup contingent counteroffer on the other.
D. Accept one offer and make a backup contingent counteroffer on the other.
CLASSIFICATION OF CONTRACTS 1.1. Which of the following contracts would be considered a unilateral agreement? A. A lease for over six months. B. An exclusive listing for six months. C. A sales contract closing in six weeks. D. An option agreement which expires in six months.
D. An option agreement which expires in six months.
10.4. An inactive licensee buying property for herself must always: A. advise her broker with a written letter of intent. B. maintain a copy of the contract for seven years. C. be represented by a licensed broker. D. clearly disclose her licensing status in the sales contract.
D. clearly disclose her licensing status in the sales contract.
1.An intoxicated buyer made an offer on a seller's property. The seller accepted the offer and communicated the acceptance to the buyer. This contract would be: A. valid and is binding in a court of law. B. void and has no legal effect. C. voidable by the offeree. D. voidable by the offeror.
D. voidable by the offeror.
2.5. An intoxicated buyer made an offer on a seller's property. The seller accepted the offer and communicated the acceptance to the buyer. This contract would be: A. valid and is binding in a court of law. B. void and has no legal effect. C. voidable by the offeree. D. voidable by the offeror.
D. voidable by the offeror.
VALIDITY OF CONTRACTS 2-1. Which of the following statements BEST describes a void contract? A. A contract that is not legally enforceable. B. A contract that is not in writing. C. A contract voidable by either party. D. A contract that has been rescinded.
A. A contract that is not legally enforceable.
3-6. A buyer submits an offer to purchase contingent on the buyer's spouse approving the property within 48 hours. Which of following statements is correct concerning this agreement? A. If accepted by the seller the contract would be voidable by the buyer. B. Real estate contracts cannot contain contingencies. C. The contingency is not valid as it requires a personal judgment. D. The contingency would have to be made on a separate amendment agreement.
A. If accepted by the seller the contract would be voidable by the buyer.
1-5. At closing, a title is transferred to the buyer. Until that event occurs, a contract entered into by a buyer and a seller is: A. executory. B. executed. C. void. D. unenforceable
A. executory.
10.6. A salesperson is writing a residential lease in Georgia. Under what circumstances may the salesperson consult an attorney about this process without prior authorization from the employing broker? A. If the client provides the attorney. B. Under no circumstance. C. If the employing broker is out of town. D. If another salesperson can furnish the name of the appropriate attorney.
B. Under no circumstance.
3.9. For a person to have legal capacity to contract they must be: A. at least 21 years old. B. mentally competent. C. literate. D. a resident of the United States.
B. mentally competent.
11.3. A seller received a closing check for $210,150. The broker's commission was 5% and the closing costs paid by the seller amounted to $3,600. What was the selling price? A. $213,750. B. $221,200. C. $225,000. D. $250,000.
C. $225,000 (100% SP - 5% SP) + $3600 + $210,000 = Sales Price (100% SP - 5% SP) + $213,750 = Sales Price (100% SP - 5% SP) + $213,750(cross this out) = $213,750 95%(cross this out) = $213,750 = $225,000 95%
3. Under the Electronic Signatures in Global and National Commerce Act (E-Sign), which of the following statements is correct? A. A contract can be denied its legal effect because an electronic signature was used. B. If a state's law requires a signature on a contract, an electronic signature is not sufficient. C. Contracts using e-mail have the same legal significance as those found on paper. D. If the state's statute of frauds law requires certain contracts to be in writing and signed by the parties involved to be legally enforceable, an electronic contract and signature are not legally sufficient.
C. Contracts using e-mail have the same legal significance as those found on paper.
7.8. Which of the following is NOT required to have a valid real estate sales contract? A. An agreement between the parties. B. Competent parties. C. Earnest money. D. Lawful purpose.
C. Earnest money.
6.5. Who signs a listing agreement? A. The listing broker and the selling broker. B. The listing broker and the customer. C. The listing broker or someone authorized by the broker and the client. D. The buyer and seller.
C. The listing broker or someone authorized by the broker and the client.
3-8. A buyer signs an offer to purchase for $250,000 that requires the refrigerator remain with the property. The seller agrees to the price, but removes the stipulation about the refrigerator. The seller initials the change and signs the document. Which of the following is true? A. The offer has been signed by both parties and is considered a binding contract. B. The seller does not have the right to change the original offer. C. The original offer by the buyer is terminated and the seller has created a new counteroffer. D. If the buyer rejects the seller's offer, the seller can accept the buyer's original offer.
C. The original offer by the buyer is terminated and the seller has created a new counteroffer.
10. Who generally orders the "termite clearance letter"? A. The closing attorney B. The lender. C. The seller or purchaser. D. The listing agent.
C. The seller or purchaser.
3-20. When does an offer become a valid sales contract? A. When the offer is signed by the offeror. B. When the offer is signed by the offeree. C. When the acceptance of the offer is communicated to the offeror. D. When the earnest money is deposited.
C. When the acceptance of the offer is communicated to the offeror.
3-14. A promise made by one party to induce another party to enter into a contract is: A. an offer and acceptance. B. a reality of consent. C. a consideration. D. a covenant.
C. a consideration.
DISCHARGE OF CONTRACTS 4-1. A buyer and seller mutually agree to rescind their residential sales contract. If the buyer was secured by the listing broker, working under an exclusive right to sell listing, the broker might be entitled to: A. the earnest money. B. one half of the earnest money. C. the full commission. D. one half of the commission.
C. the full commission.
3-21. A property owned by a corporation is listed for sale. The brokerage engagement should have the corporate seal affixed and the signature of an authorized officer. In the absence of the corporate seal the brokerage engagement must be signed by: A. the company president. B. the listing broker. C. two authorized officers. D. the chief executive officer.
C. two authorized officers.
1.3. When is a sales contract considered executed? A. When an offer is signed by the offeror. B. When acceptance of the offer is received by the offeror. C. When the deed is recorded. D. At closing when all the parties have fulfilled their promises.
D. At closing when all the parties have fulfilled their promises.
3.2. Which of the following must be included in a valid real estate sales contract? A. Brokerage commission. B. Notarized signatures. C. Earnest money. D. Consideration.
D. Consideration.
VALIDITY OF CONTRACTS 2.1. A minor signed a written sales contract to purchase a parcel of property from an adult seller. After the contract was signed, the seller learned the buyer was a minor and declared the contract void. Is the seller's action permissible? A. Yes, the agreement is void because the buyer is a minor. B. Yes, the buyer violated the statute of frauds by not disclosing their age. C. No, the agreement is binding on both parties and cannot be voided by either party. D. No, in this situation only the minor may void the agreement.
D. No, in this situation only the minor may void the agreement.
6.6. Which of the following is FALSE concerning the seller disclosure form? A. Use of this form may help protect the seller. B. Use of this form may help protect the broker. C. A seller can refuse to fill out the form. D. The use of such form is mandated by state law.
D. The use of such form is mandated by state law.
4-2. A purchaser in a real estate sales contract transfers her right to buy the property to another person. This would be considered: A. a breach of contract. B. an assumption. C. a novation. D. an assignment.
D. an assignment.
7.4. A buyer signed a contract to buy a house for $100,000. The property appraised for $110,000, to obtain a larger loan for the buyer the broker submitted a false contract to the lender for $110,000. Is the broker's action legal? A. Yes, if the buyer agreed. B. Yes, the loan would be based on the appraisal. C. No, this would be considered fraud. D. No, this is an example of redlining.
C. No, this would be considered fraud.
2-2. A buyer planned to buy an existing house and build a swimming pool in the backyard. The buyer signed a contract to buy the house and did not mention his plans about the swimming pool. After signing the contract, the buyer discovered the restrictive covenants would not permit a swimming pool. What is the buyer's recourse? A. The buyer has no legal recourse. B. File suit for damages. C. File suit for specific performance. D. The contract is illegal and void.
A. The buyer has no legal recourse.
1-2. Which of the following statements BEST describes the difference between a bilateral and unilateral contract? A. The number of parties obligated to perform. B. The number of promises each party is obligated to perform. C. The number of lenders involved. D. The number of signatures required on the contract.
A. The number of parties obligated to perform.
2-6. A buyer signs a contract to purchase a house, but then attempts to have the contract voided. He is able to prove that he was legally mentally ill when he signed the contract. Will the buyer likely have the contract declared void? A. Yes, because his mental illness renders the contract voidable. B. Yes, because any buyer can void a purchase agreement before closing. C. No, because mental illness is unrelated to enforceability of contracts. D. No, because the contract was written and signed by both parties.
A. Yes, because his mental illness renders the contract voidable.
4.2. If the purchaser is transferred to another city before closing, can he or she assign the contract and let the new purchaser close? A. Yes, unless there is a statement in the contract to the contrary. B. No, only the seller can transfer his or her interest to another party. C. No, contracts cannot be assigned. D. Yes, all contracts can be assigned.
A. Yes, unless there is a statement in the contract to the contrary.
2.3. A fifteen year old minor signs a sales contract to purchase real property. Can the minor disaffirm the contract? A. Yes, while under age and for a reasonable period of time after attaining legal age. B. Yes, only with the consent of the seller. C. No, only the seller may void the contract. D. No, the contract is valid and enforceable.
A. Yes, while under age and for a reasonable period of time after attaining legal age.
3-17. In most states, all of the following contracts need to be in writing to be enforceable EXCEPT: A. a three-month lease agreement on an apartment. B. a contract for the sale of air rights. C. the lease of an easement to the airport. D. a sales contract for a principal place of residence.
A. a three-month lease agreement on an apartment.
10.3. When an offer to purchase is made on a property on which a sales contract already exists, the licensee should be sure that the subsequent offer contains a contingency. If it does not, the licensee should: A. advise the seller to reject the offer and make a counteroffer contingent on the first contract not closing. B. not present the offer to the seller. C. advise the seller to accept it and write in such a clause. D. advise the seller to accept the new offer and cancel the existing contract.
A. advise the seller to reject the offer and make a counteroffer contingent on the first contract not closing.
1.2 A written employment agreement between a property owner and a real estate broker authorizing the broker to find a buyer for the owner's real property would be considered an: A. expressed bilateral, executory listing agreement. B. implied unilateral, executed listing agreement. C. expressed bilateral, executory sales contract. D. implied unilateral, executed sales contract.
A. expressed bilateral, executory listing agreement.
5. When adding special stipulations to a contract if there is a conflict between the wording in the stipulations and portions of the preprinted contract the: A. handwritten wording takes precedence over the typewritten wording which takes precedence over preprinted wording. B. preprinted wording takes precedence over typewritten wording which takes precedence over handwritten wording. C. typewritten wording takes precedence over preprinted wording which takes precedence over handwritten wording. D. handwritten wording will not be recognized under the law due to the statute of fraud.
A. handwritten wording takes precedence over the typewritten wording which takes precedence over preprinted wording.
5.2. The law pertaining to the period of time within which legal proceeding against certain actions in a contract must be brought to court is called the: A. statute of limitation. B. statute of frauds. C. parol evidence rule. D. statute of estoppel.
A. statute of limitation.
6.2. All of the following are typical provisions in a listing agreement EXCEPT: A. the closing date of the sale. B. the names of the seller and broker. C. the legal description of the property. D. the commission rate to be paid to the broker.
A. the closing date of the sale.
2-9. A contract entered into based on a misrepresentation is: A. voidable by the aggrieved party. B. void between the parties. C. voidable by either party. D. a valid enforceable contract.
A. voidable by the aggrieved party.
6. A prospective purchaser asked the seller to lease the house with an option to purchase. If the seller agrees to this type of arrangement, when should you prepare to write the required sales contract? A. Before you write the lease. B. At the same time you write the lease, attach a copy to the lease, consult with your broker, and have both contracts signed by the parties. C. Before the "option to purchase" clause expires. D. After the lease expires.
B. At the same time you write the lease, attach a copy to the lease, consult with your broker, and have both contracts signed by the parties.
3.3. Carr offers to buy Smith's property under the following conditions, the purchase price is $275,000, the closing date is March 15, and the down payment is $20,000. Smith agrees to all of the terms except the down payment, which he wants to be $25,000. Smith changes the $20,000 to $25,000 and signs the agreement. Which of the following statements is correct concerning this situation? A. Carr and Smith have a binding agreement because earnest money is not required in a contract. B. By changing anything in the offer, Smith has rejected Carr's initial offer and made a counteroffer. C. If Carr rejects Smith's counteroffer, Smith can go back and accept the original offer. D. When there is a counteroffer the original offeror becomes the new offeror in the counteroffer.
B. By changing anything in the offer, Smith has rejected Carr's initial offer and made a counteroffer.
3-2. A buyer makes an offer to purchase a seller's property. If the seller wanted to accept the offer, which of the following statements is CORRECT? A. If the offer had a time limit, the seller could not accept. B. If the offer had a time limit, the seller could accept within the time limit or later if the buyer agreed. C. If the offer did not have a time limit and the seven day right of rescission had not expired, the seller could accept. D. If the offer did not have a time limit and the three day right of rescission had not expired, the seller could accept.
B. If the offer had a time limit, the seller could accept within the time limit or later if the buyer agreed.
ESSENTIAL ELEMENTS OF A VALID CONTRACT 3.1. A buyer makes an offer to a seller agreeing to all the terms in the listing agreement. Would this result in a valid contract between the buyer and seller? A. No, because there was no acceptance by the broker. B. No, because there was no acceptance by the seller. C. Yes, all the terms of the listing were met by the buyer. D. Yes, because the broker would be entitled to a full commission.
B. No, because there was no acceptance by the seller.
OPTIONS 8.1. A broker finds a buyer who is willing to enter into an option on a property for 90 days. The potential buyer pays $1,000 for the option right which is acceptable to the property owner. Which of the following is TRUE? A. The sales commission is earned only if the sale is closed. B. The sales commission is earned only if the option is exercised. C. The $1,000 must be credited to the sales price. D. The commission is earned upon mutual signing of the option agreement.
B. The sales commission is earned only if the option is exercised.
LAND CONTRACT (CONTRACT FOR DEED) 9.1. A buyer and seller are using a contract for deed (land contract) agreement for the purchase of real property. Which of the following statements concerning this agreement is correct? A. The seller is the vendee and retains legal title. B. The seller is the vendor and retains legal title. C. The buyer is the vendor and receives equitable title. D. The buyer is the vendee and receives legal title.
B. The seller is the vendor and retains legal title.
2-5. A minor leases an apartment. Immediately upon reaching the age of majority, the lessee notified the lessor that the lease was being terminated. Which of the following is true in this situation? A. The lease is fully enforceable regardless of the lessee's age. B. The termination is possible because the rescission was made within a reasonable amount of time after the lessee reached the age of majority. C. The termination is not possible because all lessees are subject to the principle of caveat emptor. D. The termination is not possible because a lessee cannot unilaterally terminate a signed lease.
B. The termination is possible because the rescission was made within a reasonable amount of time after the lessee reached the age of majority.
2-10. An executor called an agent to list a property to settle an estate. While showing the property to the agent, the executor commented, "My aunt always had tenants in the upstairs apartment." Without checking with zoning, the agent listed and sold the property as multifamily. If the property is not zoned multifamily, does the buyer have the right to rescind the contract? A. Yes, because the agent misrepresented the property, and any contract entered into under misrepresentation is void. B. Yes, because the agent misrepresented the property, and any contract entered into under misrepresentation is voidable. C. No, because the executor should have checked to determine the zoning of the property before listing the property. D. No, because the title company should have checked to determine the zoning of the property.
B. Yes, because the agent misrepresented the property, and any contract entered into under misrepresentation is voidable.
8. Due to an ambiguity in the financing terms, the sellers failed to understand they will be carrying a second mortgage note for five years and wanted to cancel the contract. Might the court cancel the contract? A. Yes, if the sellers can prove to the court that they are financially incapable. B. Yes, if a contract contains any ambiguity the court will generally rule against the party who prepared it. C. No, because a signed and accepted contract is valid. D. No, because Regulation Z does not apply since no lender was involved.
B. Yes, if a contract contains any ambiguity the court will generally rule against the party who prepared it.
3-10. An offer which terminates the original offer and initiates a new offer is called: A. a contingency offer. B. a counteroffer. C. an assignment. D. a novation
B. a counteroffer.
3-4. A broker listed a property owned by a husband and wife. The husband had to leave the country on a business trip and granted a power of attorney to his wife authorizing her to sign offers on his behalf. The wife would be considered: A. a fiduciary. B. an attorney in fact. C. an agent. D. a customer.
B. an attorney in fact.
7.9. Agent Mary presents an offer from buyer Lisa to the seller who accepts all provisions except one. This situation: A. would require additional consideration as it is a new contract. B. constitutes a counter offer and a termination of the original offer. C. makes Mary the offeror and Lisa the offeree. D. allows the seller to accept the original offer if the change is not acceptable to Lisa.
B. constitutes a counter offer and a termination of the original offer.
10.8. When a licensee offers to purchase a property as a condition to obtaining a listing to sell, the licensee must: A. make a disclosure in the sales contract that they are acting as a dual agent. B. enter into a written sales contract prior to or at the same time the seller signs the listing agreement. C. offer the "asking price" of the property being purchased. D. enter into a written sales contract after the listing contract has been signed.
B. enter into a written sales contract prior to or at the same time the seller signs the listing agreement.
1-3.A bilateral contract is created when: A. only one of the parties is bound to act. B. promises have been exchanged by two parties and both are obligated to perform. C. a restriction is placed by one party to limit the actual performance by the other party. D. a contingency is to be performed by one party only.
B. promises have been exchanged by two parties and both are obligated to perform.
10.7.A contract must state the purchase price and method of payment, including the amount of earnest money, if any. If no definite purchase price is stated, the contract: A. purchase price would be established by the lender's appraisal. B. purchase price must be stated in a manner that can lead to the calculation of a definite amount. C. purchase price would be the same as the listing price. D. purchase price would be established at closing.
B. purchase price must be stated in a manner that can lead to the calculation of a definite amount.
4. A borrower is in default on their loan. Rather than experiencing the delay and expense of a foreclosure action the lender agrees to release the mortgage so the property can be sold to a new purchaser. If the sale produces less money than is owed the lender the transaction would be referred to as a: A. deed in lieu of foreclosure. B. short sale. C. land contract. D. power of sale.
B. short sale.
6.4. A broker was listing a property owned by a married couple. The husband signed the listing but his wife was out of town. The husband instructed the broker to immediately advertise the property and put the listing in the multiple listing service. The broker should: A. follow the seller's instructions because the broker has the duty of obedience. B. tell the husband that they will start marketing the property after obtaining the signature of the wife. C. start advertising the property and get the wife's signature later. D. refuse the listing because this would be considered a net listing.
B. tell the husband that they will start marketing the property after obtaining the signature of the wife.
10.2. If a buyer makes an offer to a seller that is contingent upon the buyer financing the purchase with a new loan, which of the following need NOT be stated in a Georgia real estate sales contract: A. the amount and term of the loan. B. the name of the lender. C. whether the loan is to be conventional, FHA or VA. D. the maximum rate of interest.
B. the name of the lender.
7.2. A real estate sales agreement contains the language "time is of the essence." Such language in a contract typically means: A. the parties must perform within reasonable periods of time. B. the time limits stipulated in the contract require punctual performance. C. any time limits in the contract are merely suggestions. D. if the time limits are not met the parties shall have seven days to perform.
B. the time limits stipulated in the contract require punctual performance.
7.7. A sales contract contains special stipulations: A. to make it legal. B. to express conditions specific to the sale. C. to satisfy the statute of frauds. D. to satisfy RESPA.
B. to express conditions specific to the sale.
2-4. An oral agreement for the sale of real estate would be: A. valid between the parties and enforceable in court. B. valid between the parties and unenforceable in court. C. voidable by either party. D. void.
B. valid between the parties and unenforceable in court.
2-8. Which of the following scenarios will render a contract void? A. The landlord and tenant entered into an oral lease for six months. B. A buyer purchased a property and the seller committed fraud on the property disclosure statement. C. A listing contract for commercial property was signed by the CEO, but the articles of incorporation gave the authority to buy, sell, and lease property to the secretary. D. A contract to purchase is contingent upon property inspection.
C. A listing contract for commercial property was signed by the CEO, but the articles of incorporation gave the authority to buy, sell, and lease property to the secretary.
7. A buyer made an offer on a seller's residential property. The offer included earnest money in the form of an antique clock valued at $3,000. The agent should: A. Advise the buyer that only cash or personal checks are acceptable forms of earnest money. B. Advise the buyer that the clock cannot be deposited into the broker's trust account and a cash deposit is required. C. Advise the seller of the form and value of the earnest money being offered. D. Advise the seller the earnest money is $3,000 cash.
C. Advise the seller of the form and value of the earnest money being offered.
7.6. A buyer made an offer on a seller's residential property. The offer included earnest money in the form of an antique clock valued at $3,000. The agent should: A. Advise the buyer that only cash or personal checks are acceptable forms of earnest money. B. Advise the buyer that the clock cannot be deposited into the broker's trust account and a cash deposit is required. C. Advise the seller of the form and value of the earnest money being offered. D. Advise the seller the form of earnest money and indicate $3,000 cash on the contract.
C. Advise the seller of the form and value of the earnest money being offered.
7.3. A buyer includes earnest money as part of an offer to purchase property with the understanding the earnest money would be returned if the buyer is unable to qualify for a loan. Which of the following clauses should be included in the offer to reflect the buyers request? A. "As is" clause. B. "Time is of the essence" clause. C. Mortgage contingency clause. D. Property sale contingency clause.
C. Mortgage contingency clause.
3-9. Which of the following actions will generally NOT terminate an offer? A. Rejection of the offer by the offeree. B. Death or insanity of either the offeror or offeree. C. Notice of revocation by the offeror which has not been received by the offeree. D. A qualified acceptance (counteroffer) by either party.
C. Notice of revocation by the offeror which has not been received by the offeree.
8.5. Franklin pays $2,000 to owner Simpson for a 6-month option. Which of the following is TRUE? A. Franklin is the optionor and Simpson is the optionee. B. Franklin may not assign the option to another during the 6-month period. C. Simpson may sell the property to another during the option period. D. Simpson may revoke the option by returning the $2,000 to Franklin.
C. Simpson may sell the property to another during the option period.
3-15. Every enforceable contract for the sale of real estate must be in writing and signed by all parties, in accordance with the: A. Real Estate License Act. B. Uniform Commercial Code. C. Statute of frauds. D. Truth in Lending Act.
C. Statute of frauds.
2. In a land contract (contract for deed), which of the following statements is correct? A. The vendor holds equitable title. B. The vendee holds legal title. C. The seller retains legal title. D. The buyer received legal title.
C. The seller retains legal title.
CLASSIFICATION OF CONTRACTS 1-1. An implied contract would arise from the: A. spoken words of the parties. B. written words of the parties. C. actions of the parties. D. written or spoken words of the parties.
C. actions of the parties.
3.7. A buyer makes an offer to purchase the seller's property for $125,000. The seller makes a counteroffer of $126,000. In the counteroffer, the seller is the: A. optionee. B. assignor. C. offeror. D. offeree.
C. offeror.
LISTING AGREEMENTS 6.1. The safety (broker protection) clause in an exclusive right to sell listing protects the broker's commission rights for what time period after expiration of the listing? A. Thirty (30) days, as stated by law. B. Ninety (90) days, which is standard in all listings. C. The same amount of time as the listing contract. D. A reasonable period of time negotiated between broker and principal.
D. A reasonable period of time negotiated between broker and principal.
8.2. Which of the following statements about options is true? A. The optionee is obligated to purchase the property within a stated period of time. B. If the option is not exercised the consideration must be refunded. C. An option is a bilateral agreement. D. An option is enforceable by only the optionee.
D. An option is enforceable by only the optionee.
8.4. Under an option agreement can a salesperson collect a commission directly from the seller? A. Yes, but only when the option is exercised. B. Yes, the salesperson found the buyer. C. No, commissions are not paid on option agreements. D. No, the commission would be paid to the salesperson's broker.
D. No, the commission would be paid to the salesperson's broker.
9. A new home being sold is owned by a corporation. Which of the following statements concerning the sales contract is INCORRECT? A. The corporation should adopt a resolution authorizing the sale of the property and name the persons authorized to sign the contract and attach the resolution to the contract. B. The contract should have the corporate seal affixed and the signature of an authorized officer. C. In absence of the corporate seal, the signature of two authorized officers will suffice. D. The signature of at least two major stockholders will suffice.
D. The signature of at least two major stockholders will suffice.
3-5. An offer does not contain a specific expiration date. Unless withdrawn, the courts will usually declare that the offer should remain open for: A. 10 days. B. 30 days. C. 90 days. D. a reasonable time.
D. a reasonable time.
3-13. For a person to have contractual capacity, that person must: A. be literate. B. be able to read. C. be able to write. D. be mentally competent.
D. be mentally competent.