real estate quiz

If the seller's broker and the buyer's broker agreed to split a commission 50/50, how much would each broker earn if the final sales price was $360,000 with a commission rate of 6%?

$10,800 (dollars)

If the seller's broker and the buyer's broker agreed to split a commission 50/50, how much would each broker earn if the final sales price was $680,000 with a commission rate of 5%?

$17,000 (dollars)

If the seller's broker received a commission of $10,800, what is the sales price if a 6% commission rate was paid?

$180,000 (dollars)

A property recently sold for $480,000. What is the commission owed if the seller agreed to a 4% commission rate?

$19,200 (dollars)

contract elements up into four pieces:

(1) offer and acceptance, (2) consideration, (3) legal capacity, and (4) legal purpose.

Which answer best describes a provision that could be part of a sales contract?

-A provision allowing the buyer to terminate the deal if a home inspection is unsatisfactory -A provision requiring the seller to install red velvet drapes in every southern window of the house -A provision allowing the seller to terminate the sale if the seller's contract for a job in another state is canceled before closing

Which of the following is a ground for voiding a contract?

-Duress -Undue influence -Fraud

The Uniform Electronic Transaction Act is a law

-affects any electronic record or electronic signature created, generated, sent, communicated, received, or stored after October 1, 2000. The UETA provides need-to-know information about electronic signatures and records in business transactions. -One of the biggest benefits of the UETA is that it makes electronic records and signatures just as legal as manually signed documents, as long as all parties agree to accept electronic signatures and documents. -47 states in the U.S. use UETA -Also known as UETA -must meet 3 general criteria= a sound, symbol, or process. Must be attached to or logically associated with a record, executed or adopted by a person who has the intent to sign the record.

A court might need to interpret a contract if...?

-the contract was poorly drafted. -the parties disagree about what a contract requires. -a party sues on the contract.

A contract made by a minor and an intoxicated adult may be...?

-voidable by the minor. -voidable by the adult. -unenforceable. -all true

Short Sale: By signing this Addendum, the seller and buyer agree to accept those risks, as follows:

1. Lenders or lienholders are under no obligation to approve a short sale. 2. Lienholders have the right to propose changes to the OPC, including changes to the Due Diligence Period and Settlement Date. 3. The buyer and seller are under no obligation to accept such proposed changes. 4. The buyer has the right to ask for repairs, but the seller might not be able to pay for such repairs. The buyer still has the right to terminate the contract under certain circumstances, regardless of the seller's financial situation. 5. If the short sale is ultimately not approved, the due diligence fees and costs are usually not refundable to the buyer. 6. It may take several weeks or months to obtain lienholder approval for the short sale. There are no guarantees that it will be approved. 7. The buyer, seller, closing attorney, and brokers involved in the transaction have no control over the lienholder's actions or decisions in the short sale process.

4 Types of Listing Agreements

1. Open listing 2. Exclusive agency 3. Exclusive right to sell 4. Net listing

Complying with the statute of frauds requires

1. The written contract must include the names of the parties to the contract (buyer and seller) 2. Subject matter of the contract. The subject matter should describe the property that is being transferred with its legal description. 3. Address 4. Material terms and conditions of the contract. 5. Signature for each party

the basic legal concepts of contract interpretation

1. parol evidence rule." This rule establishes specific guidelines as to whether someone can introduce evidence of the circumstances surrounding the creation, implementation, or enforcement of a contract. Evidence that goes outside the "four corners" of the contract document itself is "parol evidence." (want it write) 2.Once a contract is written, agreed upon, and signed, that written document trumps any preexisting oral contract that the parties made 3.contracts are interpreted as a whole. 4.court interprets words in the contract based on their ordinary meaning, unless those terms are defined otherwise.(by definition in the dictionary) boilerplate= terms stay the same 5.ambiguous terms in the contract, they will be interpreted against the party who wrote the contract.

Must be in writing in the State of NC

1. promising to pay the debt of another person 2. commercial loans that total over $50,000 3. promising to pay a debt even after going through bankruptcy 4.leases that last longer than three years.

Type of Contracts

1. sales contract 2. lease 3. options contract 4. listing agreements -exclusive right to sell listing -exclusive agency listing -open listing -net listing agreement 5. Independent Contract Agreement 6.Express 7. Implied 8. Bilateral 9. Unilateral

Discharges of Contracts

1.mutually agree to end the contract 2.parties fully perform their respective obligations under the contract. 3.unexpected events make a contract impossible to perform. 4.operation of law renders the contract unenforceable. 5.party breaches the contract, and a court order discharges the contract, with or without a damages award.

If the seller's broker received a commission of $15,000, what was the commission rate if the final sales price was $500,000?

3 percent

Executed Contract

A contract in which both parties have completely performed their contractual obligations.

Executory Contract

A contract in which one or both parties have not yet completed performance of their obligations.

Listing agreements

A listing agreement creates an agency relationship between an agent and a seller and authorizes an agent to sell a property on the seller's behalf. The listing agreement determines how—and whether—a real estate agent is paid.

Thelma asks Louise to help her sell her house. Louise asks Thelma if she had a starting price in mind. Thelma says, "You know, I just need to get $250,000 from the sale. If you find a buyer, you can keep anything over $250,000 as your commission." Louise agrees. This example best describes which of the following...?

A net listing agreement

............ is when a court orders a party to perform the exact obligations set forth in the contract.

A specific performance award

Which of the following can a court award while enforcing a real estate sales contract?

A specific performance award Specific performance requires the parties to perform their duties in the contract.

Assignment

A transfer of benefits and obligations within a contract to a 3rd party who is not originally a party to the contract. Assignor: One who transfers their interest in a contract to another party Assignee: One who receives the interest in a contract from another party. The assignee is now liable for the contract.

Which of the following are usually considered to have legal capacity?

Adults

Specific Performance

An action to compel performance of an agreement, e.g., sale of land as an alternative to damages or rescission.

Sasha asks a real estate agent to help her sell her house. Sasha ends up finding a buyer for the house. At the closing, no agent receives a commission. What type of listing agreement did Sasha make?

An exclusive agency listing

Juan asks Teresa to help him sell his house. Juan finds a buyer. At the closing, Teresa receives a commission check. What type of listing agreement did Juan make?

An exclusive right to sell listing

Which statement is false?

An independent contractor agreement is not that important because labor laws will generally protect the interests of a salesperson.

Which of the following is not necessary for an agent to be considered a "statutory nonemployee" of a brokerage firm?

An independent contractor's license

Willie offers to sell his house to Leopold for $100,000. Leopold says he is interested but unsure. He offers Willie $200 to hold the offer open for three weeks to let him think about it. Willie agrees and takes the $200. Which phrase best describes Willie and Leopold's deal?

An options contract

Options contracts

An options contract gives a party a right—but not an obligation—to purchase a property at a specified price during a specified time. During the options period, the seller cannot sell the property to anyone else. At the end of the options period, if the option holder has not exercised his option, then the seller is free to sell the property to someone else.

What is enforceable under the statute of frauds?

An oral contract to lease an apartment for 11 months. Leases less than one year in duration do not have to be in writing.

A transfer by a person of that person's rights under a contract is known as...?

Assignment

true about independent contractor

B. An independent contractor agreement is the best way to create a clear understanding about what the broker and the salesperson can each expect from each other. C. An independent contractor agreement usually contains a plan for how to terminate the agreement. D. An independent contractor agreement is the best way to prevent misunderstandings about how much commission a salesperson will earn.

When a salesperson is considered an employee of a brokerage, the IRS requires the broker to do which of the following as the employer?

B. provide health insurance C. pay social security taxes D. withhold taxes

Ideally, when should a licensee review and become familiar with the standard sales contract form?

Before helping a potential purchaser submit an offer or helping a potential seller review submitted offers. Real estate professionals who plan to help clients make offers or review submitted offers should become familiar with the standard North Carolina sales contract and related forms before sitting down with clients.

Standard 2A7-T

Buyer Possession Before Closing Agreement

Cindy lives in an area where it is necessary to drive a car to take customers to show homes. She hasn't received a commission for some time when her car is damaged while she is showing a home to customers, requiring expensive repairs. Which is true?

Cindy is responsible for all payments related to her car

What are the public policy grounds for making specific performance a rare remedy?

Courts do not want to force people into transactions that they do not want to join in, if there is a monetary remedy available.

Which of the following can a court award while enforcing a contract?

Expectation damages Expectation damages are damages recoverable from a breach of contract by the non-breaching party.

Valid

Having force, or binding force; legally sufficient and authorized by law.

If the buyer pays the seller the purchase price for real estate pursuant to a real estate contract, but the seller does not give the buyer a deed to the property, what is this considered?

Impossibility of performance.

Which is true about independent contractor agreements?

It lays out both the obligations of the broker and the duties of the salesperson

Joan is a salesperson who has developed a great relationship with many of her brokerage's clients. She would like to take these clients with her. Which is most likely?

Joan and her sponsoring broker have signed a comprehensive independent contractor agreement, which states that Joan may not take any listings with her

The essential elements of a contract include offer and acceptance, consideration, legal capacity, and...?

Legal purpose

Jimmy and James offer to sell a plastic bead necklace to Mary for $100. Mary agrees, and gives Jimmy and James $100. They give Mary the necklace. When Mary gets home, she shows the necklace to her sister, Olivia. Mary suffers from schizophrenia. Who might be able to void this contract?

Mary

Which of the following are usually considered to have NO legal capacity?

Minor children Persons with mental illness People in a drunken stupor

If a person makes an offer in jest, does an acceptance create a valid contract?

No. An offer must be made with an intent to create a legally binding contract. The offer must be explicitly accepted with the intention of following through with the agreement.

Hubert says to Melvin, "I will sell you my car for $500." Melvin says, "That sounds interesting." Hubert says, "If I don't hear back from you, I'll assume you accept. I'll meet you here next Tuesday." Hubert does not hear from Melvin. He arrives at the meeting place of Tuesday morning. Do Hubert and Melvin have a contract?

No. Silence cannot be acceptance.

Palmer is 80 years old. He gives Maxwell a contract that reads, "In consideration of the love and affection Maxwell has shown and will show me, I agree to give Maxwell $500 a year for the next 10 years." Do they have a contract?

No. There is no consideration Love and affection cannot be used as consideration.

A buyer and seller sign a real estate contract. The buyer pays the purchase price, and the seller conveys the property to the buyer by deed. Three weeks after the closing, there is a tornado that destroys the real estate. The buyer is claiming that the seller made partial performance because he does not have the property anymore. Will this claim succeed?

No. There was full performance and the seller is no longer liable under the contract.

What do we call performance that is not full performance?

Partial performance.

When authorized or directed by a client to do so, which of the following may a real estate licensee draft for a client?

Pre-printed sale or lease contract forms.

Choose the best statement about the importance of the North Carolina real estate sales contract.

Real estate sales are generally large-dollar transactions, with both the seller and potential buyer taking significant risks. The sales contract is intended to protect both parties by documenting the terms and conditions of the sale. Real estate sales are generally large-dollar transactions, with both the seller and potential buyer taking significant risks. The sales contract is intended to protect both parties by listing the terms and conditions of the sale.

Standard form 2A14-T

Short sale Addendum

Why should a real estate agent understand contracts?

So the agent can help the transaction go smoothly Real estate agents should understand the essential elements of a contract to avoid any obvious pitfalls that may occur.

Jim is a seller on a real estate contract, and Bill is the buyer. Jim receives the purchase price from Bill, and Jim hands Bill a deed for the real estate, but Jim did not sign it. What remedy is available to Bill?

Specific performance to sign the deed. The parties clearly wanted the transaction to go forward The seller must sign the deed. Specific performance can easily solve this issue.

Voidable

That which is capable of being adjudged void, but is not void unless action is taken to make it so.

The Vacation Rental Addendum, NC Standard form 2A13-T, should be used when the property is subject to one or more existing vacation rental agreements as defined by what state law?

The Vacation Rental Act. This Addendum should be used when the property is subject to one or more existing vacation rental agreements, as defined by the NC Vacation Rental Act.

Which of these is a true statement about the seller possession after closing agreement?

The agreement is not intended for long-term occupancy and does not cover the provisions typically covered by a longer-term residential lease.

Under which of these circumstances would the buyer NOT be entitled to a return of their earnest money?

The buyer breaches the contract.

Which of these statements is true regarding the buyer's due diligence rights under this Vacation Rental Addendum?

The buyer has the right to review copies of existing rental agreements and to terminate the contract without penalty during the due diligence period.

Which of the following is NOT true regarding the buyer's obligations to tenants with existing rental agreements?

The buyer is obligated to honor existing vacation rental agreements that extend beyond 180 days from closing. Under the Vacation Rental Act, the buyer takes title subject to the existing vacation rental agreements up to 180 days after the closing date. For agreements that extend beyond this date, the buyer may choose to honor them but is not obligated to do so. The Act requires the buyer to notify tenants with existing rental agreements that the property has changed hands, within 20 days of closing.

If a contract contains a force majeure provision, and an accident destroys the object of the contract, which of the following is most likely to govern the discharge of the contract?

The force majeure provision Damage from a fire or natural disaster can lead to a discharge of contract due to impossibility of performance. Neither party will be in breach.

Serena has been the salesperson and closed the deal on a $900,000 home. She has a 40/60 split with her broker in the independent contractor agreement. However, the broker was on vacation during the entire time that Serena marketed the house, found a buyer, navigated the contract and attended the closing. Serena feels like she should receive a 50/50 split on this transaction. Which of the following is true?

The independent contractor agreement stands, although the broker may choose to pay a bonus at their own discretion.

Who typically signs the sales contract first?

The offeror (buyer) signs the contract first, listing the terms of their offer, before submitting it to the seller for review. The sales contract represents the offer the buyer is making to purchase the seller's property. So, before submitting their offer to the seller, tithe buyer signs the contract first.

Which is not a legal effect of a valid contract?

The parties can be jailed for failing to perform.

The buyer and seller of a house are having a dispute about whether furniture would stay with the property after the sale. The real estate contract says that the furniture leaves with the seller, but the buyer has a letter dated after the contract was signed that says he gets the furniture. Who should prevail?

The seller. It's written in the contract.

Novation

The substitution or exchange of a new contract for an old one by the mutual agreement of the parties example, if the buyer and seller agree to make a change to the sales contract, the existing contract can be mutually terminated for a new contract between the parties

extrinsic evidence

This is any writing or document, or evidence in general, besides the original contract. Courts will not allow a party to present anything from outside the contract that would make the contract seem ambiguous, and try to resolve the ambiguity. The courts want parties to put all of their terms into a single contract and rely only on that document.

Void

To have no force or effect; that which is unenforceable.

For which of these properties would you use the "Offer to Purchase and Contract - Vacant Lot/Land" form?

Use the "Offer to Purchase Vacant Lot/Land" form when the transaction involves unimproved real property that the buyer is purchasing for personal use with no immediate plans to subdivide it.

At what point does the sales contract become legally binding on the parties?

When all parties have signed it. The sales contract becomes effective and binding on all the parties when both the buyer and seller have signed the agreement.

Buyer and Seller enter into a real estate contract. Seller has paid off all liens, Buyer has paid the purchase price, Seller has signed the deed and handed over the deed to Buyer. Has there been full performance?

Yes.

Joe is a salesperson working under his sponsoring broker, Clara. Which form of payment does the IRS allow Clara to make?

a percentage of commission received from successful transactions which Joe has worked on Joe can only earn a commission, which is paid to him by his sponsoring broker.

A contract for an illegal purpose can be called...?

a void contract. Legal purpose is one of the essential elements of a valid contract. If legal purpose is missing, the contract is void.

Willis offers to sell a house to Elizabeth for $100,000, with closing to occur two weeks from next Friday. Elizabeth accepts all of Willis's terms. Willis does not own the house. The contract between Willis and Elizabeth is...?

a void contract. The contract is void because Willis does not own the house. You cannot sell what you do not own.

A contract between a minor and an adult is...?

a voidable contract.

In ............, a real estate agent is certain to receive a commission if a closing occurs.

an exclusive right to sell listing

Melinda and Sasha enter into a written sales contract for Melinda's home. Two weeks before closing, Sasha works on finalizing her loan documents and schedules a home inspection for three days before closing. Melinda works on some agreed repairs and hires a lawyer to write her deed. At this point, Melinda and Sasha's contract is...?

an executory contract.

A complete contract that has been reduced to writing is...?

an express contract

brokers cannot use/ include in preprinted forms/ contracts

brokers may not use preprinted forms that have provisions about brokerage compensation, including the forfeiture of earnest money to any broker or firm. In addition, preprinted forms may not include provisions that attempt to disclaim the broker's liability related to his or her representation.

Samantha offers to sell her house to Rebecca. Rebecca declines the offer. Samantha tells Rebecca she better buy the house, or she'll tell Rebecca's employer about the time Rebecca stole some equipment from the employer. Rebecca agrees to buy Samantha's house. This contract might be voidable by Rebecca on the ground of...?

coercion. Coercion involves persuading someone to do something by using force or threats. A contract that was created through coercion is unenforceable.

The duty to perform in good faith is...?

consistent with our expectations when we make a contract.

the construction is already completed, then the Offer to Purchase and Contract

form 2-T used with the New Construction Addendum, form 2A3-T.

Offer to Purchase and Contract - New Construction,

form 800-T

Standard form 2A9-T

lead base paint addendum

For an executed contract, all the obligations of the parties under the contract have been...?

performed.

The parol evidence rule

prevents a party from using extrinsic evidence to create an ambiguity in a contract, or to add to a contract that is whole in its terms as known as the "four corners doctrine"

North Carolina Real Estate Commission Rule A.0112

provides a list of twenty required components for valid preprinted offer and sales contract forms. parties' names and a description of the property, preprinted forms must include an itemized list of personal property included in the sale, as well as the purchase price and manner of payment (including specific requirements for financed transactions). It also must state the amount of earnest money, information about assessments, the closing costs and date, the buyer's inspection rights, and more.

If a contract contains a liquidated damages provision, the court may refuse to enforce it if the court finds the provisions is...?

punitive.

The following are all potential awards in a contract suit, EXCEPT for...?

reconsideration. Reconsideration is not a potential award in a lawsuit. The remaining answer choices are considered common awards.

"time is of the essence" clause

requires the parties to perform their obligations by a specified time. If the parties haven't performed by the date set in the clause, they are in breach of contract.

Who is legally and financially responsible for liability claims, lawsuits, costs and expenses related to property damage, personal injury or death that may occur as the result of the seller's occupancy after the closing date?

the buyer, although the seller agrees to indemnify and hold the buyer harmless Paragraph 9 of the addendum addresses the seller's obligation and agreement to indemnify and hold the buyer harmless against liability claims, lawsuits, costs and expenses related to property damage, personal injury or death that may occur as the result of the seller's occupancy after the closing date. This is important because without this provision the buyer would be legally and financially responsible for such loss occurring after the closing date.

Who pays for any expenses involved with getting a real estate license?

the real estate salesperson

When a broker has a salesperson working as an independent contractor, which of the following is NOT true?

they must withhold taxes from their pay

Which is a benefit of being an independent contractor?

you set your own hours