Section 3: Real Estate Contract and Agency
The phrase "a person who is placed in a position of trust to act for someone else's benefit" is the definition of the term: a. Fiduciary b. Agent c. Trustor d. Intermediary
a. Fiduciary
Jones leases a building and an earthquake destroys it. Usually... A. the lease is no longer enforceable. B. the tenant must pay rent when the building is rebuilt. C. the landlord must rebuild the building. D. the tenant may rebuild the building and the landlord will have to reimburse the tenant.
A. the lease is no longer enforceable.
When a buyer buys a property under an installment sale contract, the seller retains a. Title to the property b. A remainder estate c. Possession of the property d. A life estate
a. Title to the property
A broker acts as an agent in all of the following functions EXCEPT: A. Leasing property B. Selling property C. Appraising property D. Exchanging property
C. Appraising property
The Anytown Helpers is a charitable group run by a local church. They provide temporary low-cost housing to people with children who are poor and/or victims of abuse. They give preference to those who are members of the church. Does this violate the Fair Housing Act of 1968? A. Yes, in all cases. B. No, in no case. C. No, as long as the church does not discriminate in membership against any protected class. D. Yes, unless the church has received a specific waiver from HUD.
C. No, as long as the church does not discriminate in membership against any protected class.
An agent has the responsibility of care, obedience, accountability, loyalty, and disclosure to which of the following. A. The customer B. The buyer C. The client D. All of these choices
C. The client
To be legally binding, a real estate sales contract must contain a A. termite clause B. list of personal property C. legal description D. commission
C. legal description
Broker Fowler located a property for buyer Jackson. Jackson paid seller Allan a $1,000 fee for a 30 day option. Which of the following is true? A. Fowler earned his commission when the option was signed B. Part of Fowler´s commission will come from the $1,000 C. Local custom will determine the commission D. Fowler will not earn a commission until Jackson becomes owner of the property
D. Fowler will not earn a commission until Jackson becomes owner of the property
A clause in a lease that provides for increases in rents due to changes in costs or taxes is known as a/an a. Escalator clause b. Habendum clause c. Acceleration clause d. Prepayment penalty clause
a. Escalator clause
When a lessee assigns his or her leasehold interest in a property, all of the following statements are true, EXCEPT: A. The assignor transfers all of his or her rights in the property to the assignee. B. The assignee pays the rent directly to the landlord. C. The lessor has the right to require prior approval of the assignment. D. The assignor remains primary liable for the rental payment
D. The assignor remains primary liable for the rental payment
Licensee Larry has a listing on a seller's home. He shows the home to Patti Prospect who is looking to purchase a home. Licensee Larry has not inquired about the condition of the roof with the seller. Patti Prospect asks about the condition of the roof and Licensee Larry says that he is sure the roof is fine. After the purchase closes the first rain storm hits and it is apparent that the roof leaks. Which of the following statements best describes this scenario? A. This is deliberate fraud and the contract is voidable. B. This is a misrepresentation and the contract is void. C. This is a mistake but the contract is not voidable. D. This is misrepresentation and the contract is voidable.
D. This is misrepresentation and the contract is voidable.
Baker gives a real estate licensee a power of attorney. The licensee is called a/an? A. agent in place. B. real estate broker. C. attorney-at-law. D. attorney-in-fact.
D. attorney-in-fact.
True or false: net listings are acceptable in most states.
False
True or false: money paid upon the signing of a contract is known as principal.
False; this is earnest money
A broker who intends to be compensated if any other person sells his listed property during the listing period, should acquire: a. An exclusive right-to-sell listing b. An open listing c. An exclusive agency listing d. A net listing
a. An exclusive right-to-sell listing
Which of the following listings is the most advantageous to the broker? a. Exclusive right-to-sell b. Exclusive agency c. MLS d. Implied
a. Exclusive right-to-sell
True or false: FHA-financed developments must undertake affirmative marketing to attract a cross-section of the community.
True
True or false: a novation is the substitution of a new legal obligation for an old one.
True
True or false: a proprietary tenant usually has an interest in a cooperative apartment.
True
True or false: a seller who refuses to sell his home to a person from Afghanistan after the person has made a bona fide offer for the home is violating the Federal Fair Housing Law.
True
True or false: an attorney-in-fact need not be an attorney-at-law.
True
True or false: in a revaluation lease, the rent is adjusted automatically according to the reappraisal of real estate.
True
True or false: with respect to Federal Fair Housing Laws, the term "family" includes a single individual, whether male or female.
True
Which of the following is NOT an agent? a. A person employed by the MLS b. A property manager c. A real estate salesman employed by a broker d. A person holding a power of attorney
a. A person employed by the MLS
Which of the following individuals would be considered a member of the "familial status" protected class? a. A same-sex couple who are in the process of adopting a child b. A married couple with no children c. A single female d. All of these choices
a. A same-sex couple who are in the process of adopting a child
A buyer enters into a contract for the purchase of property, agreeing to make a specified down payment, and further agreeing to regular monthly payments to the seller, who is holding legal title, for a specified period of time. This describes what type of contract? a. Installment contract b. Purchase money mortgage c. Option contract d. Agreement contract
a. Installment contract
What tax benefits does a business owner gain if she sells the building the business operates from and leases it back from the buyer? a. It may convert a low-deductible mortgage payment into an entirely deductible lease payment b. The gain on sale will be tax-deferred c. The business owner will be able to take depreciation deductions d. All of these are benefits to the business owner
a. It may convert a low-deductible mortgage payment into an entirely deductible lease payment
During the term of the lease, the lessor of a property holds what form of estate in the property? a. Leased Fee b. Leasehold c. Estate for Years d. None of the above
a. Leased Fee
When there is a "meeting of the minds", which of the following has been accomplished? a. Offer and acceptance b. All of the elements of the contract have been satisfied c. Settlement has been made d. Acknowledgment and delivery
a. Offer and acceptance
The owner of a sporting goods store rents some space in a shopping mall. In the lease, the owner insists that the lessor must include a clause in all future leases stating that future tenants cannot sell sporting goods. This is an example of a(n): a. Protective covenant b. Restrictive covenant c. Subordination clause d. Escalator clause
a. Protective covenant
If a buyer defaults on a valid sales contract and the seller wants to enforce the terms of the contract, the seller would file suit for which of the following? a. Specific performance b. Monetary damages c. Liquidated damages d. Quiet title
a. Specific performance
In the event a person was deemed mentally ill but is later found to be free of any mental illness, this person is: a. Still ineligible to sign contracts b. Can be discriminated against for other reasons c. Competent and should be treated as any other person d. No longer protected under the Americans with Disabilities Act (ADA)
a. Still ineligible to sign contracts
When a property is sold with an existing lease... a. The entire lease interest is transferred b. The original lessor remains primarily liable on the lease c. The original lessee has no liability under the lease d. The assignee would pay the rent to the assignor
a. The entire lease interest is transferred
What is a silent lease? a. A lease that is not in writing b. A lease that states nothing about a particular issue or circumstance c. A lease that is not recorded d. A sublease where the landlord has not been notified
b. A lease that states nothing about a particular issue or circumstance
Which type of listing agreement allows the seller to sell his property and NOT have to pay a commission, but assures the broker a commission if anyone else, other than the owner, sells the property? a. An open listing b. An exclusive agency listing c. A special listing d. An exclusive right-to-sell listing
b. An exclusive agency listing
Peter rents a ground floor apartment. A major water line supplying most of the upper floors burst and left his unit uninhabitable. Peter immediately moves out of the apartment and so notifies the landlord. Peter would consider this to be: a. Actual eviction b. Constructive eviction c. Casualty eviction d. Abandonment
b. Constructive eviction
The 1988 Fair Housing Amendments Act added which of the following protected classes to the Fair Housing Act? a. National origin b. Familial status c. Both national origin and familial status d. Neither national origin nor familial status
b. Familial status
Mr. Foster signed a 60 day exclusive right-to-sell listing with Broker Roy. One week later, Foster signed an exclusive agency listing with Broker Gary, who sold the home a few days later. Which of the following statements is correct? a. Foster may pay Roy only b. Foster owes two full commissions c. Foster must pay Roy only and Roy will split the fee with Gray d. Foster should give one half the commission each to Roy and Gray
b. Foster owes two full commissions
A landlord may reject the application of a person with a mental disability: a. Without restriction b. If there is evidence that the person represents a threat to the safety of the other tenants c. In no case d. If the applicant cannot produce a Certificate of Recovery from a qualified mental health professional
b. If there is evidence that the person represents a threat to the safety of the other tenants
The Federal Fair Housing Act is intended to protect the public from all of the following, EXCEPT: a. Blockbusting b. Price fixing c. Steering d. Redlining
b. Price fixing
An apartment complex has a "no pets" policy. Mary is a blind person who applies to rent a unit, but she wants to have her certified guide dog live in the apartment with her. This request: a. Can only be granted if the landlord agrees to remove the "no pets" policy b. Should be considered a "reasonable accommodation" c. Should be considered a "reasonable modification" d. Cannot be granted
b. Should be considered a "reasonable accommodation"
An owner and tenant enter into a one year lease. Six months later the lessor dies and the lessors' heirs want to take physical possession of the property. Which of the following is correct? a. The lease terminates, by law, upon death of one of the parties b. The heirs may not occupy the property until the lease expires c. The heirs, as new owners, may terminate the lease and occupy the property d. The heirs must give the tenants 90 days' notice to quit and vacate, before they can take possession
b. The heirs may not occupy the property until the lease expires
Which of the following statements about options is true? a. The optionor can void the option if another offer is submitted b. The optionee can allow the option to expire c. The optionee can extend the option period automatically d. Options only involve raw land
b. The optionee can allow the option to expire
A property management contract is between the property manager and: a. His or her employees b. The property owner c. The tenants d. The broker
b. The property owner
A lease provision that prohibits using certain premises for a drugstore is called a a. Protective covenant b. Use covenant c. Restrictive covenant d. Condemnation covenant
b. Use covenant
Two brokers who each own their own real estate companies agree to divide commissions received equally. Broker A pays for three-fourths of the advertising costs and finds the buyer. Broker B pays for one-fourth of the advertising costs. If the total commission on the sale is $4,500, how much does Broker B get? a. $4,500 b. $1,125 c. $2,250 d. None of the above
c. $2,250
Don owns a store in a shopping mall. He pays base rent of $1,500 per month plus 2.5% of sales in excess of $300,000. If his total sales were $1,200,000 for the year, what was the total rent for the year? a. $30,000 b. $37,500 c. $40,500 d. $48,000
c. $40,500
Claims filed with HUD for alleged Fair Housing violations must be filed within a. 90 days b. 180 days c. 1 year d. 2 years
c. 1 year
All listings must include a. A dragnet clause b. Permission for the listing broker to appoint subagents c. A description of the property d. An automatic renewal clause
c. A description of the property
When leased property is sold, the tenants... a. Must record the lease b. Must obtain an assignment from the purchaser c. Are not affected d. Must move out within 30 days
c. Are not affected
John Doe is trying to rent one bedroom in his house. A Hispanic applies and is told by the owner (Doe), "I will only rent to a Caucasian." Which law has John violated, if any? a. 1968 Fair Housing Law b. Civil Rights Act of 1866 c. Civil Rights Act of 1964 d. There is no violation, as owner John Doe is exempt from the law
c. Civil Rights Act of 1964
Which of the following is required for a contract to be valid? a. In writing b. An earnest money deposit c. Consideration d. Signature and seal of a notary public
c. Consideration
Which of the following is NOT specifically protected by the various fair housing statutes? a. People in a particular religious group b. People who are physically handicapped c. Current drug users d. Persons previously confined to a mental institution
c. Current drug users
Which of the following agency responsibilities most likely would be limited in dual agency representation? a. Fairness b. Reasonable care c. Disclosure d. Accounting
c. Disclosure
A brother takes a listing from a seller who later tells the broker that the house should not be shown to a minority person. The broker should: a. Note this on the MLS form b. Make written acknowledgment of the instructions c. Explain that he/she cannot comply because this violates Federal law d. Avoid discussion of the request
c. Explain that he/she cannot comply because this violates Federal law
A graduated lease is defined as one: a. That includes an option to purchase b. In which all expenses are paid by the lessor c. In which there may be an increase or decrease in rent at a stated future time d. Whereby rent increases with each new tenant
c. In which there may be an increase or decrease in rent at a stated future time
A buyer requests the broker take a listed property off the market until his wife sees the property. Should the broker do this? a. Yes, as long as his wife can see it before the next business day b. Yes, it the buyer pays the brokerage firm a small fee for this service c. No, this would violate the agency agreement d. No, only the local Association of Realtors can approve such an arrangement
c. No, this would violate the agency agreement
When a mortgagee substitutes a new party for another on a mortgage in order to release the original borrower of liability, it is referred to as: a. Satisfaction b. Subordination c. Novation d. Substitution
c. Novation
A couple with good income and excellent credit want to buy and renovate an older home located in an economically distressed neighborhood. They have been turned down by 3 different lenders. This is an example of: a. Good judgment on the part of lenders. b. Blockbusting. c. Redlining. d. Steering.
c. Redlining.
Which of the following is an example of blockbusting? a. Refusal to sell or rent to prospects because of race b. Refusal to lend within a designated area c. Soliciting listings based on a fear of racial change in the area d. Directing people to an area based on race
c. Soliciting listings based on a fear of racial change in the area
A clause in a lease which gives future mortgages priority over the lessees' interests is called a(n): a. Protective covenant b. Restrictive covenant c. Subordination clause d. Escalator clause
c. Subordination clause
If an offer is rescinded, it is: a. Revised b. Altered c. Terminated d. Accepted
c. Terminated
Chris, a salesperson working for Broker Janet, is assigned to work on a listing that started on January 3. The listing is a 90 day exclusive right-to-sell agreement. On March 1, Chris is killed in an automobile accident. What is the status of the listing agreement? a. The listing becomes an open listing b. The listing terminates by operation of law c. The listing remains valid d. The seller may now list the property with another broker
c. The listing remains valid
Which of the following statements is true regarding time limits for complaints regarding alleged violations of the Fair Housing Act? a. The time limit is 1 year for both complaints to HUD and federal lawsuits b. The time limit is 2 years for both complaints to HUD and federal lawsuits c. The time limit is 1 year for complaints to HUD and 2 years for federal lawsuits d. The time limit is 2 years for complaints to HUD and 1 year for federal lawsuits
c. The time limit is 1 year for complaints to HUD and 2 years for federal lawsuits
What is the purpose of a liquidated damages clause in an offer to purchase a property? a. To set a specific time limit to complete the transaction b. To give the buyer a "due diligence" period during which the buyer could rescind the contract c. To specify what damages the seller may collect if the buyer defaults on the contract d. To allow the seller to sue the buyer for damages if the buyer breaches the contract
c. To specify what damages the seller may collect if the buyer defaults on the contract
A listing broker earns his or her commission: a. When the listing contract is signed b. At the closing of the transaction c. When producing a ready, willing, and able buyer on terms acceptable to the seller d. Only if the broke presents a ready willing and able buyer on the seller's exact terms
c. When producing a ready, willing, and able buyer on terms acceptable to the seller
When does title pass in an installment sales contract (land contract)? a. At closing b. In one year c. When the debt has been satisfied d. When the contract is signed
c. When the debt has been satisfied
A valid written lease generally requires: a. Legal capacity of both parties b. A meeting of the minds c. Consideration d. All of these options
d. All of these options
Who is required to comply with the Fair Housing Laws? a. Only real estate professionals b. Real estate professionals and lenders c. Real estate professionals, lenders, and insurance companies d. Everyone, unless specifically exempted by the law
d. Everyone, unless specifically exempted by the law
Who is required to comply with the Civil Rights Act of 1866? a. Only licensed real estate professionals b. Real estate professionals and insurance complainants c. Lenders and real estate professionals d. Everyone, without exception
d. Everyone, without exception
Andrew, an owner, lists his home with salesperson Heidi with the provision that the house not be shown if he is not at home. Andrew leaves town on Monday for a two-week business trip. On Tuesday, Jose and Maria, a minority couple, contact Heidi and want to see Andrew's house. Heidi refuses to show the house. In this situation, which of the following statements is true? a. The couple should file a discrimination suit against Andrew, the owner of the property b. The couple should complain to Heidi's broker and demand to be shown the property c. The couple should sue Andrew, Heidi, and the broker for refusing to deal which is a violation of Fair Housing laws d. Heidi's refusal to show the property is in keeping with her duties to Andrew and she has not violated the law
d. Heidi's refusal to show the property is in keeping with her duties to Andrew and she has not violated the law
A broker brought a ready, willing, and able minority buyer who signed an offer to buy a house at the listed price. Because of the buyer's race, the sellers refused the offer. The broker may legally take all of the following actions EXCEPT: a. Sue the seller for his commission b. Advise the prospect of his right to complain to the U.S. Department of Housing and Urban Development (HUD) c. Warn the sellers that their refusal is a violation of Fair Housing Laws d. Market the house only to non-minority customers
d. Market the house only to non-minority customers
Under a net lease, which of the following is the tenant NOT required to pay? a. Taxes b. Repairs c. Utilities d. Mortgage
d. Mortgage
Lionel rents an apartment under a three-year lease. After the first six months of the lease, the landlord sells the building. What effect will this have on Lionel? a. Lionel must renegotiate with the new owner because the previous lease is terminated b. The new owner has 60 days to renegotiate the lease or it remains in force c. The new owner may terminate the lease at any time with 30 days notice d. The sale has no effect on the lease
d. The sale has no effect on the lease
A broker, acting as a dual agent, with the knowledge and consent of all parties, collected one-half the commission from the seller and one-half from the buyer at settlement. Which of the following statements is true concerning this situation? a. This action is illegal b. The broker needed only the consent of the seller c. The broker needed only the consent of the buyer d. This action is permitted only with the consent of both parties
d. This action is permitted only with the consent of both parties
An oral listing is: a. Void b. Voidable c. Illegal d. Unenforceable
d. Unenforceable
True or false: the client may be obligated to compensate the salesperson for financial losses incurred as a result of actions by the clients.
True
A salesperson took a listing on a property which had a crack in the foundation caused by water seepage. It was obvious that the owner had filled in and painted over the crack although the owner advised the sales agent that the seepage problem had been corrected, when in fact it had not. If the salesperson shows the property without advising potential buyers of the seepage problem, the salesperson would be guilty of: a. Fraud b. Misrepresentation c. Puffery d. Nothing
a. Fraud
A broker and salesperson owe all EXCEPT which of the following to the purchaser/customer? a. Negotiation of the lowest possible price b. Honesty c. Fairness d. Disclosure of defects in the property
a. Negotiation of the lowest possible price
A salesperson comments to a prospective buyer, "In my opinion, this is the greatest house in town." The salesperson is guilty of: a. Puffing b. Misrepresentation c. Fraud d. Usury
a. Puffing
A broker is representing a buyer. When the broker is showing property, he may NOT disclose to his buyer: a. The current owner is infected with the HIV virus. b. Information the broker knows about the financial condition of the seller. c. Deed restrictions that might affect the buyer's intended use of the property. d. That the seller will not accept an offer based on VA financing.
a. The current owner is infected with the HIV virus.
A listing agreement may be terminated by: a. The seller b. The buyer's broker c. The salesperson that obtained the listing d. Death of the salesperson
a. The seller
A client is obligated to her agent for... a. indemnification against loss not caused by the agent. b. reimbursement. c. performance. d. all of the above.
a. indemnification against loss not caused by the agent.
A person that authorizes another to act for him or her is known as the: a. Agent b. Client c. Broker d. Customer
b. Client
A property is listed for sale with a real estate agent at $190,000. A buyer submits a proper written offer of $185,000. Under these circumstances, which of the following is true? a. The seller is legally bound to either accept or reject the offer in writing b. The buyer may withdraw his offer at any time prior to acceptance by the seller c. The agent need not bother to submit such a low offer to his client d. The buyer is bound to the offer the moment he signs it
b. The buyer may withdraw his offer at any time prior to acceptance by the seller
In a valid real estate contract, the seller is known as the: a. Offeror b. Vendor c. Grantee d. Mortgagor
b. Vendor
When a contract is entered into based strictly on the actions of the parties involved, it would be considered to be which type of contract? a. Unilateral b. Executed c. Implied d. Expressed
c. Implied
An agency relationship can be terminated in which of the following ways? a. Death of the client b. Renunciation by the agent c. Revocation by the client d. Any of these choices
d. Any of these choices
In what type of listing would the listing broker be paid the commission if the listing broker or any other broker was the procuring cause, but not if the seller found the buyer personally? a. Net listing b. Open listing c. Exclusive right to sell listing d. Exclusive agency listing
d. Exclusive agency listing
An escrow account is maintained by a broker for the purpose of a. Earning interest for the broker b. Earning interest for the broker's clients c. Disposition of money to the buyer d. Impartial protection of both parties
d. Impartial protection of both parties
A salesperson lists a home. The house burns down prior to receiving an offer. Which of the following is true in this situation? a. The vacant lot is still listed b. The broker can sue the seller for the commission based on the listed price c. All advertising must be revised to accurately describe the property d. The listing automatically terminates
d. The listing automatically terminates
In agency representation, the employer is called the... A. Seller B. Agent C. Client D. Broker
C. Client
If a seller learns, after he has entered into a valid contract with a buyer, that the broker was representing the buyer, the seller has the right to: A. Cancel the contract, without obligation to either the buyer or broker. B. Cancel the contract, but would be liable to the broker for any expenses incurred by the broker. C. Cancel the contract, with written permission of the buyer. D. The seller has no rights, the contract is valid and must be executed as agreed.
A. Cancel the contract, without obligation to either the buyer or broker.
A seller contacted 3 brokers and asked each to suggest the listing price for his property. Broker A said $78,000. Broker B said $79,000. Broker C said $91,000. The seller listed with broker C and the house later sold for $76,000. Broker C is guilty of violating which of his or her agency responsibilities? A. Loyalty B. Reasonable care C. Disclosure D. Accountability
B. Reasonable care
William Wells, a principal broker, listed parcel A under an exclusive agency listing agreement and listed parcel B under an exclusive right-to-sell agreement. Both listings expired. Three days later, without seeing each other's property beforehand, the two owners exchanged properties in a Like-Kind exchange. William will receive: A. One commission. B. Two commissions. C. No commission. D. A split commission.
C. No commission.
Seller Chaney has rejected three offers which were all $2,500 below the listed price of her home. Broker Rudy receives a fourth offer which is also $2,500 below the listed price. What should Rudy do? A. Tell the prospective buyers to forget it, as the same offer has already been rejected by Chaney B. Tell the prospective buyers their offer will be submitted to Chaney only if they increase the offered price C. Hold the offer to see if a better one comes in D. Immediately submit this offer to Chaney
D. Immediately submit this offer to Chaney
Licensee Larry has held a real estate license for many years and has completed many residential transactions but never any commercial transactions. His neighbor owns a small strip mall and asks Licensee Larry to sell the property. Licensee Larry should be especially careful to consider which of the following duties to the client? A. Disclosure. B. Accounting. C. Confidentiality. D. Reasonable care and due diligence.
D. Reasonable care and due diligence.
Broker Macro was showing a tract of land with irregular boundaries. When asked about a boundary, Macro indicated that it ran from the edge of the stone wall to the creek. Macro knew this was not exactly correct. After the buyer contracted for the property, he was shown a survey which reflected the true boundary. Was Macro guilty of misrepresentation? A. No, verbal statements are not binding B. No, the buyer was responsible for verifying the official records. C. Yes, the broker was responsible for verifying the official records. D. Yes, because Macro knew his statement was not completely accurate.
D. Yes, because Macro knew his statement was not completely accurate.
True or false: unless agreed to in writing by all the parties, the broker is not entitled to a commission until the transaction has been consummated.
True
Which of the following real estate related contracts is considered an employment contract or agreement? a. A listing agreement b. An offer to purchase c. An option d. None of these choices
a. A listing agreement
A homeowner tells a broker that he would like to sell his house. The broker agrees to sell the house. This agreement would be considered: a. An express contract b. An implied contract c. An illegal contract as it requires a writing d. An equilateral contract
a. An express contract
Which of the following is not required for a contract for the sale of real property to be valid and enforceable? a. Performance b. Offer and acceptance c. Consideration d. In writing
a. Performance
Broker Betty has a listing on Seller Sara's house. Broker Betty puts the listing on the local MLS -- agreeing to share the commission with any other member broker who finds a buyer for the house. Up through the 1970s if another broker found the buyer, that broker would be considered a(n): a. Subagent. b. General Agent. c. Universal agent. d. Special agent.
a. Subagent.
It would NOT be considered commingling of funds, if: a. The broker holds a deposit check at the request of the offeror until acceptance by the offeree b. The broker holds a deposit check at the request of the offeror after acceptance by the offeree c. The broker holds an earnest money deposit in his personal account until the offer is accepted or rejected d. The broker holds an earnest money deposit in his brokerage operating account because the deal is going to be all cash
a. The broker holds a deposit check at the request of the offeror until acceptance by the offeree
Any of the following could cause a listing agreement to be terminated. Which of the following is NOT by operation of law? a. The seller discharges the broker b. The property is destroyed by fire c. The broker declares bankruptcy d. The seller dies
a. The seller discharges the broker
Real estate licensees are required to disclose pertinent information relative to property they list. Which of the following are you NOT required to disclose? a. The seller is having financial problems and must sell the property to avoid bankruptcy b. The state plans to build a new highway near the property c. The property is subject to seasonal flooding d. The interior of the house is badly in need of painting
a. The seller is having financial problems and must sell the property to avoid bankruptcy
Which of the following would be included in the duties of an agent to a customer? a. To disclose material adverse facts about the property b. To maintain the confidentiality of information provided to the agent c. Both to disclose material adverse facts about the property and to maintain the confidentiality of information provided to the agent d. Neither to disclose material adverse facts about the property and to maintain the confidentiality of information provided to the agent
a. To disclose material adverse facts about the property
When a broker accepts a listing he or she has created an agency relationship. Which of the following is not an agency responsibility? a. To obey all the instructions of the seller b. To use care in filling out contract forms c. To be accountable for documents and funds d. To be loyal to the seller
a. To obey all the instructions of the seller
Which of the following is essential for a contract for the sale of real property to be upheld by a court? a. Written form b. Earnest money deposit c. Removal of all liens and encumbrances d. All of the above
a. Written form
A property was listed for sale at $185,000. Four offers are presented. Which offer BEST describes an offer made by a ready, willing, and able buyer? a. An offer for $175,000, all cash b. A full price offer, from a financially qualified buyer, subject only to financing at current market rates c. An offer at full price contingent upon the buyer (offeror) first selling his current residence d. A full price offer contingent upon the seller "taking back" a second trust for $15,000
b. A full price offer, from a financially qualified buyer, subject only to financing at current market rates
The instrument authorizing one person to act for another person is: a. An attorney in fact. b. A power of attorney. c. An estoppel certificate. d. A certificate of no defense.
b. A power of attorney.
A legal procedure or action initiated by either buyer or seller to enforce the terms of a sales contract is known as: a. An option b. A suit for specific performance c. A suit for quiet title d. A statute of frauds
b. A suit for specific performance
To be valid, a contract for sale must contain all of the following EXCEPT: a. Signatures of all parties b. An earnest money deposit c. Consideration d. An offer and an acceptance
b. An earnest money deposit
Broker Bob has opened an escrow account and has deposited a buyer's earnest money deposit in that account. Broker Bob later learns that a different customer is about to file a lawsuit against him so he deposits $100,000 of his own money in that account. This action constitutes: a. Conversion b. Commingling c. Disintermediation d. Wise business practice
b. Commingling
Mr. Badguy owns a house which he rents to Mr. Chump. Mr. Badguy tells Mr. Chump that at the end of the 2 year lease Mr. Chump will have the right to purchase the property for a specified price. One year into the lease, Mr. Chump pays to replace the roof and is complimented by Mr. Badguy. At the expiration of the lease Mr. Badguy refuses to sell the house to Mr. Chump. What legal doctrine might require Mr. Badguy to sell the house at the specified price? a. Mens rea b. Estoppel c. Statute of Frauds d. Statute of Limitations
b. Estoppel
Landlord Lloyd hires Property Manager Paul to manage an apartment complex owned by Lloyd. Property Manager Paul would most likely be considered a(n): a. Subagent b. General agent c. Universal agent d. Special agent
b. General agent
Which of the following listing agreements is LEAST likely to specify a commission rate? a. Open listing b. Net listing c. Exclusive agency d. Exclusive right-to-sell
b. Net listing
The client in a listing agreement would be the: a. Salesperson taking the listing. b. Seller of the listed property. c. Listing broker. d. Buyer.
b. Seller of the listed property.
A buyer and seller have a legal real estate contract. The contract does NOT address the issue of death by either party. If the seller dies, prior to closing, which of the following is true? a. The contract becomes null and void. b. The contract remains valid and enforceable. c. The sellers estate may cancel the contract. d. The contract is void by operation of law.
b. The contract remains valid and enforceable.
A buyer makes an offer to purchase a piece of property. The seller changes the date of occupancy by one day and signs the contract. If the purchaser does not agree with this change, which of the following is true? a. The buyer only has 72 hours to accept a change of this type b. The purchaser has no further liability c. The seller and purchaser could both sue for specific performance d. The seller may keep the deposit as liquidated damages
b. The purchaser has no further liability
A unilateral contract is executed: a. When the offeror signs the contract b. Upon completion of the requested act c. When the offeree signs the contract d. After a reasonable period of time
b. Upon completion of the requested act
Which of the following best describes a contract? a. An offer and acceptance between competent parties to do a specific legal act b. A written agreement between competent parties to abstain from doing a specific act c. An offer and acceptance between competent parties to do or not to do a specific legal act for consideration d. A mutual agreement between two or more parties
c. An offer and acceptance between competent parties to do or not to do a specific legal act for consideration
A broker can do which of the following? a. Accept, as binding, a promissory note given as an earnest money deposit b. Accept, on behalf of the seller, an offer OVER the listed price of the property c. Buy and sell property in his own name d. Represent both buyer and seller, with the permission of the buyer
c. Buy and sell property in his own name
During the period of time after a real estate contract is ratified, but before title actually passes to the buyer, the status of the contract is: a. Voidable b. Executed c. Executory d. Implied
c. Executory
Mr. Gregory has a home for sale with a sign, FOR SALE BY OWNER, in the front yard. Salesperson Gary calls, identifies himself, and asks for the key to show the property. Mr. Gregory agrees. Which of the following best describes any agency relationship that may exist? a. Mr. Gregory is Gary's client. b. Gary is Mr. Gregory's agent. c. Gary's broker is the agent of Mr. Gregory for a reasonable time. d. No agency relationship exists.
c. Gary's broker is the agent of Mr. Gregory for a reasonable time.
If a listing broker tells a prospective buyer, "...go ahead and make that offer, I'm sure the seller will accept it...", the broker may have created an agency relationship which would be described as: a. General agency b. Express agency c. Implied agency d. Unilateral agency
c. Implied agency
If you are showing property you are listing and tell a prospective buyer that "...this property is the best for you," the relationship created could be interpreted as: a. Universal agency b. Special agency c. Implied agency d. General agency
c. Implied agency
Seller Corcoran is in very poor health and cannot work his farm. Should a broker, who has a listing on the farm, disclose this fact to prospective buyers? a. Yes, it is a material fact about the farm which Moore must disclose. b. Yes, it may help to get at least a low offer and help sell the farm. c. No, it may hurt Corcoran's bargaining position and hurt his chances to get a fair price for the property. d. No, it would be a violation of Federal Fair Housing Laws.
c. No, it may hurt Corcoran's bargaining position and hurt his chances to get a fair price for the property.
A seller signs a listing with the provision that any commission will be split between the brokerage firm handling the sale and the seller's unlicensed brother. Is this agreement legal? a. Yes, as long as the brother has contractual ability b. Yes, if the brother assists in the negotiation c. No, the brother must be a licensed real estate broker to receive a commission d. No, the local board of Realtors must first approve this agreement
c. No, the brother must be a licensed real estate broker to receive a commission
A real estate broker wishes to deposit an earnest money check in his business operating account until settlement, so the purchaser can earn a higher rate of interest on his funds. Can he legally do this? a. Yes, if the purchaser receives a comparison of available interest rates b. Yes, if the broker promises to insure such funds will be available at closing c. No, these funds must be placed in a separate escrow account d. No, the broker cannot guarantee a higher interest rate
c. No, these funds must be placed in a separate escrow account
Which of the following contracts is voidable? a. One of the parties to the contract is legally insane b. One of the parties did not sign the contract c. One of the parties was drunk at the time the contract was signed d. The subject of the contract was for an illegal purpose
c. One of the parties was drunk at the time the contract was signed
Who is an intermediary between a buyer and a seller? a. Lender b. Mortgage broker c. Real estate broker d. FDIC
c. Real estate broker
Sara Seller hired Larry Licensee to sell her home under specified terms. Larry Licensee would most likely be a(n): a. Subagent. b. Universal agent. c. Special agent. d. General agent.
c. Special agent.
The loan contingency contained in an offer to purchase will contain all of the following EXCEPT: a. The loan amount b. The rate of interest c. The name of the financial institution d. The date of the commitment
c. The name of the financial institution
Which of the following contracts will provide instruction for the distribution and proration of escrow and impound funds? a. A deed b. A mortgage c. The sales contract d. The listing
c. The sales contract
A property is listed at $168,000. A full price offer is made without contingencies. Which of the following statements is the most complete correct answer? a. The seller must accept the offer b. The seller is not obligated to sell the property c. The seller may refuse to sell, but could be required to pay the broker a commission d. The seller would be in violation of Fair Housing Law
c. The seller may refuse to sell, but could be required to pay the broker a commission
A broker has entered into a signed listing agreement. Which of the following reasons would make the agreement voidable? a. The agreement specifies that no other broker may show the property. b. The seller, being illiterate, signed the agreement with an "X". c. The seller was under the influence of alcohol when the contract was signed. d. The contract specified a 10% commission to be paid.
c. The seller was under the influence of alcohol when the contract was signed.
Bill, the buyer, signs an offer to purchase agreement and gives broker Joan, a $1,000 earnest money deposit. The next day, before Joan has a chance to present the offer to the seller, Bill finds he needs his $1,000. What should he do? a. Ask the broker to return his money b. Nothing because he is bound to go through with the offer c. Withdraw his offer and ask Joan for his money d. Give Joan $500 for letting him out of the contract
c. Withdraw his offer and ask Joan for his money
If a deed is delivered in escrow, it is given to: a. the buyer's attorney b. the seller's attorney c. a neutral third party d. the mortgagee
c. a neutral third party
Brokers must hold their client's funds in a/an... a. office safe. b. savings account. c. trust or escrow account. d. special account managed by the Board of Realtors.
c. trust or escrow account.
Under an exclusive right-to-sell listing, the seller would be responsible for paying a commission to the listing broker: a. If the seller, himself, finds a buyer b. If the seller went to another broker and the other broker found a buyer c. If another broker saw the listing in the MLS and sold the property d. All of these choices
d. All of these choices
Which of the following would cause what appears to be a valid contract to be declared void or invalid? a. Misrepresentation by one of the parties b. Undue influence or duress c. A mistake in fact d. Any of the above
d. Any of the above
How can an agency relationship be created? a. Written document b. Action of the parties c. Words of the parties d. Any of these choices
d. Any of these choices
Which of the following could be recognized as consideration in a valid contract? a. A mortgage with interest b. A promise to install a cabinet c. A note without interest d. Any of these choices
d. Any of these choices
How many brokers can be given an open listing? a. One b. Two c. Three d. As many as the owner chooses
d. As many as the owner chooses
Broker Jane is acting as a dual agent in a real estate transaction and decides to appoint salesperson Sara to represent the seller and salesperson Ben to represent the buyer. Ben and Sara both work in Jane's firm. a. Jane cannot legally do this. b. Ben and Sara are dual representatives. c. Ben and Sara must be independent contractors. d. Ben and Sara are designated representatives.
d. Ben and Sara are designated representatives.
Meredith "fell in love" with and made an offer to purchase a beautiful Cape Cod style house. When she learned that the seller had accepted her offer, she was so happy that she agreed to pay the selling agent an extra commission for her effort. How will the sales agent receive her "extra" commission, when the sale is consummated? a. From the buyer b. From the seller and buyer as agreed c. From the settlement attorney handling the closing d. From her employing broker
d. From her employing broker
To be legally binding on all parties, a contract for sale of real estate MUST have: a. The signature of the wife, if the seller is married b. An earnest money deposit c. A seal d. Legally competent parties
d. Legally competent parties
Broker Bob is holding a buyer's good faith deposit in his escrow account. The offer has an inspection clause which gives the buyer 10 days to have the home inspected and to rescind (cancel) the contract if the inspection reveals adverse facts. The inspector finds that the roof leaks and the buyer notifies the seller in writing of that decision. The seller maintains that the buyer is in breach of the contract. May Broker Bob legally return the buyer's good faith deposit? a. Yes, since his rescission was clearly permissible under the terms of the contract b. Yes, in all cases c. No, since the rescission was clearly not permissible under the terms of the contract d. No, but Broker Bob could give it to a court through an interpleader action
d. No, but Broker Bob could give it to a court through an interpleader action
Dave and Pat want to purchase a home that is occupied by their grandparents. They want to take title in such a way that will result in the least amount of income tax liability for them. How should a real estate salesperson or broker advise them? a. Advise them to take title as tenant-in-common with their grandparents b. Advise them to acquire title as joint tenants with each other c. Advise them to take title as tenants-in-common but each with an equal interest d. Refer Dave and Pat to an attorney or tax advisor
d. Refer Dave and Pat to an attorney or tax advisor
Which of the following MUST be disclosed by an agent to his client in a real estate transaction? a. Minority groups are moving into the area b. The average commission recommended by the local real estate association c. The buyer intends to violate deed restrictions d. The buyer has had previous credit problems which may have an impact on loan qualifications
d. The buyer has had previous credit problems which may have an impact on loan qualifications
John, an adult, entered into a contract with Paul, who is 16 years old. When John learned that Paul was a minor he decided to terminate the contract. Which of the following statements is true? a. Contracts with minors are automatically void b. Contracts with minors are voidable at the option of the adult. c. The contract is valid and binding on both parties d. The contract is valid and binding only on John
d. The contract is valid and binding only on John
True or false: a salesperson need only disclose such offers to the seller-client that the salesperson thinks the seller-client will seriously consider.
False
True or false: courts will not enforce contracts that require one to do something that is illegal.
True
True or false: if a broker brings the seller an offer meeting all the terms specified in the listing, the seller does not have to sell.
True
The statute of frauds does NOT require a written contract for: a. Ingress or egress b. Purchase and sale of real property c. Legal estates or equitable interests d. Contract for deed
a. Ingress or egress
Under a contract for deed, the buyer: a. Receives an insurable interest b. Receives legal title c. Is not allowed possession of the property until the purchase price is paid d. Has a fee simple estate
a. Receives an insurable interest
Which of the following is NOT required in an open listing? a. Signature of the client b. Definite termination date c. Agreed upon commission or fee d. Description of the property
b. Definite termination date
Broker Jones is considering lowering the price on an overpriced listing. Which of the following is the best answer? a. This is good business practice b. Jones must have the owner's permission to lower the price c. Jones, as the listing agent, has implied authority to do this d. Jones is legally liable for misrepresenting the price to previous prospective buyers
b. Jones must have the owner's permission to lower the price
A broker listed a vacant lot zoned for residential use. Later, an adjacent lot was rezoned causing an increase in value. What should the broker do? a. Buy the listing, have it rezoned, then sell it for a profit. b. Tell the seller of the zoning change and advise the seller to consider application for rezoning the property. c. Continue to market the property as residential property, according to the terms of the listing. d. Offer to terminate the listing agreement.
b. Tell the seller of the zoning change and advise the seller to consider application for rezoning the property.
When may a counteroffer be withdrawn? a. Within twenty-four hours after acceptance b. Within thirty-six hours after acceptance c. At any time before acceptance d. At any time before closing
c. At any time before acceptance
Which of the following would NOT terminate an offer to sell real property? a. Lapse of reasonable time b. Rejection of the offer by the offeree c. Death of the sales agent d. Revocation of the offer
c. Death of the sales agent
Which of the following is subject to the Statute of Frauds? a. Six-month lease for an apartment b. Tenancy at will c. Two-year lease for real property d. Month to month rental
c. Two-year lease for real property
A broker has the buyer's earnest money deposit deposited in an escrow account. The amount of the deposit exceeds the amount of the broker's commission for the sale. The broker may remove his commission on this sale ONLY: a. When the buyer moves into the property. b. When the seller moves out of the property. c. When the closing is completed. d. Whenever the seller says it is ok to do so
c. When the closing is completed.
An agent's authority can arise from: a. Ratification b. Custom c. Implication d. All of these choices
d. All of these choices
An offer is accepted by all parties with a settlement date of September 5. Three days prior to settlement the purchaser notifies the seller that funds are not available and settlement cannot take place as scheduled. Which of the following options are available to the seller? a. Sue for specific performance b. Sue for monetary damages c. Allow rescission of the contract d. Any of these choices
d. Any of these choices
Bill has a contract in place to purchase Sam's house. Bill later changes his mind and defaults on the contract. Sam would have which of the following remedies? a. Rescind the contract b. Sue for damages c. Sue for specific performance d. Any of these choices
d. Any of these choices
All of the following will automatically terminate a listing by operation of law, EXCEPT: a. Bankruptcy of the client b. Destruction of the property c. Condemnation of the property d. Client's decision
d. Client's decision
A contract may be all of the following EXCEPT: a. Exclusive authorization or right to sell b. Lease c. Contract of sale d. Prospectus
d. Prospectus
When does a broker earn his commission? a. When the listing is taken b. When the title insurance policy is given to the purchaser c. When closing is complete and title passes d. When the offer to purchase has been signed and accepted by the seller
d. When the offer to purchase has been signed and accepted by the seller
One party to a contract has the right to change his mind and not perform as agreed. This right a. can be a condition of the contract itself b. can be created by statute c. may require payment of monetary damages d. could be any of the above
d. could be any of the above