Agency Relationships & Contracts

All listing contracts tend to require similar information:

type of listing agreement, broker's authority and responsibilities, names of all parties to the contract, brokerage firm, list price, real and personal property, description of property, commission, termination of the contract, etc.

The essential elements of a contract includes all of the following EXCEPT

A) competent grantor. B) offer and acceptance. C) consideration. D) lawful purpose. ANSWER-COMPETENT GRANTOR

An option to purchase binds which of the following parties?

Seller only

The buyer has made an offer that the seller has accepted and proper notice has been given to the buyer of the seller's acceptance. The offer is now considered an

executory contract.

The seller has accepted monetary consideration and has agreed to sell his property for an agreed upon amount within a specified timeframe, if the buyer then chooses to purchase. This contract is called a(n)

option contract.(In an option contract, the seller accepts option money and agrees to sell his property for a specified amount within a specified timeframe, if the buyer chooses to purchase in the future.)

A buyer makes an offer to purchase a certain property listed with a real estate professional and leaves an earnest money deposit to show good faith. The offer is accepted. The real estate professional should

put the deposit in a trust account, as provided by state law.

A buyer's agent would NOT recommend the buyer seek expert advice if the buyer asked

A) "Would you recommend a radon test?" B) "How long has the property been on the market?" C) "Does this crack in the foundation mean there is structural damage?" D) "How should I take title to the property?" ANSWER-B) "How long has the property been on the market?"

A buyer's broker whose commission is shared via the MLS with the commission paid by the seller to the listing broker in a real estate purchase

A) becomes a designated agent for the buyer. B) must disclose the dual agency to the buyer. C) remains the agent of the buyer. D) becomes the agent of the seller. ANSWER-REMAINS THE AGENT OF THE BUYER

A contract that conveys the right to the possess the real property of another, but does not convey title, is a

A) lease. B) quitclaim deed. C) dedication. D) bill of sale. ANSWER-LEASE

All of the following are essential elements of a contract EXCEPT

A) mutual agreement. B) words of conveyance. C) consideration. D) lawful objective ANSWER-words of conveyance.

All of the following reasons are valid bases for terminating a listing contract EXCEPT

A) the death of the salesperson. B) agreement of the parties. C) destruction of the premises. D) the sale of the property. ANSWER-THE DEATH OF THE SALESPERSON

A buyer and a seller agree on a purchase price of $200,000 for a house. The contract contains a clause stating that "time is of the essence." Which statement is TRUE?

If the closing date passes and no closing takes place, the party who failed to close is considered to in default.

A woman tells her neighbor, a real estate broker, that she is thinking about selling her home. The broker contacts several prospective buyers to whom she has shown her firm's listings in the past month. One of the buyers makes an attractive offer on the woman's home without even seeing the property. The broker goes to the woman's house and presents the offer, which the homeowner accepts. What is the agency relationship between the homeowner and the broker?

Implied agency(The homeowner and the broker did not have an oral or written agency contract, but the broker's actions implied to prospective buyers that the broker was acting as the homeowner's agent.)(Express agency occurs when two parties enter into an oral or written formal agency agreement. Universal agency empowers the agent to do anything the principal could do personally, such as authorized by a power of attorney. General agency allows the agent to act for the principal in a wide range of matters, as authorized, for example, in a property management contract.)

A buyer agrees to buy a property, and then changes his mind. The seller in this agreement has no recourse against the buyer. The contract was

an option.(In an option contract, the seller's only recourse is to retain the option money.)

The MLS lists a number of personal property items the seller was willing to include in the sale including the commercial stove and refrigerator along with all other appliances. The buyer and seller have gone back and forth over a number of items including price and the appliances, which were included in the first offer. The final contract did not included any appliances, in this case the appliances

belong to the seller who may take them upon closing the property.(The final contract is what is used to determine what is to be conveyed, and since no mention of the appliances was made, they belong to the seller who may take them.)

Under the provisions of the Electronic Signatures in Global and National Commerce Act (ESIGN Act)

businesses must retain evidence of contractual agreements signed in electronic format.

Fiduciary means that there is a(n)

legal relationship between parties that creates a position of trust and confidence.(An agent owes the duties of honesty and good faith to the customer, the third party or non-represented consumer in the transaction)

Last month a broker took a listing on a property. She now learns that her client has been declared incompetent by the court. Her listing now is

terminated.(A listing contract may be terminated if either party dies or becomes incapacitated. Once terminated, the contract is not binding, and there is no basis for a commission to the broker.)

All of the following are true of an open listing and an exclusive-agency listing EXCEPT

under each listing, the broker earns a commission regardless of who sells the property, as long as it is sold within the listing period.(Both open and exclusive-agency listings allow the owner to sell without the assistance of the broker thus avoiding the seller from having to pay a commission.)

A minor inherited a commercial real estate property and has entered into a sales contract with a buyer to purchase the property. In this situation, the sales contract is considered to be

voidable by the minor.

To create an executory contract, the offeree must accept the offer

without any changes to the offer.