Chapter 2-5: Specific Real Estate Contracts

You wrote an offer for your buyer-client and the seller replied with a counter-offer. While your buyer was considering the seller's counter-offer, the seller received another offer. The seller can accept the other offer if A. it is better than the terms of the counter-offer. B. the seller withdraws the counter-offer before it is accepted by the buyer. C. the seller notifies you of their intent to accept the other offer. D. the seller asks the buyer for their "highest and best" offer.

B. the seller withdraws the counter-offer before it is accepted by the buyer. Until an offer is accepted, it can be revoked by the offeror. The seller can revoke their counter-offer before it is accepted.

A listing type that authorizes a single broker to sell the property and earn a commission, but leaves the owner the right to sell the property without the broker's assistance and pay no commission is an

Exclusive agency agreement. An exclusive agency listing authorizes a single broker to sell the property and earn a commission but leaves the owner the right to sell the property without using the brokerage, in which case no commission is owed.

Mary Carboy buys a house from Jim Schmidt and at the same time obtains an option to purchase the adjoining vacant lot for $10,000 within one year. A few months later, Carboy informs Schmidt that she is ready to exercise her option, but finds that Schmidt has received an offer of $12,000 from another party. Schmidt tells Carboy that he will accept the $12,000 offer unless Carboy is willing to match it. Which of the following is true of this situation?

Schmidt must sell to Carboy for $10,000. Mary's option-to-buy contract is enforceable, assuming she paid a consideration for it.

To be enforceable, a contract for the conveyance of real estate must

be written. A contract for the sale of real estate is enforceable only if it is in writing. A buyer or seller cannot sue to force the other to comply with an oral contract for sale, even if the contract is valid.

A bilateral contract is one in which

both parties promise to do something in exchange for the other party's performance. A bilateral contract is one in which both parties promise to perform their respective parts of an agreement in exchange for performance by the other party. An example of a bilateral contract is an exclusive listing: the broker promises to exercise due diligence in the efforts to sell a property, and the seller promises to compensate the broker when and if the property sells.

Absent a default by the buyer, and unless otherwise provided for in the sale agreement, when would the seller receive the buyer's earnest money deposit?

At closing.

If the buyer deposits funds in escrow, the escrow agent can pay out the funds in accordance with the written instructions of A. the principals to the escrow transaction. B. only the buyer if the buyer does not go through with the sale.

B A only The escrow agent must act on the written instructions of the transaction principals.

Which of the following contracts must be in writing to be enforceable? A. A parol contract. B. A two-year lease. C. An executory contract. D. A six-month lease.

B. A two-year lease. A contract may be in writing or it may be an oral, or parol, contract. Certain oral contracts are valid and enforceable, others are not enforceable, even if valid. For example, most states require listing agreements, sales contracts, and leases exceeding one year to be in writing to be enforceable.

Consideration in a contractnge of

can be an exchange of promises. Consideration is something of value provided by one person in exchange for something of value from another. Consideration can be mutual promises (i.e., a promise for a promise), a promise for an act, a promise in exchange for a forbearance to act, or love and affection.

In the event of a buyer's default, a provision for liquidated damages in a sale contract enables a seller to

claim the deposit as compensated damages for the buyer's failure to perform. f a buyer fails to perform under the terms of a sale contract, the breach entitles the seller to legal recourse for damages. The usual remedy is forfeiture of the buyer's deposit as liquidated damages, provided the deposit is not grossly in excess of the seller's actual damages.

A provision in an offer to purchase that requires the completion of a certain act before further performance of the contract is a

contingency.

An executory contract is always a

contract that will be performed.

Which type of buyer broker agreement gives the buyer broker the most protection for receiving a fee? A. Open B. Exclusive Right C. Exclusive Agency D. Net Agency

B. Exclusive Right

Using threats to force a person to enter into a contract involuntarily is known as __________ .

duress. Duress is the threat of economic or physical harm leading a person to enter into a contract that they would not otherwise have entered into. The threat may be of harm to the contracting party or to a third party.

A land sale contract is

for the purchase of property in which the seller becomes the buyer's lender.

The rights and duties in the listing agreement flow

from the principal broker to the broker, then from the broker to the property owner.

A lease where the tenant pays a flat monthly amount and the landlord pays all property related expenses such as taxes, is a

gross lease.

A buyer submits an offer to a seller and then dies in a car accident before the seller accepts the offer. Which is true about this situation?

he buyer's death terminated the offer. Any of the following actions or circumstances can terminate an offer: acceptance (the offer becomes a contract); rejection; revocation; lapse of time; counteroffer; or death or insanity of either party.

A property owner agrees to pay a broker an open-ended commission as the difference between the sale price and a net amount, provided the owner receives a minimum amount of proceeds from the sale at closing. This is an example of a(n)

net listing. A net listing is one in which an owner sets a minimum acceptable amount to be received from the transaction and allows the broker to have any amount received in excess as a commission, assuming the broker has earned a commission according to the other terms of the agreement.

A proper escrow should

not be subject to the control of any one interested party alone.

When a landlord promises to compensate any broker who procures a tenant, this is an example of an

open rental listing. An open listing is a non-exclusive authorization to sell or lease a property. The owner may offer such agreements to any number of brokers in the marketplace. With an open listing, the broker who is the first to perform under the terms of the listing is the sole party entitled to a commission.

A lease where the tenant pays a monthly amount, plus a portion of the monthly or annual gross sales generated by the business leasing the space as additional rent is a

percentage lease.

When a real estate sales transaction is to be closed in escrow, the escrow agent

protects the interest of each party to the transaction.

To be valid, a contract must

reflect a mutual understanding or agreement. Mutual consent, also known as offer and acceptance and meeting of the minds, requires that a contract involve a clear and definite offer and an intentional, unqualified acceptance of the offer.

If, upon receipt of an offer to purchase under certain terms, the seller makes a counteroffer, the prospective purchaser is

relieved of the original offer

An option

should recite in detail the terms of the purchase in the event it is exercised.

The valuable consideration necessary to make a contract valid must be

something of value traded in exchange for something of value. A contract must contain a two-way exchange of valuable consideration as compensation for performance by the other party. The contract is not valid or enforceable if just one party provides consideration. Valuable consideration may be something of tangible value, such as money, or something the party promises to do. It may also be something intangible that a party must give up.

These escrow instructions (click here to view) require the seller and buyer to acknowledge they have a continuing obligation to cooperate with escrow. The buyer's and seller's obligation in this regard

survives the closing of the transaction.

In the context of agency law, the legal difference between an owner representation agreement and a buyer representation agreement is

the client. Generally, buyer and tenant representation agreements are subject to the same laws and regulations as those applying to owner listings. The only difference is the client and his or her transaction expectations.

A breach of contract is

the failure of a party to perform according to the terms of the contract.

An implied agency relationship may be deemed to exist if

the parties act as if there is a contract. An implied contract is an unstated or unintentional agreement that may be deemed to exist when the actions of any of the parties suggest the existence of an agreement.

The purpose of the statute of frauds is to

to help eliminate fraud by requiring certain conveyance-related contracts to be in writing.

To create an enforceable option-to-buy contract, there must be an exchange of

valuable consideration and a right to buy. An option-to-buy is an enforceable contract in which a potential seller, the optionor, grants a potential buyer, the optionee, the right to purchase a property before a stated time for a stated price and terms. In exchange for the right of option, the optionee pays the optionor valuable consideration.

A construction contractor executes a contract with a buyer. In the agreement, the contractor promises to complete construction by November 20. This promise can be construed as

valuable consideration. Valuable consideration can be something of tangible value, such as money, or something a party promises to do or not do. For example, a home builder may promise to build a house for a party as consideration for receiving money from the home buyer.

A contract created to pursue an illegal objective is

void. A contract created to pursue an illegal objective is void. Legality of purpose is the contract element that requires the object of the contract to be legal. If entered into for an illegal purpose, a contract is not legally binding.

A seller falsely leads a buyer to believe the seller owns a property. The seller then contracts to sell this property to the buyer. The contract is

void. The content, promise, or intent of a contract must be lawful. A contract that proposes an illegal act is void.

During the closing process, the instructions from which of the following documents takes precedence?

Escrow instructions. Because escrow instructions are created after the real estate sale agreement, they take precedence over any instructions that are written in the earlier real estate sale agreement.

In Oregon, a married female under age 18 1. is considered to be a minor, and any contract she enters into is voidable. 2. can disaffirm any contract entered into, until a reasonable time after reaching the age of majority.

Neither 1 nor 2 In Oregon, a married female under the age of 18 can be considered a legal adult if she is 17. Therefore, she is not necessarily considered a minor. Additionally, she cannot disaffirm any contract.

An offer can be terminated by A. rejection by the offeree. B. a counter offer. C. revocation by the offeror.

1, 2 and 3. A seller (i.e., the offeree) can accept the offer as written, reject the offer outright, reject the offer by making a written counter offer, or do nothing and let the offer expire. The buyer (i.e., the offeror) can revoke the offer presented to the offeree if it has not been accepted.

Mary sold her condominium to Paul using a land sale contract. Paul stopped making his payments after just 9 months. Which remedies are available to Mary under the typical land sale contract? 1. Strict Foreclosure 2. Suit for installments 3. Forfeiture 4. Judicial Foreclosure

1,2,3, and 4. All of the above remedies would be available to Mary.

Which of the following contracts can be assigned to another party? A. An independent contractor agreement between a principal broker and broker. B. A personal services agreement. C. A contract for the sale of undeveloped land. D. An exclusive listing agreement.

A personal services agreement. C. A contract for the sale of undeveloped land. A real estate contract that is not a personal contract for services can be assigned to another party unless the terms of the agreement specifically prohibit assignment. Listing agreements, for example, are not assignable, since they are personal service agreements between agent and principal. Sales contracts, however, are assignable, because they involve the purchase of real property rather than a personal service.

Closing occurs when: A. the funds are made available to the seller. B. the lender transfers the loan proceeds to the escrow agent. C. the deed is recorded in the name of the buyer. D. the principal brokers for the buyer and seller instruct escrow to close.

A and C

A listing agreement between a principal broker and seller can be terminated by A. death of either party. B. bankruptcy of the seller. C. destruction of the property. D. All of the above

All of the above. A listing agreement between a principal broker and seller can be terminated by death of either party, bankruptcy of the seller and destruction of property, among many other things.

What is a multiple listing?

A listing that is entered in a multiple listing service to enable cooperation with member brokers. Though not a distinct type of listing agreement, multiple listing is a significant feature of brokerage practice. Multiple listing is an authorization to enter a listing in a multiple listing service.

Which of the following is an essential element of a valid contract for the sale of real estate? A. An offer and acceptance. B. A marketable title. C. A habitable property. D. A valid blank form that the contract is written on.

A. An offer and acceptance. A contract of sale is created by full and unequivocal acceptance of an offer. Offer and acceptance satisfy the mutual consent requirement for a valid contract. The offeree must accept the offer without making any changes whatsoever.

When the buyer and seller sign a land sale contract, what does the buyer receive? A. Equitable title. B. Naked legal title. C. Complete title. D Cash.

A. Equitable title. When the buyer and seller sign a land sale contract, the seller retains actual legal title and the buyer gets equitable title.

Which of the following is true regarding the assignability of an option? A. It is always assignable unless the contract prohibits assignment. B. It is assignable only if the option is exercised. C. It is never assignable. D. It is assignable only if the contract specifically allows assignment.

A. It is always assignable unless the contract prohibits assignment. A real estate contract that is not a personal service contract can be assigned to another party unless the terms of the agreement specifically prohibit assignment. An option-to-buy is therefore assignable in the absence of such a prohibiting clause.

Which is the BEST definition of procuring cause? A. The uninterrupted series of causal events that leads to a successful sale of the property. B. The broker who introduced the buyer to the property regardless of which broker sells the property. C. The broker claiming to represent the buyer at the time the buyer makes an offer. D. The broker who has a buyer broker agreement with the offering buyer.

A. The uninterrupted series of causal events that leads to a successful sale of the property. Procuring Cause, as defined by the National Association of REALTORS®, is "the uninterrupted series of causal events that leads to a successful transaction." It is the way to determine disputes about who deserves a real estate commission for causing a sale

Broker Peter has an open listing agreement with seller Frank. Paul is Peter's principal broker. Since it is an open listing, Principal Broker Patrick also has a commission agreement with Frank. A buyer represented by Principal Broker Perry submits an offer and eventually buys Frank's property. Who is most likely to be compensated in this scenario? A. Paul, since he is Peter's principal broker B. Perry, since he found the buyer and completed the sale C. Peter, since he has a written listing agreement D. Patrick, since he has a commission agreement

B. Perry, since he found the buyer and completed the sale. Perry, since he found the customer. The two principal determinants of procuring cause are being first to find the customer, and being the one who induces the customer to complete the transaction.

A buyer makes an offer to purchase a house, and the seller accepts the offer. Before the broker can inform the buyer of the seller's decision, the buyer delivers a written notice that they are opting out and canceling the agreement. At this point, which of the following is true? A. The seller must give the buyer an opportunity to make a new offer. B. The contract has been legitimately cancelled and is null and void. C. The seller must notify the buyer in writing that the buyer is in default. D. The buyer must perform under the terms of the contract

B. The contract has been legitimately cancelled and is null and void. To be valid, a contract must meet the criteria of: competent parties, voluntary act of good faith, mutual consent, legal purpose, and valuable consideration. The buyer broke the mutual consent requirement by opting out before being told of the seller's acceptance. Thus, there is no valid contract.

Which of the following conditions is necessary for a customer to qualify as "ready, willing, and able?" A. The customer must have no business relationship with the agent. B. The customer must be legally competent to undertake the transaction. C. The customer's offer must be accepted. D. The customer must have a commitment from a lender.

B. The customer must be legally competent to undertake the transaction. A ready, willing, and able customer is one who is amenable to the terms of the transaction (ready and willing), and is financially capable of paying the price and legally capable of completing the transaction (able).

A written agreement in which a buyer agrees to buy and a seller agrees to sell is called A. an agency agreement. B. a contract. C. a fiduciary obligation. D. a letter of intent.

B. a contract. A written agreement in which a buyer agrees to buy and a seller agrees to sell is called a contract.

Which of the following is an executory contract? A. A recorded real estate sale agreement. B. An option to buy after the option is exercised. C. A contract for the sale of real estate before the transaction closes escrow. D. An expired lease.

C. A contract for the sale of real estate before the transaction closes escrow. An executory contract is one in which performance is yet to be completed. A contract for the sale of real estate before the transaction closes is an executory contract.

You wrote an offer for a buyer. The seller did not accept the offer but made a counter-offer. Your buyer signed and accepted the seller's counter-offer and you delivered the acceptance back to the seller. In the interim, your buyers found another house they liked better and you wrote an offer for them, which was accepted. Which statement is TRUE about this situation? A. The counter-offer on the first house is not enforceable. B. Only the first offer, along with the seller's counter-offer is valid. C. Both offers are valid. D. Neither contract is enforceable.

C. Both offers are valid.

When does the buyer take title when property is financed under a land sale contract? A. On whatever date is stated in the agreement for purchase and sale. B. When 50% of the mortgage has been paid. C. When the land sale contract is paid in full. D. On closing.

C. When the land sale contract is paid in full. The land sale contract sets out the financing arrangement between the vendor and the vendee. Because the vendor retains title to the property until the vendee has fulfilled all obligations under the contract, there is no lien against title. The buyer (vendee) will receive title after completing the conditions of the contract with the vendor (seller).

One purpose of an earnest money deposit in a real estate transaction is to: A. make sure that the broker will receive some compensation if either the buyer or seller default. B. provide some evidence that the buyer is able to qualify for financing to complete the purchase. C. give the seller some indication of how serious the buyer is in completing the contract. D. cover pre-paid loan items the buyer will have to pay at closing.

C. give the seller some indication of how serious the buyer is in completing the contract. Earnest money is a deposit the buyer makes into a trust account to show how earnest the buyer is in completing the contract.

To be enforceable, a listing for residential property

must be signed by the owner and the listing licensee.

Which statement is FALSE? A. A void contract is not valid and is unenforceable. B. A voidable contract can be rescinded but its outcome cannot be changed if it is fulfilled. C. A valid contract includes all the required contract elements and meets all requirements for enforceability. D. A void contract is valid when entered into by the parties but it may later become unenforceable.

D. A void contract is valid when entered into by the parties but it may later become unenforceable. Valid: meets all requirements, Void: not valid; unenforceable, Voidable: may be rescinded due to subsequent discoveries: if performed, cannot change the outcome.

A homeseller signs a listing agreement with a broker then subsequently revokes the listing. Which of the following is true? A. The seller continues to have contractual obligations to the broker. B. The contract remains in full force until the expiration date. C. The seller cannot sign a listing agreement with another broker. D. The broker may have a claim for marketing expenses expended during the listing term.

D. The broker may have a claim for marketing expenses expended during the listing term. The damaged party may elect the following legal remedies: rescission; forfeiture; suit for damages; or suit for specific performance. However, the broker must show that the seller has breached the contract.

Which is true of a contract for deed transaction? A. At the end of the contract period, the vendee receives equitable title, provided all required periodic payments have been made. B. The vendor may cancel the contract at any time before the final payment is received. C. The vendee has no right to possess or occupy the property during the contract period. D. At the end of the contract period, the vendor conveys legal title provided the vendee has fulfilled all contractual obligations.

D. At the end of the contract period, the vendor conveys legal title provided the vendee has fulfilled all contractual obligations. A contract for deed is a bilateral agreement between a seller, the vendor, and a buyer, the vendee, in which the vendor defers receipt of some or all of the purchase price of a property over a specified period of time. At the end of the period, the buyer completes payment to the vendor of the full purchase price and the vendor deeds legal title to the vendee.

On Wednesday, Jack offered to buy Fred's property for $275,000, with the offer to remain open until 5 p.m. the next day. On Thursday morning, Jack offered Sally $280,000 for her property, and she accepted. At 1 p.m. on Thursday, Fred accepted Jack's offer. Which of the following is true of this situation? A. One of the contract's is voidable by Jack. B. Jack's acceptance of Sally's offer is invalidated by Fred's acceptance, because Jack's offer to Fred was made before his offer to Sally. C. The acceptance by Sally creates a contract and terminates Fred's offer to Jack. D. Jack has entered into contracts with both Fred and Sally.

D. Jack has entered into contracts with both Fred and Sally. Jack has entered into contracts with both Fred and Sally. Jack should have rescinded his offer to Fred before making an offer to Sally. Jack is obligated to perform both contracts or face possible damages.

Which of the following is not essential to a valid contract? A. Competent parties B. Offer and acceptance C. A lawful object D. Monetary consideration

D. Monetary consideration While consideration is an essential element to a valid contract, a monetary consideration is not. A consideration is something of value provided by one party to the contract in exchange for something of value from the other party to the contract.

What kind of interest does the buyer acquire once a real estate sale contract is signed by the principal parties?

Equitable title. A sale contract gives the buyer an interest in the property that is called equitable title, or ownership in equity. If the seller defaults and the buyer can show good faith performance, the buyer can sue for specific performance, that is, to compel the seller to transfer legal title upon payment of the contract price.

When the escrow instructions differ from the sale agreement, which statement is correct? A. The escrow agent will decide which instructions should be used after negotiating with the buyer and seller. B. The sale agreement takes precedence over the escrow instructions. C. The buyer and seller must negotiate a new sale agreement. D. The escrow instructions take precedence over the sale agreement.

D. The escrow instructions take precedence over the sale agreement. Escrow instructions take precedence of the sale agreement.

A tenant has an option-to-purchase agreement with the landlord that expires on June 30. On July 1, the tenant frantically calls the landlord to exercise the option, offering the apology that stating there was a death in the family. Which of the following is true? A. The tenant loses the right to buy, but can claim the money paid for the option from the landlord. B. The landlord does not have to sell, but must renew the option. C. Absent anything in writing to the contrary, contracts are automatically extended for a reasonable time following extenuating circumstances.. D. The option is expired, and the tenant has no rightful claim to money paid for the option.

D. The option is expired, and the tenant has no rightful claim to money paid for the option. The option automatically expires at the end of the option period. The landlord has no obligation, either to sell the property or to return the consideration, after the expiration date.

Which of the following is true of an option-to-buy agreement? A. It is a bilateral agreement. B. The contract can be executed at no cost to the optionee. C. The potential buyer, the optionee, is obligated to buy the property once the option agreement is completed. D. The optionor must perform if the optionee takes the option, but the optionee is under no obligation to do so.

D. The optionor must perform if the optionee takes the option, but the optionee is under no obligation to do so. An option-to-buy places the optionee under no obligation to purchase the property. However, the seller must perform under the terms of the contract if the buyer exercises the option. An option is thus a unilateral agreement. Exercise of the option creates a bilateral sale contract where both parties are bound to perform.

Which of the following statements below does NOT accurately reflect the duties of escrow agents? A. They must act as fiduciaries until escrow is closed. B. They are to act impartially for both the buyer and seller. C. They must follow escrow instructions. D. They are to provide any missing clauses when reviewing legal documents.

D. They are to provide any missing clauses when reviewing legal documents. Escrow agents must act impartially toward the principals, follow the principals matching instructions, and act as fiduciaries until the escrow is closed.

The real estate sale agreement is: A. a bilateral personal service contract. B. an enforceable option contract. C. a unilateral contract. D. the contract between a buyer and seller for the purchase and sale of real estate.

D. the contract between a buyer and seller for the purchase and sale of real estate.

Two parties enter into a contract for deed agreement. In this form of agreement, A. title is conveyed to the buyer, but the seller retains possession for a stipulated time period. B. the buyer contracts to pay all cash at closing in exchange for the deed. C. the buyer immediately acquires legal title and takes possession. D. the seller retains legal title while the buyer makes partial payments until the contract is fully executed.

D. the seller retains legal title while the buyer makes partial payments until the contract is fully executed. In a contract for deed, the seller, or vendor, defers receipt of some or all of the purchase price of a property over a specified period of time. During the period, the vendor retains legal title and the vendee acquires equitable title. At the end of the period, the buyer pays the vendor the full purchase price and the vendor deeds legal title to the vendee.

Which of the following is NOT TRUE about an exclusive right to sell listing? A. It encourages brokers to spend resources marketing a property B. It allows the listing broker to freely promote the listing to cooperating brokers without fear of losing their commission. C. It discourages cooperation between brokers D. It encourages brokers to spend time marketing a property

It discourages cooperation between brokers. The exclusive right to sell listing ensures the broker can put resources into marketing the property and work with other brokers without fear of losing the commission to another broker.

If an agent has an exclusive listing to sell a property, and the property is then taken by eminent domain, what is the status of the listing?

It is terminated. The listing is terminated since property ownership changed. A listing can terminate on grounds of: performance; infeasibility; mutual agreement; revocation; abandonment; breach; lapse of time; invalidity of the contract; incapacitation of either party; destruction of the property; or, in this case; involuntary title transfer.

A lease where the tenant is responsible for one or more property related expenses in addition to the monthly lease is a

net lease.

Madison owns 80 acres of prime subdivision land and wants to sell. Madison has three close friends who are real estate brokers and gives each of them a type of listing agreement. What type of listing agreement has Madison given to the brokers?

Open. Madison has entered given open listings. The open listing allows the seller to employ any number of agents at the same time. However, the seller will only owe a commission to the agent who sells the property. In addition, the seller is able to sell the property without owing any commission.

Ray agrees to sell his property to Shirley using a land sale contract. Who will have legal title to the property the day after the transaction closes escrow?

Ray

A tenant rented an apartment for one year. After the tenant's lease expired, the tenant dropped by the landlord's office and paid cash for one month's rent and got a receipt. What kind of leasehold does the tenant have?

Tenancy at will

What is rescission?

The act of declaring that a contract is no longer in effect for a given party. Parties to a contract may rescind a contract by mutual consent, or a damaged party may rescind the contract unilaterally. This act of rescission cancels the contract and returns the parties to their pre-contract condition, including the refunding of any monies already transferred.

A multiple listing authorization gives a broker what authority?

To list the owner's property in a multiple listing service. A multiple listing is not a distinct listing contract but rather a provision in an exclusive listing authorizing the broker to place the listing into a multiple listing service. A multiple listing service is an organization of member brokers who agree to cooperate in the sale of properties listed by other brokers in exchange for a share of the broker's resulting commission.

What is a key difference between an exclusive agency listing and an exclusive right to sell listing?

Under an exclusive right to sell listing, the agent earns their commission regardless of who finds the buyer.

How much time does a seller have to accept a buyer's offer that includes "time is of the essence?"

Until the expiration date the buyer included in the offer. When the offer includes an expiration date and the phrase "time is of the essence," the offer expires at exactly the time specified.

A buyer signs a real estate sale agreement and gives it to the broker who showed them the property. After leaving the broker's office, the buyer reconsiders and decides on a different property. How long does the buyer have to rescind their offer?

Until the seller communicates acceptance of the offer back to the buyer. An offeror may revoke an offer for any reason prior to communication of acceptance by the offeree.

In assisting a buyer or seller to complete an offer to purchase, what should an agent do to reduce the risk of committing an unauthorized practice of law?

Use a standard contract promulgated by a state agency or a real estate board. It is advisable, and legally required in most states, for a broker to use a standard contract form promulgated by state agencies or real estate boards, as such forms contain generally accepted language. This relieves the broker of the dangers of creating new contract language, which can be construed as a practice of law for which the broker is not licensed.

Which type of lease allows for periodic rent increases based on a specified index, such as the consumer price index?

Variable lease - indexed.

A contingency in a sale contract is

a condition that, if unmet, renders the contract unenforceable. A contingency is a condition that must be met before the contract is enforceable. If one party cannot meet a contingency condition by a specified deadline, the other party may cancel the contract.

A prospective homebuyer submits a signed offer with the condition that the seller pay for the inspection at closing. The seller disagrees, crosses out the provision, then signs and returns the document to the buyer. At this point, assuming all other contract validity items are in order, the original offer is now

a counteroffer. By changing any of the terms of an offer, the offeree creates a counteroffer, and the original offer is void. At this point, the offeree becomes the offeror, and the new offeree gains the right of acceptance. If accepted, the counteroffer becomes a valid contract provided all other requirements are met.

Spencer wants to sell his house and offers the listing to Bill. Bill completes a CMA and determines the market value to be $350,000. Spencer asks Bill to hurry and sell his house and offers him everything over $300,000 that the house sells for as his fee. Spencer is offering Bill

a net listing. The net listing provides that the broker may take any amount of sale proceeds over and above the agreed upon net sale proceeds due the seller.

In general, a buyer may not withdraw an offer to purchase the seller's property

after receiving proper notification of the seller's acceptance of the offer. Typically a buyer may not withdraw an offer on a property after the seller has agreed to all of the terms of the contract (i.e., mutual assent). There are some exceptions that may allow a buyer to back out of an accepted contract such as misrepresentation or mutual mistake.

Among the items that normally must be disclosed in a sale contract or its addenda is/are the

agency relationships and property condition. It is common for the seller to disclose the property condition requiring the buyer to acknowledge receipt of the disclosure. The broker discloses the applicable agency relationships in the transaction and names the party who must pay the brokerage commission.

The amount of the earnest money deposited is determined by

agreement between the buyer and seller. In a real estate transaction, the amount of the earnest money deposit is negotiated by the buyer and seller. There is no set amount required for earnest money.

A real estate sale contract is an executory contract until

all the obligations and promises are performed and the transaction is closed. An executory contract is one for which the signatories have yet to perform their respective obligations and promises. Upon closing, the sale contract is fully performed and no longer exists as a binding agreement.

real estate sale contract is an executory contract until

all the obligations and promises are performed and the transaction is closed. An executory contract is one for which the signatories have yet to perform their respective obligations and promises. Upon closing, the sale contract is fully performed and no longer exists as a binding agreement.

A contract created by actions rather than oral or written words is called

an implied contract. A contract created by actions rather than oral or written words is called an implied contract. As opposed to express contracts, implied contracts are not created by an oral or written agreement, thus they must be deduced from the actions of the parties.

A contract between a buyer and seller that requires the seller to sell within a certain timeframe but doesn't require the buyer to buy during the same timeframe is known as A. a optional agreement contract. B. a mutually exclusive option. C. an option contract. D. a periodic exclusive contract option.

an option contract.. An option contract is a unilateral contract that gives one party the exclusive right to buy, sell, or lease a specific property, at a specified price, within a specific period.

All contracts for the sale of real property must be

in writing.

To be enforceable, a real estate sale agreement must

include a legal description of the property. In addition to satisfying the requirements of a valid contract in general, a contract that conveys an interest in real estate must be in writing, include a legal description of the property, and be signed by one or more of the parties.

The guardian for a mentally incompetent party enters into an oral contract with another party to buy a trade fixture on behalf of the incompetent party. This contract

is possibly valid and enforceable. Incompetent parties, or parties of "unsound mind," may not enter into enforceable contracts. However, during the period of one's incompetency, a court may appoint a guardian who may act on the incompetent party's behalf with court approval.

The statute of limitations requires that parties to a contract who have been damaged or who question the contract's provisions

must act within a statutory period. The statute of limitations restricts the period for which an injured party in a contract has the right to rescind or disaffirm the contract. A party to a voidable contract must act within the statutory period.