REAL ESTATE REVIEW MODULE 2

A contract for sale of a parcel of real estate must be signed by the seller. the buyer. the broker. the escrow agent.

1 AND 2 ONLY

With written escrow instructions, an escrow agent may do which of the following? Disburse funds as authorized by the principals. Draft legal documents. Review legal documents for typographical errors.

1 and 3 only

A "voidable" contract is unenforceable. valid until action is taken to make it vo

2

Which one of the following statements is/are correct? Listing agreements are assignable without the seller's consent. Unless prohibited in the contract, a land sale contract can be assigned by the buyer

2 only

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

A contract for the sale of real estate before the transaction closes escrow.

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

A contract for the sale of undeveloped land.

What is a multiple listing? A listing that a listing agent delegates to a subagent. A listing that is entered in a multiple listing service to enable cooperation with member brokers. A listing shared by a listing agent and a selling agent. A listing that authorizes a listing agent to market more than one property for a seller.

A listing that is entered in a multiple listing service to enable cooperation with member brokers.

Which of the following would NOT need to be in writing? A month-to-month rental agreement. A listing agreement. An earnest money agreement. An easement in gross.

A month-to-month rental agreement.

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

A two-year lease.

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 A voidable contract can be rescinded but its outcome cannot be changed if it is fulfilled.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

A void contract is valid when entered into by the parties but it may later become unenforceable.

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

An offer and acceptance.

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 the time the buyer makes the offer At closing. At the time the seller accepts the offer. None of the above

At closing.

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

At the end of the contract period, the vendor conveys legal title provided the vendee has fulfilled all contractual obligations.

An accepted offer to purchase includes the signature of the buyer. the seller.

BOTH

Which is/are true? A minor's contract to sell land is valid unless they disaffirm the contract. An illiterate person is bound by a written contract.

BOTH

A voidable contract is one that both parties can consider acceptable has a defect allowing one of the parties to declare it void. Both 1 and 2 1 only 2 only Neither 1 nor 2

Both 1 and 2

Which of the parties to a contract for the sale of land has the right to sue for specific performance when the other party defaults?

Both 1 and 2

What kind of interest does the buyer acquire once a real estate sale contract is signed by the principal parties? Lienholder interest. Reversionary interest. Legal title. Equitable title.

Equitable title.

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

It is always assignable unless the contract prohibits assignment.

f 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? The commission clause of the agreement is canceled. It is terminated. The seller's obligations under the listing are assigned to the agency that takes the property. It becomes a voidable contract.

It is terminated.

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? The acceptance by Sally creates a contract and terminates Fred's offer to Jack. One of the contract's is voidable by Jack. Jack has entered into contracts with both Fred and Sally. 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.

Jack has entered into contracts with both Fred and Sally.

Broker Peter has an open listing with Frank. Paul is Peter's principal broker. Principal Broker Perry's customer buys Frank's house. Principal Broker Patrick has a commission agreement with Frank. Who is most likely to be compensated in this scenario? Paul, since he is Peter's broker. Perry, since he found the customer. Peter, since he has a written listing agreement. Patrick, since he has a commission agreement.

Perry, since he found the customer.

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? Carboy must pay $12,000 or lose the property. If the other party delivers payment before Carboy does, the option is canceled. Schmidt may sell to Carboy or the other party, but the price cannot exceed $10,000. Schmidt must sell to Carboy for $10,000

Schmidt must sell to Carboy for $10,000.

What is the meaning of novation? Rescission Estoppel Ratification Substitution of a new contract between the same or different parties

Substitution of a new contract between the same or different parties

What is rescission? The act of declaring a contract unenforceable. The act of withdrawing an offer before it has been accepted. The act of declaring that a contract is no longer in effect for a given party. The act of modifying the terms of an offer.

The act of declaring that a contract is no longer in effect for a given party.

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

The broker may have a claim for marketing expenses expended during the listing term.

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? The buyer's heirs have the option of enforcing the contract. The buyer's death terminated the offer. The seller can force the buyer's estate to go through with the purchase. The seller must make a new offer with the same terms to the buyer's heirs.

The buyer's death terminated the offer.

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? The seller must notify the buyer in writing that the buyer is in default. The buyer must perform under the terms of the contract The seller must give the buyer an opportunity to make a new offer. The contract has been legitimately cancelled and is null and void.

The contract has been legitimately cancelled and is null and void.

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

The customer must be legally competent to undertake the transaction.

Which one of the following would NOT release an offer? A counteroffer by the seller. Revocation, communicated to the seller by the offeror. The illiteracy of the seller. The expiration of a specified time limit in the offer prior to acceptance

The illiteracy of the seller.

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? The tenant loses the right to buy, but can claim the money paid for the option from the landlord. The option is expired, and the tenant has no rightful claim to money paid for the option. Absent anything in writing to the contrary, contracts are automatically extended for a resonable time following extenuating circumstances.. The landlord does not have to sell, but must renew the option.

The option is expired, and the tenant has no rightful claim to money paid for the option.

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

The optionor must perform if the optionee takes the option, but the optionee is under no obligation to do so.

Broker Jones left Principal Broker Adams and went to work for Principal Broker Brown. What happens to the listings obtained by Jones while licensed with Adams? They remain with Principal Broker Adams. The become void as soon as Broker Jones's license transfers to Principal Broker Brown. Broker Jones would take the listings to the new principal broker because the contracts are personal to Jones. They transfer to Principal Broker Brown

They remain with Principal Broker Adams.

A multiple listing authorization gives a broker what authority? To list the owner's property in a multiple listing service. To sell several properties for the owner at once. To represent both seller and buyer, if necessary, in selling the property. To delegate the listing responsibilities to other agents.

To list the owner's property in a multiple listing service.

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. Within 24 hours following the stated expiration. Forty-eight hours from the time of the offeror's signing of the offer. Twenty-four hours from the time of the offer's delivery to the seller.

Until the expiration date the buyer included in the offer.

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 it is signed by the seller regardless of whether the acceptance is communicated to the buyer. The offer cannot be rescinded once it is signed by the buyer. Until the earnest money deposit check is cashed. Until the seller communicates acceptance of the offer back to the buyer.

Until the seller communicates acceptance of the offer back to the buyer.

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? Observe ethical standards promulgated by real estate trade organizations. Use a standard contract promulgated by a state agency or a real estate board. Offer legal advice only on points of the contract that the agent is absolutely certain about. Write contract terms that are fair to both buyer and seller.

Use a standard contract promulgated by a state agency or a real estate board.

A contingency in a sale contract is an optional, unilateral action that either party may take at the request of the other party. one of several alternative actions that buyer or seller may take to satisfy contract requirements. a promise by buyer or seller to perform a specific action. a condition that, if unmet, renders the contract unenforceable.

a condition that, if unmet, renders the contract unenforceable.

Every valid contract must meet all of the following requirements EXCEPT an offer and acceptance mutually agreed upon. a consideration clause expressed in monetary terms. legally competent parties to the agreement. a legitimate purpose.

a consideration clause expressed in monetary terms.

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 an accepted offer, therefore a valid contract. a counteroffer. an executable option. a contingent offer.

a counteroffer.

Among the items that normally must be disclosed in a sale contract or its addenda is/are the buyer's financial capability. agency relationships and property condition. buyer's source of funds for the down payment. seller's acceptable price range.

agency relationships and property condition.

A real estate sale contract is an executory contract until all the obligations and promises are performed and the transaction is closed. the buyer and seller have agreed to all provisions and have signed the contract. the completed sale transaction is recorded. the loan has been approved, the title insurance has been obtained, and the closing date is set.

all the obligations and promises are performed and the transaction is closed.

To be enforceable, a contract for the conveyance of real estate must be recorded. be acknowledged by witnesses. be written. have an expiration date.

be written.

A bilateral contract is one in which both parties promise to do something if the other party performs first. both parties receive equal consideration. both parties promise to do something in exchange for the other party's performance. two parties agree to perform a service together

both parties promise to do something in exchange for the other party's performance.

A buyer who gives a seller five days to accept an offer only becomes obligated if the offer is accepted before listing agreement expired. must also deposit earnest money of at least equal to 5% of the offered amount. can withdraw the offer at any time during the five days if acceptance by the seller has not been communicated to the buyer. must await the seller's approval or disapproval before offering to deposit earnest money

can withdraw the offer at any time during the five days if acceptance by the seller has not been communicated to the buyer.

n the event of a buyer's default, a provision for liquidated damages in a sale contract enables a seller to force the buyer to quitclaim equitable title. claim the deposit as compensated damages for the buyer's failure to perform. sue the buyer for the broker's marketing expenses. sue the buyer for specific performance.

claim the deposit as compensated damages for the buyer's failure to perform.

A contract of sale that is conditional upon the buyer's ability to obtain leases in advance is llusory. void because it violates the Statute of Limitations. unenforceable. enforceable.

enforceable

A voidable contract is invalid and the contract cannot be enforced by either party. enforceable, but is subject to rescission by one of the parties to the contract. void because one party to the contract has an unfair advantage over the other party. illegal because all of the elements to create the contract are not present.

enforceable, but is subject to rescission by one of the parties to the contract.

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 right-to sell agreement. exclusive agency agreement. open net listing. open listing.

exclusive agency agreement.

When the parties to a contract have fully performed the terms, the contract is properly described as executed. expressed. acknowledged. secured.

executed

To be enforceable, a real estate sale agreement must be recorded within three days to be enforceable. be written on a form approved by the state bar association. include a legal description of the property. be acknowledged by three witnesses.

include a legal description of the property.

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. must be in writing to be valid. is valid but unenforceable. does not meet validity requirements.

is possibly valid and enforceable.

The statute of limitations requires that parties to a contract who have been damaged or who question the contract's provisions must wait a statutory period before they may take legal action. must act within a statutory period. must arbitrate prior to taking court action. must select a specific, limited course of action for recouping their losses.

must act within a statutory period.

To be enforceable, a listing for residential property must be signed and accepted by the buyer. can be verbal or in writing. must contain the words "exclusive right to sell." must be signed by the owner and the lisitng licensee.

must be signed by the owner and the lisitng licensee.

At the time of her death, Mrs. Sampson, a licensed real estate principal broker, had 50 listings. The business, including all its assets, was left to her daughter, Jane Jones, who was a licensed real estate broker. If the daughter wished to legally collect commissions on the sale of the listed properties, she would be required to do nothing because contract law provides for a successor trustee. tell each owner that the commission would be paid to her. negotiate a new listing with each of the 50 property owners. take court action to authorize collections.

negotiate a new listing with each of the 50 property owners.

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) exclusive agency agreement. open listing. net listing. exclusive right-to sell agreemen

net listing.

When Bob bought Brian's house, he assumed Brian's mortgage and the lender released Brian from all further liability under the loan. This is known as deed in lieu of substitution reservation. satisfaction of mortgage. novation.

novation

When a landlord promises to compensate any broker who procures a tenant, this is an example of an exclusive agency agreement. all-inclusive lease listing. open rental listing. exclusive right to rent agreement.

open rental listing.

When the time is of the essence clause is in the contract, punctual performance of the terms is required of the buyer only. both the buyer and the seller are prohibited from voluntarily extending the time limits set in the contract. punctual performance of the terms is required of the seller only. punctual performance of the terms is required of the principals to the contract.

punctual performance of the terms is required of the principals to the contract.

To be valid, a contract must not be executable. be created only by an attorney. use precise wording in a document. reflect a mutual understanding or agreement.

reflect a mutual understanding or agreement.

The valuable consideration necessary to make a contract valid must be something of value traded in exchange for something of value. something of equal value with whatever is received in exchange. money. something tangible

something of value traded in exchange for something of value.

A second offer made on a property prior to the seller's decision on the first offer should be held pending a decision on the first offer. rejected by the broker. returned to the offeror if it does not provide better terms than the first offer. submitted to the seller immediately

submitted to the seller immediately.

In the context of agency law, the legal difference between an owner representation agreement and a buyer representation agreement is fiduciary duties. the commission amount. the client. regulatory approval

the client.

A breach of contract is a lawsuit to force a party to discharge the contract. the failure of a party to perform according to the terms of the contract. a termination of the contract by the mutual consent of the parties. financial damage suffered by a party because

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. the parties promise to perform their part of the agreement if the other party performs. the parties do not disavow an express contract that has expired. an offering party does not receive written notice that the offer has been rejected.

the parties act as if there is a contract.

When a broker takes a listing to sell real property, the listing belongs to the broker only. the broker and the principal broker. the principal broker only. neither the broker nor principal broker until a sale is made.

the principal broker only.

If a buyer agrees to purchase a house "as is" the seller or listing broker must reveal all known defects to the buyer or buyer's broker. the broker does not have to reveal the defects known to the buyer or buyer's broker. neither the seller nor the listing broker are required to reveal known defects to the buyers or their broker. none of the above are correct.

the seller or listing broker must reveal all known defects to the buyer or buyer's broker.

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

the seller retains legal title while the buyer makes partial payments until the contract is fully executed.

The purpose of the statute of frauds is to to help eliminate fraud by requiring certain conveyance-related contracts to be in writing. to protect title insurance companies. nullify oral leases and listing agreements. invalidate certain oral contracts.

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 promise to buy. valuable consideration and a right to buy. a down payment and a post-dated contract for sale. a promise to sell and a promise to buy.

valuable consideration and a right to buy.

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 a meeting of the minds. mutual consent. valuable consideration. an option.

valuable consideration.

A seller contracts to sell a property that they do not own. The contract is executable. is binding on the owner of the property. void. illegal yet potentially enforceable.

void

Party A entered into a contract with Party B after being coerced by Party B. The contract between Party A and Party B is: invalid. voidable at the option of Party A. voidable at the option of Party B. voidable at the option of either party.

voidable at the option of Party A.