REU Unit II Module 2 Quiz
What is the one item that is required to be in a facilitator's agreement?
A clause that spells out the limitations of the agreement in terms of confidentiality and representation.
Which of the following items is required in a listing or buyer's agreement?
A dual agency clause. All listing and buyer agreements must contain a clause that allows the client to indicate whether or not they are open to a dual agency agreement. The client can either indicate that they are not open to the relationship, or they can indicate that they will decide later.
You'll generally have a better chance of negotiating commission splits and other details if you choose to work with?
A smaller company. Not all big companies are rigid and not all small companies are easy to work with, but it's generally accepted that smaller real estate companies are going to be more flexible. If you're looking for a better chance of negotiating things, choose a smaller company to work with. The odds are higher that the managing broker will be open to adjustments to the contract — and that includes the commission split.
What is specific performance?
An order from the court to complete a term of the contract. Specific performance is defined as an action to compel performance of an agreement, for example, the sale of land as an alternative to damages or rescission.
How do courts interpret the words in a contract?
Based on their ordinary meanings, unless the contract defines them otherwise. Courts interpret the words in a contract based on their ordinary meanings, unless the contract defines them otherwise. If you are using a word in a unique way in a contract, you need to make sure the contract outlines the unique definition. Otherwise, the courts will use the ordinary definition of the word.
How is the amount of earnest money set?
By negotiation of the parties.
What is extrinsic evidence?
Evidence outside the contract itself. Extrinsic evidence is evidence that relates to a contract, but is not contained within the document itself (for example, circumstances surrounding the negotiations of the contract).
Which of the following is an example of a listing contract?
Exclusive right to sell agreement
What is the main reason a seller will agree to an installment sale?
For tax benefits.
A buyer and seller enter into a real estate contract. Three days before closing, the house burns down. What is this called?
Impossibility of performance.
What does a contract contingency do?
It allows one party to walk away unilaterally if a certain condition hasn't been met. A contingency creates a unilateral right to walk away from a contract if a specific condition isn't met. It is not needed if both parties agree and earnest money may not be lost depending on the contract. Contingencies are not automatic as they can be waived.
What does a financing contingency addendum do?
It changes the form real estate contract to make the transaction contingent on the buyer getting a lender or it addresses situations where the seller sells the property to the buyer on contract.
What happens to earnest money after the closing is completed?
It goes to the seller, and is part of the purchase price.
What can a broker not say about their compensation rate?
It is standardized by law.
Marie Sanchez is a real estate agent. Her neighbor, Ayako Aki, asks Marie to put her house on the market. Marie prepares the listing agreement, but she cannot sign it. Who is the legal owner of the relationship with the seller (and must sign the contract)?
Marie's broker
Which of these is required for a valid contract?
Meeting of the minds. One of the essential elements of a valid contract is offer and acceptance. In other words, the parties must have a meeting of the minds.
Most real estate independent contractor agreements are?
Month-to-month. While there are exceptions to the rule, the majority of independent contractor agreements made between brokers and managing brokers are on a month-to-month basis. That's because brokers can come and go, and they aren't always a good fit for the managing broker they're working with. Being able to make changes quickly and efficiently is important for both brokers and managing brokers alike.
As an independent contractor, if you're not happy with the broker where you're working, you can simply choose to?
Move on.
Super Corp is selling real estate to Jim. The secretary of Super Corp was appointed by the Board of Directors to sign the deed on behalf of the corporation. The secretary signed the deed, but didn't affix the corporate seal. The state has a law that says all deeds from a corporation must have a corporate seal. Has there been full performance?
No, the corporate seal must be added to the deed.
Brian offers Sam $200,000 for his property in a written document. The document also has the names of the parties, the address of the property, the price, and the closing date. Sam has not signed it. Is this a valid contract?
No. There hasn't been acceptance.
A buyer and seller sign a real estate contract. The buyer pays the purchase price, and the seller conveys the property to the buyer by deed. Three weeks after the closing, there is a tornado that destroys the real estate. The buyer is claiming that the seller made partial performance because he does not have the property anymore. Will this claim succeed?
No. There was full performance and the seller is no longer liable under the contract.
In the case of impossibility of performance, what remedy is available to the seller?
None of the answer choices apply.
Jerry enters into a contract to sell his house, 500 Jones Street, to Cam. But Cam sees another property, 123 Main Street, that is also owned by Jerry. The parties agree to change the subject real estate of the contract and sign the appropriate documents. What is this called...?
Novation.
In an ............ listing there can be many agents trying to sell the property at the same time.
Open
Which listing contracts do most buyers prefer?
Open
What do we call performance that is not full performance?
Partial performance. If full performance is not achieved, the parties will have partial performance since there are still outstanding duties owed in the contract.
What does the buyer usually require the seller to do before closing?
Pay off liens.
If a bankruptcy is discharged, what happens to payment obligations under a contract?
Payment obligations are canceled.
When a seller accepts an offer, or there's a counter offer made that's accepted, how quickly does the written acceptance need to be delivered to all parties?
Promptly, but there is no set time limit.
When someone wants to purchase a property, they need to be willing to?
Put it in writing. Verbal statements about buying a property or asking if the seller would take a certain amount of money just aren't sufficient for a real estate transaction to get started. Anyone who's serious about their purchase will put everything in writing so they can move forward.
What must be given in exchange for a contract being signed?
Something of value.
Jim is a seller on a real estate contract, and Bill is the buyer. Jim receives the purchase price from Bill, and Jim hands Bill a deed for the real estate, but Jim did not sign it. What remedy is available to Bill?
Specific performance to sign the deed. The parties clearly wanted the transaction to go forward
A seller is selling his real estate to a buyer. The purchase price is $200,000. The buyer gives the seller $100,000 with the promise to give the rest to the seller the next day. The seller gives the buyer the deed. However, the buyer never makes the second payment. What remedy is available to the seller?
Specific performance, getting an order from the court, forcing the buyer to pay the rest of the money.
What is the name of the process when a contract is canceled by both parties?
Termination by mutual agreement.
When a contract is canceled by court order, what is this called?
Termination by operation of law.
If a party goes into bankruptcy after a contract is signed but not fully performed, what is likely to happen?
The bankruptcy trustee cancels the contract by operation of law.
What is contained in a letter of intent?
The basic terms of the real estate contract.
What usually comes first in the real estate contract negotiation process?
The buyer makes an offer to the seller. The first step in purchasing a property is to have the buyer make an offer on the property.
Eddie and Sue enter into a real estate contract. But because of an unlimited inspection period, the transaction does not close for five years. Sue files suit against Eddie to complete the transaction. But the state has a law that says contracts are enforceable for only 4 years. What is the result?
The contract is terminated by operation of law, statute of limitations.
Ben has a real estate contract where he is the buyer. He pays $1,000 earnest money to be held by the closing attorney. The real estate contract says that the closing will go forward if Ben can get a mortgage at 5% interest. After due effort, he can only get a mortgage at 8% interest. What happens to the earnest money?
The earnest money goes back to the buyer.
Under termination, what happens to the earnest money?
The earnest money goes back to the buyer.
In contract interpretation, which rule bars the introduction of elements that are not included in the written contract?
The parol evidence rule.
A termination clause states that if an agent has brought a buyer who is willing and able to close to the table, she has earned her commission at that time. So, if the seller unreasonably turns down an offer...?
The seller could be liable to pay the commission anyway.
When might a real estate professional consent to a mutual termination of a listing agreement at the property owner's request?
The seller is not happy with the agent's efforts to sell the property.
What happens if tailor-made language and boilerplate language conflict with each other in a contract?
The tailor-made language supersedes the boilerplate language. In contract interpretation, tailor-made language supersedes boilerplate language. "Boilerplate" refers to language that is largely similar from contract to contract while tailor-made language is unique to that specific contract.
What is the relationship between preexisting oral agreements and a written contract?
The terms of the written contract trump preexisting oral agreements.
Bret is the buyer on a real estate contract. He's obligated to pay $100,000 to buy a new home. However, for other reasons, Bret goes into bankruptcy. What will likely happen to the contract?
The trustee will terminate the contract by operation of law.
What is the purpose of an assignment contract?
To transfer the rights to buy a home from the buyer, who is already under contract to a different buyer.
A listing contract acts as a contract between a real estate broker and a seller who is the owner of real property. True or false?
True (T)
An open listing is a non-exclusive, unilateral real estate contract. This means that more than one broker may be employed to sell a single property, and the owners may act on their own behalf. Is this statement true or false?
True (T)
How long can a party wait to sue for breach of contract?
Up until the statute of limitations.
What is a counteroffer?
When the seller does not agree with the buyer's offer and makes an offer of their own.
Broker Justin Lucas signs a Listing Agreement with an Exclusive Right to Sell Agreement with seller Malia Tahir for a duration of 6 months. Two weeks later, Malia finds a buyer through another broker and tells Justin the Listing Agreement is null and void. Is Justin owed a commission?
Yes, due to the nature of an Exclusive Right to Sell agreement. In an exclusive-right-to-sell agreement, one broker represents the seller and is entitled to a commission even if the seller finds the buyer themselves.
Abe offers Cal $100,000 for his real estate in a contract. Cal demands $150,000 in his own contract. Abe is willing to pay $125,000. Can he make another offer?
Yes, there can be unlimited counteroffers.
If a person orders a 50-inch television for $1,000 from Best Buy by written contract, but Best Buy delivers a 40-inch TV, is there an enforceable contract?
Yes.
Can a real estate attorney draft a real estate contract?
Yes. Attorneys can draft any type of contract.
If there's a dispute or a disagreement, and you don't have an independent contractor agreement, it's?
Your word against theirs.
What is required to adjust the price after a home inspection?
a modification to the contract
If the escrow agent cannot determine who gets the earnest money, what can he do?
an interpleader case in court and let a judge decide.
Who usually negotiates real estate contracts?
real estate agents One of the primary duties of a real estate agent is to negotiate on behalf of their client.
