Unit 10 : Sales Contracts and Practices
A married couple offers in writing to purchase a house for $320,000, including the draperies, with the offer to expire on Saturday at noon. The owners reply in writing on Thursday, accepting the $320,000 offer, but excluding the draperies. On Friday, while the couple considers this response, the owners reconsider the original offer and decide to accept the original offer in writing, including the draperies. Since it is before Saturday at noon, the couple A) must buy the house but may deduct the value of the draperies from the $320,000. B) must buy the house and is not entitled to the draperies. C) is not bound to buy because they are not under contract. D) is legally bound to buy the house including the draperies.
D.
At 1:30 pm, a broker faxed an offer to purchase to her seller client. At 2:00 pm, after considering the offer, the seller called and informed his agent that he wanted to increase the earnest money deposit by $1,000. To make the seller's requested change for additional earnest money, the seller's agent need only change the term in the original offer, initial, and date the one change on behalf of the seller. prepare a new offer and, with the seller's permission, sign on behalf of the seller. A)II only B)Neither I nor II C)Both I and II D)I only
B.
A buyer agreed to purchase a property for $230,000. The buyer gave a $7,000 earnest money deposit to the listing broker. The seller was unable to transfer clear title, so the buyer subsequently demanded the return of his earnest money. The broker should... A)return the entire amount to the buyer only if the seller does not dispute the return. B)deduct her commission and return the balance to the buyer if there is no dispute of the return of funds. C)retain the earnest money in the interest-bearing trust account until completion of the second interest cycle. D)immediately deposit the money with the county clerk of court.
A.
A for-sale-by-owner signs a written offer to purchase without making any changes to the offer. The seller then mails the signed offer to the buyer by express mail without any further contact with the buyer. Before receipt of the envelope from the seller, the buyer changes her mind about purchasing the property and calls the seller to withdraw the offer. Which of the following statements is TRUE? A)Buyer cannot withdraw offer because she is already under contract. B)Contract has been formed but is unenforceable since real estate brokers were not involved. C)Buyer can withdraw offer since she has not received the signed contract yet. D)Buyer was under contract as soon as the seller signed the offer to purchase.
A.
A buyer agreed to purchase a property for $230,000. The buyer gave a $7,000 earnest money deposit to the listing broker. The seller was unable to transfer clear title, so the buyer subsequently demanded the return of his earnest money. The broker should... A) deduct her commission and return the balance to the buyer if there is no dispute of the return of funds. B) return the entire amount to the buyer only if the seller does not dispute the return. C) retain the earnest money in the interest-bearing trust account until completion of the second interest cycle. D) immediately deposit the money with the county clerk of court.
B.
The buyer is making an offer on a property and needs to get new financing to purchase the property. In assisting the buyer with the sale, the buyer's broker should make sure that the sales contract is contingent on financing being obtained by the buyer. Having such a contingency will mean that the contract A)will not have the earnest money deposited until after the contingency is met or terminated. B)should have all loan terms and contingency terms and dates clearly stated. C)is not binding on either party until the contingency is met. D)is not considered executory until the contingency has been dropped.
B.
The listing agent received a full price offer that she faxed to the out-of-town seller. The seller signed the faxed copy and faxed the signed copy back to the listing agent. The agent faxed the signed offer to the buyer's agent. Has contract been formed? A)No, because the buyer has not been notified of the acceptance yet. B)Yes, because faxed signatures are binding for 48 hours until ink signatures can be obtained. C)Yes, because the Uniform Electronic Transaction Act states that faxed signatures are as binding as ink signatures. D)No, because there is not one copy that has ink signatures of both parties.
C.
When a buyer and seller have entered into an installment land contract, the seller retains an interest called legal title. the buyer acquires an immediate interest in the property known as equitable title. A) I only B) Neither I nor II C) Both I and II D) II only
C.
Under the NCBA/NCAR 2-T Offer to Purchase and Contract, which of the following BEST describes the due diligence fee? A) Legal consideration B) Purchase price deposit C) Liquidated damages D) Good-faith money
A.
Which of the following statements is/are TRUE when an offer to purchase has been signed by the buyer and then given to the seller's broker with an earnest money deposit check for the seller to consider? 1. The earnest money check must be deposited immediately into the listing firm's trust account. 2. If the buyer withdraws the offer before it is accepted by the seller, the earnest money will be forfeited. A)II only B)Both I and II C)Neither I nor II D)I only
C.
A buyer's agent presents an offer to a listing agent of a cooperating firm. The seller accepts and signs the offer in the presence of the listing agent. Before the listing agent communicates the acceptance to the buyer agent, the seller receives a better offer. The seller immediately withdraws his acceptance to the first buyer and signs the second in the presence of the listing agent. Which of the following is TRUE? A)The seller is now under contract with two different buyers for one property. B)The seller may withdraw his acceptance to the first buyer. C)The seller may not withdraw acceptance to the first buyer. D)The seller is under contract with the second buyer.
B.
A land contract provides for... A)the sale of unimproved land only. B)the conveyance of legal title at a future date. C)the sale of real property under an option agreement. D)the immediate transfer of reversionary rights.
B.
All of the following are essential elements to create the validity of a purchase agreement EXCEPT A) communication of acceptance. B) lawful objective. C) earnest money. D) consideration.
C.
A broker is preparing an offer for a buyer he represents as an exclusive agent. The buyer wants to make certain there is a clear acceptance deadline for the offer. To accomplish this, the broker should... A)use a preprinted form that defines the time frame for acceptance. B)write an addendum and attach it to the Offer to Purchase and Contract (NCAR/NCBA). C)use the Contingent Sale Addendum to define the time frames. D)add the time frame to the signature section of the offer.
A.
Which of the following is TRUE about an installment land contract? A)The buyer is given immediate possession and use of the property. B)The buyer obtains a mortgage loan from a traditional lender. C)The seller delivers legal title to the buyer at settlement. D)The seller delivers a deed to the buyer.
A.
A broker presented a written offer to a seller on behalf of a prospective buyer. The seller changed the offer amount from $142,000 to $142,800, initialed and dated the change, and signed the offer. This action by the seller was... A)an illegal counter offer. B)a new offer by the seller. C)a partial acceptance of the buyer's offer. D)a qualified acceptance of the buyer's offer.
B.
A broker who represents a seller under an exclusive listing receives two offers for the property at the same time, one from a buyer-client of the firm and one from a buyer-customer. How should the broker handle the offers?... A) Submit the offer from the other firm first. B) Submit both offers to the seller at the same time. C) Submit the offer from the broker's firm first. D) Submit the higher offer to the seller first.
B.
A conventional option contract A)makes the seller liable for a commission. B)requires the optionee to complete the purchase within the specified time period, time being of the essence. C)gives the optionee an easement on the property. D)allows negotiation of better terms during the option period; yet the seller remains bound to the original contract terms.
B.
The buyer's offer is made on the condition that the buyer's inspection indicates that all working systems of the structure are up to current code. This condition is called A)an option. B)a contingency. C)a unilateral offer. D)a first right of refusal.
B.
A buyer and a seller enter into a real estate sales contract. Under the contract's terms, the buyer will pay the seller $500 a month for 10 years. The seller will continue to hold legal title, while the buyer will have possession of the home and pay all real estate taxes, insurance premiums, and regular upkeep costs. What kind of contract do the buyer and the seller have? A)Contract for mortgage or deed B)Unilateral contract binding on the seller C)Installment land contract with seller as lender D)A 10-year option contract
C.
A man signs a contract under which he may purchase a house for $800,000 any time within the next three months. The man pays the current owner $5,000 at the time the contract is signed. Which of the following best describes this contract? A)Contract for deed B)Contingency C)Option to purchase D)Installment land contract
C.
All of the following are essential elements to create the validity of a purchase agreement EXCEPT... A)communication of acceptance. B)lawful objective. C)earnest money. D)consideration.
C.
If a broker receives a due diligence fee from a buyer under the North Carolina standard offer to purchase and contract, when can the seller receive the fee?... A) When the offer is presented to the seller B) At the settlement meeting C) When a contract is created between the seller and the buyer D) After the deed is recorded
C.
Under an installment land contract, the title to the property is held by... A)the vendee. B)the trustee. C)the vendor. D)the trustor.
C.
A buyer is under contract to purchase a seller's home for a sales price of $95,000. It becomes apparent that the seller cannot deliver clear marketable title and the buyer wishes to terminate the contract. According to the Offer to Purchase and Contract (NCAR/NCBA), the $2,000 earnest money deposit that is being held in the listing firm's trust account will be.. A) retained by the listing firm as liquidated damages. B) forfeited by the buyer to the seller as liquidated damages. C) split between the buyer and the seller. D) returned to the buyer in full.
D.
During the due diligence period in the NCBA/NCAR 2-T Offer to Purchase and Contract, the buyer did not receive final loan approval but chose not to terminate the contract based on favorable communications from the lender. A week before closing, the buyer's loan application is denied. If the buyer terminates the contract at this point, the buyer... A)will receive a refund of the earnest money and the due diligence fee. B)can be sued by the seller for specific performance. C)will receive a refund of the earnest money, because the termination was related to financing. D)will forfeit the earnest money deposit, because it would be a buyer breach.
D.
A purchaser made an offer to purchase and gave it to the listing agent, who forwarded the offer to the owners by email. The owners signed the sales contract and mailed it to the listing agent. While this document was in the mail to the listing agent, a second purchaser made a higher offer on the property. The listing agent called the owners to tell them about the second offer. Before the owners could say they had accepted the first offer and inform the listing agent that they had mailed the signed contract to the agent, the agent told the owners there was a second higher offer for the property. The owners immediately told the agent to disregard the signed contract they had mailed because they would prefer to accept the second offer. At this point, which of the following statements is TRUE? A)The seller may accept the second offer because notice to the first buyer has not occurred. B)The seller and the listing broker must respond or reject the first offer before responding to the second offer. C)The second offer has been legally accepted. D)The first offer has been legally accepted.
A.
An offer to purchase is submitted on a listing while the property owner is out of town on business. The offer is electronically submitted to the owner and the owner signs and returns the offer with no changes in terms. If the signed offer is then electronically submitted to the listing agent who calls the buyer's agent with this information, which of the following statements is TRUE? A)The seller is under contract to sell his property since electronic signatures are binding. B)The original signatures of both buyer and seller must appear on the same copy of the offer; therefore, a contract does not exist. C)No contract exists yet since the buyer has not been personally told of the contract acceptance. D)No contract exists since no one on the buyer's side of the transaction has seen the seller's signature.
A.
Checks for earnest money and tenant security deposits must be deposited in a trust account within three... A)banking days after acceptance of the contract. B)calendar days after acceptance of the contract. C)calendar days after receipt of the trust funds. D)banking days after receipt of the trust funds.
A.
If an owner takes a property off the market for a definite period of time in exchange for some consideration, but grants the right to purchase the property within that period for a stated price, this is called A) an option. B) a right of first refusal. C) a contract of sale. D) an installment agreement.
A.
The buyer's offer is made on the condition that the buyer is able to obtain an 80% institutional loan at a specified interest rate by a specified date. If the buyer notifies the seller in writing of the inability to obtain such a loan, the buyer will... A)not have to purchase the home and will be entitled to a full refund of the earnest money deposit. B)not have to purchase the home but will forfeit the whole earnest money deposit. C)not have to purchase the home but will forfeit half of the earnest money deposit. D)have to go ahead with the purchase anyway.
A.
The listing broker has received four offers on a property. The first is full list price, the second is $5,000 over list price, the third is $2,000 under list price, and the fourth is full list price but has a contingency for the buyer to sell her current home. When presenting the offers, the listing broker should A)give the seller only the over-list-price offer because it is clearly the best for all parties. B)present all offers to the seller at the same time and allow the seller to determine which, if any, to negotiate or accept. C)vocalize to the brokers who offered less than the list price to elevate their offer to full list price or higher or the listing broker will not present the offer to the seller. D)present the highest and best offers first and then work to the lowest price if needed.
B.
Which of the following statements is/are TRUE when an offer to purchase has been signed by the buyer and then given to the seller's broker with an earnest money deposit check for the seller to consider? I. The earnest money check must be deposited immediately into the listing firm's trust account. 2. If the buyer withdraws the offer before it is accepted by the seller, the earnest money will be forfeited. A)II only B)Neither I nor II C)I only D)Both I and II
B.
An offer to purchase is submitted on a listing while the property owner is out of town on business. The offer is electronically submitted to the owner and the owner signs and returns the offer with no changes in terms. If the signed offer is then electronically submitted to the listing agent who calls the buyer's agent with this information, which of the following statements is TRUE? A)No contract exists since no one on the buyer's side of the transaction has seen the seller's signature. B)No contract exists yet since the buyer has not been personally told of the contract acceptance. C)The original signatures of both buyer and seller must appear on the same copy of the offer; therefore, a contract does not exist. D)The seller is under contract to sell his property since electronic signatures are binding.
D.
During the term of a contract for deed, the seller holds which of the following? A)Purchase money mortgage B)Purchase money deed of trust C)Equitable title D)Legal title
D.
During the term of a contract for deed, the seller holds which of the following? A)Purchase money mortgage B)Equitable title C)Purchase money deed of trust D)Legal title
D.
Shopping offers... A)both of these. B)neither of these. C)is prohibited in North Carolina. D)is a practice in which a homeseller's real estate agent discloses prices and terms of an offer to competing buyers, in an effort to get higher bids.
D.
When a valid purchase contract is fully executed by the seller and the buyer... A)the seller retains reversionary rights. B)the buyer transfers equitable title to the lender. C)the buyer forfeits financing contingency rights. D)the seller transfers equitable title to the buyer.
D.
Which of the following is TRUE of a right of first refusal given to the tenant of a rental house? A)The landlord must sell the property, if the tenant decides to buy. B)The landlord cannot sell the property to anyone but this tenant. C)The tenant must buy the property, if the landlord decides to sell. D)The landlord must offer to sell the property to the tenant first, if the landlord decides to sell the house.
D.
Which of the following statements is TRUE of a conventional option to purchase contract?... A) It is enforceable by both the optionor and the optionee. B) It need not recite a set amount of consideration for purchase of the property. C) It does not allow negotiation on changes to contract terms during the option period. D) It must be exercised within a specified time period by the optionee.
D.
