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Unit 11: Real Estate Contracts > Assessment > Flashcards

Assessment Flashcards

1
Q

A legally enforceable agreement under which 2 parties agree to do something for each other is called…

A

A valid contract

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2
Q

A buyer approaches a seller and says “I’d like to buy your house.” The seller says, “Sure,” and they agree on a price. What kind of contract is this?

A

Unenforceable

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3
Q

A contract is said to be ___ if all parties to the contract are bound to act.

A

Bilateral

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4
Q

A contract is said to be bilateral if…

A

All parties are bound to act

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5
Q

During the period of time after a real estate sales contract is signed but before title actually passes, the status of the contract is ___.

A

Executory

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6
Q

A man and woman sign a contract under which the man will convey his property to the woman. The man changes his mind, and the woman sues for specific performance. What is the woman seeking in this lawsuit?

A

Conveyance of the property

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7
Q

In a standard sales contract, several words were crossed out and others were inserted. To eliminate future controversy as to whether the changes were made before or after the contract was signed, the usual procedure is to have both parties ___ and ___ in the margin near each ___.

A

1) sign / initial
2) date
3) change

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8
Q

A buyer makes an offer on a seller’s house, and the seller accepts. Both parties sign the sales contract. At this point, the buyer has what type of title to the property?

A

Equitable

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9
Q

The sales contract says a man will purchase only if his wife approves the sale by the following Saturday. His wife’s approval is a(n) ___.

A

Contingency

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10
Q

A(n) ___ is evidence of the buyer’s intention to carry out the terms of the contract in good faith.

A

Earnest money deposit

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11
Q

A man and woman enter into a real estate sales contract. Under the contract’s terms, the man will pay the woman $500 a month for 10 years. The woman will continue to hold legal title to the property. The man will live on the property and pay all real estate taxes, insurance premiums, and regular upkeep costs. What kind of contract do these 2 people have?

A

Land or installment contract

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12
Q

Under the statute of frauds, all contracts for the sale of real estate must be ___ to be enforceable.

A

in writing

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13
Q

A buyer makes an offer in writing to purchase a house for $220,000, including its draperies, with the offer set to expire on Saturday at noon. The seller replies in writing on Thursday, accepting the $220,000 offer, but excluding the draperies. On Friday while the buyer considers this counteroffer, the seller decides to accept the original offer, draperies included, and states that in writing. At this point the buyer is…

A

Not bound to buy

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14
Q

A broker has found a buyer for a seller’s home. The buyer has indicated in writing his willingness to buy the property for $1,000 less in earnest money with the broker. The seller is out of town for the weekend, and the broker has been unable to inform him of the signed document. At this point, the buyer has signed a(n) ___.

A

Offer

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15
Q

A buyer and seller agree to the purchase of a house for $200,000. The contract states that closing will occur on April 30, 2014, and contains a clause stating that “time is of the essence.” If the specified April 30, 2014 closing date passes and no closing takes break, the contract may…

A

have been breached

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16
Q

A buyer signs a contract allowing her to purchase the property for $230,000 anytime in the next 3 months. The buyer pays the owner $5,000 at the time the contract is signed. This is best described as a(n) ___ contract.

A

Option

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17
Q

In preparing a sales contract, an Illinois licensee may fill in ___ and ___ details in the blank spaces of a customary reprinted form.

A

Factual and business

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18
Q

On Tuesday, a sponsoring broker received $1,750 in earnest money from a buyer. The seller accepted the offer on Thursday. Where and when must the sponsoring broker deposit the buyer’s money?

A

In a special non-interest-bearing trust account by the end of business on Friday

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19
Q

An Illinois broker does NOT need ___ of both parties to a transaction to charge a fee for their services.

A

written consent

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20
Q

The unauthorized practice of law was dealt with in which Illinois Supreme Court case?

A

Chicago Bar Association, et al. v. Quinlan and Tyson, Inc.

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21
Q

Which provision could legally be placed in an Illinois installment contract?
a) “Seller will retain legal title.”
b) “Buyer may not record this contract.”
c) “Recording does not constitute notice.”
d) “Buyer will forfeit $1,000 for recording.”

A

“Seller will retain legal title.”

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22
Q

A voluntary, legally enforceable promise between legally competent parties to perform (or refrain from performing) some legal act

A

Contract

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23
Q

A contract in which the parties state their intentions in words

A

Express Contract

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24
Q

A contract established by acts and conduct of the parties

A

Implied Contract

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25
Q

A contract in which both parties promise to perform some act

A

Bilateral contract

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26
Q

An agreement having one promise

A

Unilateral contract

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27
Q

A contract that has been completely performed

A

Executed contract

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28
Q

The status of a real estate sales contract prior to closing

A

Executory contract

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29
Q

The person who accepts the offer in a contract

A

Offeree

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30
Q

Complete agreement about the purpose and terms of a contract

A

Mutual assent

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31
Q

Something of legal value offered by one party and accepted by another as an inducement to act or refrain from acting

A

Consideration

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32
Q

A contract that is without legal force or effect because it lacks one or more essential elements

A

Void

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33
Q

The transfer of rights or duties under a contract

A

Assignment

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34
Q

The substitution of a new contract to replace an earlier one

A

Novation

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35
Q

A violation of any of the terms or conditions of a contract without legal excuse

A

Breach

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36
Q

A new offer that rejects the original offer

A

Counteroffer

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37
Q

A deposit customarily made by a prospective purchaser when making an offer

A

Earnest money

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38
Q

The interest held by a buyer prior to deliveryh and acceptance of the deed

A

Equitable title

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39
Q

An amount of money that the parties agree will be the complete compensation available in the event of a breach

A

Liquidated damages

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40
Q

Additional conditions that must be satisfied before a property sales contract is fully enforceable

A

Contingencies

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41
Q

Parties must be of legal age and have enough mental capacity to understand the consequences of their actions in the contract

A

Legal capacity

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42
Q

An agreement to be bound by all of the terms proposed in an offer constitutes ___.

A

Acceptance

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43
Q

All contracts must be in writing to be enforceable. True or false?

A

False, only certain types of contracts

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44
Q

A contract is valid when it meets all the essential elements that make it ___ and ___.

A

Legally sufficient and legally binding

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45
Q

A(n) ___ is often used in commercial transactions to present a buyer’s offer.

A

Binder

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46
Q

___ is something of legal value offered by one party and accepted by the other as an inducement to act.

A

Consideration

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47
Q

Consideration is something of legal value offered by one party and accepted by the other as…

A

an inducement to act

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48
Q

In a(n) ___ contract, the actual agreement between the parties is demonstrated by their acts and conduct.

A

Implied

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49
Q

What is the difference between a bilateral contract and a unilateral contract?

A

Number of parties bound to perform

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50
Q

In a bilateral contract, which parties are obligated to perform?

A

Both parties

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51
Q

In a(n) ___ contract, both parties are obligated to perform.

A

Bilateral

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52
Q

In a unilateral contract, which party is NOT legally obligated to act?

A

the second party

53
Q

In a(n) ___ contract, the second party is not legally obligated to act.

A

Unilateral

54
Q

A sales contract is a(n) ___ contract from the time it is signed until cosing.

A

Executory

55
Q

At closing, an executory contract becomes a(n) ___ contract.

A

Executed

56
Q

A(n) ___ contract exists when one or both parties still have an act to perform.

A

Executory

57
Q

A contract that may be rescinded or disaffirmed by one or both of the parties based on some legal principle is ___, even though it may appear to be valid.

A

voidable

58
Q

The person who makes an offer is the ___.

A

Offeror

59
Q

The person who rejects an offer is the ___.

A

Offeree

60
Q

The person who accepts an offer is the ___.

A

Offeree

61
Q

What are the 6 essential elements of a contract?

A

1) Offer
2) Acceptance
3) Consideration
4) Legal purpose
5) Consent
6) Legal Capacity

62
Q

Performance is an element of…

A

Discharging the contract

63
Q

An oral agreement for the sale of real estate is ___.

A

Unenforcable

64
Q

The statute of frauds requires that any transfer of real property interests must be…

A

in writing

65
Q

Under a(n) ___ contract, the buyer obtains possession, but the seller retains legal title until the terms of the contract have been satisfied.

A

Land

66
Q

Under a land contract, the ___ obtains possession, but the ___ retains legal title until the terms of the contract have been satisfied.

A

Buyer obtains possession
Seller retains legal title

67
Q

___ is the substitution of a new contract in place of the original one.

A

Novation

68
Q

___ is a transfer of rights or duties under a contract.

A

Assignment

69
Q

An offer or counteroffer may be revoked at any time prior to its acceptance. True or false?

A

True

70
Q

The ___ may revoke the offer any time before notification of acceptance

A

Offeror

71
Q

The offeror may revoke the offer at any time before notification of acceptance, but the revocation must be…

A

Communicated to the offeree

72
Q

An option is a contract by which the ___ gives the ___ the right to buy or lease property at a fixed price within a specific period of time.

A

Optioner gives the optionee

73
Q

The Uniform Vendor and Purchaser Risk Act provides that the seller bear any ___ to the property that occurs before title passes or the buyer takes possession.

A

loss for damage

74
Q

The interest held by a buyer during the time between the signing of a sales contract and the transfer of title is called ___.

A

Equitable title

75
Q

After both buyer and seller have executed a sales contract, the buyer acquires an interest in the property. This interest is called ___.

A

Equitable title

76
Q

A page that provides for seller’s contribution to the payment for repairs revealed by the property inspection that will be made after closing by the buyer is attached to the sales contract. This is an example of…

A

An addendum

77
Q

Any provision added to an existing contract without altering the content of the original, is called a(n) ___.

A

Addendum

78
Q

A(n) ___ is essentially a new contract between parties that includes the provisions of the original contract by reference.

A

Addendum

79
Q

An option is a(n) ___ contract.

A

unilateral

80
Q

An option is enforceable only by the ___.

A

Optionee

81
Q

Why is an option a unilateral contract?

A

It is only enforceable by the optionee

82
Q

A(n) ___ contract is considered by the courts to be valid if the party who has the option to disaffirm the agreement does not do so within a period of time.

A

Voidable

83
Q

A contract entered into by a minor is ___.

A

Voidable

84
Q

Which of these is a unilateral contract?
a) Lease
b) Agreement of sale
c) option
d) listing agreement

A

option

85
Q

A seller accepted all of the terms that the buyer offered, making only one small change in the amount of the earnest money. At this point, the seller has made…

A

A counteroffer

86
Q

After making an offer on a vacation home, but before receiving any response from the seller, the offeror decided against buying the property. The offeror’s agent was directed to withdraw the offer. The offeror’s action is called…

A

a revocation

87
Q

The sales associates in a realty office are told by their broker that a $1,000 bonus will be paid to the top selling sales associate each quarter. This contract is…

A

An express unilateral contract

88
Q

A buyer makes an offer on a house and the seller accepts in writing. The buyer and seller have what type of contract?

A

Express bilateral executory contract

89
Q

A buyer offers to buy a seller’s house for the full $215,000 asking price. The offer contains this clause: “Possession of the premises on August 1.” The seller is delighted to accept the buyer’s offer and signs the contract. First, however, the seller crosses out August 1 and replaces it with August 3, because the seller will be out of town until then. The seller begins scheduling movers. The seller ___ the buyer’s offer and made a(n) ___.

A

Rejected
Counteroffer

90
Q

A buyer offers to buy a seller’s house for the full $215,000 asking price. The offer contains this clause: “Possession of the premises on August 1.” The seller is delighted to accept the buyer’s offer and signs the contract. First, however, the seller crosses out August 1 and replaces it with August 3, because the seller will be out of town until then. The seller begins scheduling movers. The buyer is free to ___ or ___ the seller’s counteroffer.

A

Accept or reject

91
Q

A contract that is entered into by a person who is under the age of contractual capacity is ___.

A

Voidable

92
Q

A property buyer wants to take over the seller’s mortgage. The lender releases the seller from the obligation, substituting the buyer as the party liable for the debt. The new agreement is called a(n) ___.

A

Novation

93
Q

A buyer and seller enter into a sales contract for the sale of a home. The seller backs out of the contract at the last minute, and the buyer suffers a financial loss of $1,500 and must rent a home in which to live. The contract usually must have a specific provision allowing it if…

A

The buyer sues the seller for the rent he paid

94
Q

On March 7, a buyer and seller execute a contract for the purchase of the seller’s property. Closing is set for June 10. On April 15, the property is struck by lightning and destroyed by the resulting fire. If the Uniform Vendor and Purchaser Risk Act has been adopted by the state in which the property is located, which party bears liability for the loss?

A

The seller

95
Q

A buyer makes an off3er on a seller’s house. Pursuant to this offer, the buyer is obligated to perform only if the buyer is first able to sell a condominium. This is an example of…

A

A property sale contingency

96
Q

Although it is not essential to a valid real estate sales contract, an offer to purchase usually includes a(n) ___, held in an escrow account.

A

Earnest money deposit

97
Q

Although it is not essential to a valid real estate sales contract, an offer to purchase usually includes an earnest money deposit, held in a(n) ___.

A

Escrow account

98
Q

A 14 year old comes into a brokerage office and says “I want to make an offer on this property. Here is a certified check for 10% of the asking price. Please help me with the paperwork.” The broker should be concerned because the sales contract may be ___ by the minor.

A

Disaffirmed

99
Q

In case the buyer decides not to buy for no legal reason, the contract may provide that the earnest money be used as ___.

A

Liquidated damages

100
Q

The buyer and seller agreed to a closing date of September 7 and that “time is of the essence.” This phrase means that…

A

Closing date must be on or before September 7

101
Q

The ___ should be an amount sufficient to discourage the buyer from defaulting

A

Earnest money deposit

102
Q

The earnest money deposit should be an amount sufficient to discourage the buyer from ___.

A

defaulting

103
Q

If a property owner is forced under threat of violence to sign a contract to sell property for a low price, the contract is voidable because there is lack of ___.

A

Consent

104
Q

If a contract seems to be valid, but neither party can sue the other to force performance, the contract is said to be ___.

A

Unenforceable

104
Q

Anything the parties agree is good and valuable is the minimum consideration in a(n) ___.

A

Valid contract

105
Q

If a contract fails to specify a time or date for performance, the obligations required by the contract should be performed within…

A

a reasonable time

106
Q

If a seller allows a buyer to back out of a contract, returns the earnest money, and both are back to the positions they held before the contract, the contract has been ___.

A

Rescinded

107
Q

When is an offer considered to be accepted?

A

When the broker notifies the buyer that the seller has accepted the offer

108
Q

The informal document that may be used to begin negotiations between the parties in a complex transaction is the ___.

A

Letter of intent

109
Q

The amount of earnest money in a sales contract should discourage…

A

the buyer from waling away from the agreement

110
Q

The term ___ is best described as the time period in which parties to a contract may bring a lawsuit to enforce their rights

A

Statute of limitations

111
Q

A(n) ___ contract is one in which all parties have fulfilled their promises. The contract has been performed.

A

Executed

112
Q

A voidable contract meets all the essential elements that make it enforceable in court. True or false?

A

False

113
Q

The term ___ means something of legal value offered by one party and accepted by another as an inducement to perform or to refrain from performing some act.

A

Consideration

114
Q

A(n) ___ contract meets all the essential elements that make it legally sufficient or enforceable and is binding in court.

A

Valid

115
Q

The elements of a valid contract are offer and acceptance, consent, and legal purpose. True or false?

A

False - some elements are missing

116
Q

The contractual provision “___” means that the contract must be performed within the time limit specified

A

Time is of the essence

117
Q

___ is a transfer of rights or duties under a contract

A

Assignment

118
Q

A change to an existing contract

A

Amendment

119
Q

Mixing escrow money with personal business, or operating funds.

A

Commingling

120
Q

Complete agreement about the purpose and terms of the contract

A

Mutual assent

121
Q

A provison added to an existing contract without altering the content of the original

A

Addendum

122
Q

A form required by the IDFPR and completed by the managing broker for each financial institution where escrow accounts are maintained

A

Consent to examine and audit special accounts

123
Q

When managing broker uses the escrow moneys to pay business expenses

A

Conversion

124
Q

Funds deposited with any person for the benefit of the parties in a real estate transaction

A

Escrow money

125
Q

A(n) ___ is a contract by which an owner gives a prospective purchaser or lessee the right to buy or lease the owner’s property at a fixed price within a certain period

A

Option

126
Q

An option is a contract by which a(n) ___ gives a(n) ___ the right to buy or lease the owner’s property at a fixed price within a certain period

A

Optioner gives an optionee

127
Q

A(n) ___ is evidence of the buyer’s intention to carry out the terms of the contract in good faith.

A

earnest money deposit

128
Q

Which of these is true about contract negotiation?
a) Licensees should avoid delays in responding because “time is of the essence”
b) changes made in negotiation must be reflected in the final contract
c) Licensees should keep good records throughout the process
d) all of the above

A

All of the above

Unit 11: Real Estate Contracts (3 decks)

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