Assessment

Question 1

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

Answer 1

A valid contract

Question 2

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?

Answer 2

Unenforceable

Question 3

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

Answer 3

Bilateral

Question 4

A contract is said to be bilateral if…

Answer 4

All parties are bound to act

Question 5

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

Answer 5

Executory

Question 6

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?

Answer 6

Conveyance of the property

Question 7

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 ___.

Answer 7

1) sign / initial
2) date
3) change

Question 8

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?

Answer 8

Equitable

Question 9

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) ___.

Answer 9

Contingency

Question 10

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

Answer 10

Earnest money deposit

Question 11

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?

Answer 11

Land or installment contract

Question 12

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

Answer 12

in writing

Question 13

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…

Answer 13

Not bound to buy

Question 14

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) ___.

Answer 14

Offer

Question 15

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…

Answer 15

have been breached

Question 16

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.

Answer 16

Option

Question 17

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

Answer 17

Factual and business

Question 18

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?

Answer 18

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

Question 19

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

Answer 19

written consent

Question 20

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

Answer 20

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

Question 21

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.”

Answer 21

“Seller will retain legal title.”

Question 22

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

Answer 22

Contract

Question 23

A contract in which the parties state their intentions in words

Answer 23

Express Contract

Question 24

A contract established by acts and conduct of the parties

Answer 24

Implied Contract

Question 25

A contract in which both parties promise to perform some act

Answer 25

Bilateral contract

Question 26

An agreement having one promise

Answer 26

Unilateral contract

Question 27

A contract that has been completely performed

Answer 27

Executed contract

Question 28

The status of a real estate sales contract prior to closing

Answer 28

Executory contract

Question 29

The person who accepts the offer in a contract

Answer 29

Offeree

Question 30

Complete agreement about the purpose and terms of a contract

Answer 30

Mutual assent

Question 31

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

Answer 31

Consideration

Question 32

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

Answer 32

Void

Question 33

The transfer of rights or duties under a contract

Answer 33

Assignment

Question 34

The substitution of a new contract to replace an earlier one

Answer 34

Novation

Question 35

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

Answer 35

Breach

Question 36

A new offer that rejects the original offer

Answer 36

Counteroffer

Question 37

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

Answer 37

Earnest money

Question 38

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

Answer 38

Equitable title

Question 39

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

Answer 39

Liquidated damages

Question 40

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

Answer 40

Contingencies

Question 41

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

Answer 41

Legal capacity

Question 42

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

Answer 42

Acceptance

Question 43

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

Answer 43

False, only certain types of contracts

Question 44

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

Answer 44

Legally sufficient and legally binding

Question 45

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

Answer 45

Binder

Question 46

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

Answer 46

Consideration

Question 47

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

Answer 47

an inducement to act

Question 48

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

Answer 48

Implied

Question 49

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

Answer 49

Number of parties bound to perform

Question 50

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

Answer 50

Both parties

Question 51

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

Answer 51

Bilateral

Question 52

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

Answer 52

the second party

Question 53

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

Answer 53

Unilateral

Question 54

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

Answer 54

Executory

Question 55

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

Answer 55

Executed

Question 56

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

Answer 56

Executory

Question 57

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.

Answer 57

voidable

Question 58

The person who makes an offer is the ___.

Answer 58

Offeror

Question 59

The person who rejects an offer is the ___.

Answer 59

Offeree

Question 60

The person who accepts an offer is the ___.

Answer 60

Offeree

Question 61

What are the 6 essential elements of a contract?

Answer 61

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

Question 62

Performance is an element of...

Answer 62

Discharging the contract

Question 63

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

Answer 63

Unenforcable

Question 64

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

Answer 64

in writing

Question 65

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

Answer 65

Land

Question 66

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

Answer 66

Buyer obtains possession Seller retains legal title

Question 67

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

Answer 67

Novation

Question 68

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

Answer 68

Assignment

Question 69

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

Answer 69

True

Question 70

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

Answer 70

Offeror

Question 71

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

Answer 71

Communicated to the offeree

Question 72

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.

Answer 72

Optioner gives the optionee

Question 73

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.

Answer 73

loss for damage

Question 74

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

Answer 74

Equitable title

Question 75

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

Answer 75

Equitable title

Question 76

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...

Answer 76

An addendum

Question 77

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

Answer 77

Addendum

Question 78

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

Answer 78

Addendum

Question 79

An option is a(n) ___ contract.

Answer 79

unilateral

Question 80

An option is enforceable only by the ___.

Answer 80

Optionee

Question 81

Why is an option a unilateral contract?

Answer 81

It is only enforceable by the optionee

Question 82

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.

Answer 82

Voidable

Question 83

A contract entered into by a minor is ___.

Answer 83

Voidable

Question 84

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

Answer 84

option

Question 85

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...

Answer 85

A counteroffer

Question 86

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...

Answer 86

a revocation

Question 87

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...

Answer 87

An express unilateral contract

Question 88

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

Answer 88

Express bilateral executory contract

Question 89

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) ___.

Answer 89

Rejected Counteroffer

Question 90

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.

Answer 90

Accept or reject

Question 91

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

Answer 91

Voidable

Question 92

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) ___.

Answer 92

Novation

Question 93

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...

Answer 93

The buyer sues the seller for the rent he paid

Question 94

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?

Answer 94

The seller

Question 95

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...

Answer 95

A property sale contingency

Question 96

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.

Answer 96

Earnest money deposit

Question 97

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) ___.

Answer 97

Escrow account

Question 98

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.

Answer 98

Disaffirmed

Question 99

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

Answer 99

Liquidated damages

Question 100

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

Answer 100

Closing date must be on or before September 7

Question 101

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

Answer 101

Earnest money deposit

Question 102

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

Answer 102

defaulting

Question 103

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 ___.

Answer 103

Consent

Question 104

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

Answer 104

Unenforceable

Question 104

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

Answer 104

Valid contract

Question 105

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

Answer 105

a reasonable time

Question 106

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 ___.

Answer 106

Rescinded

Question 107

When is an offer considered to be accepted?

Answer 107

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

Question 108

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

Answer 108

Letter of intent

Question 109

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

Answer 109

the buyer from waling away from the agreement

Question 110

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

Answer 110

Statute of limitations

Question 111

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

Answer 111

Executed

Question 112

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

Answer 112

False

Question 113

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.

Answer 113

Consideration

Question 114

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

Answer 114

Valid

Question 115

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

Answer 115

False - some elements are missing

Question 116

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

Answer 116

Time is of the essence

Question 117

___ is a transfer of rights or duties under a contract

Answer 117

Assignment

Question 118

A change to an existing contract

Answer 118

Amendment

Question 119

Mixing escrow money with personal business, or operating funds.

Answer 119

Commingling

Question 120

Complete agreement about the purpose and terms of the contract

Answer 120

Mutual assent

Question 121

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

Answer 121

Addendum

Question 122

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

Answer 122

Consent to examine and audit special accounts

Question 123

When managing broker uses the escrow moneys to pay business expenses

Answer 123

Conversion

Question 124

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

Answer 124

Escrow money

Question 125

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

Answer 125

Option

Question 126

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

Answer 126

Optioner gives an optionee

Question 127

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

Answer 127

earnest money deposit

Question 128

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

Answer 128

All of the above