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Real Estate > Ch. 11 Real Estate Contracts > Flashcards

Ch. 11 Real Estate Contracts Flashcards

Nearly every business transaction is based on a contract. Key to every contract is the promise. In a real estate contract, the seller promises to convey title to the real estate, and the buyer promises to pay the purchase price. Contract promises are enforceable by law, provided the contract meets certain requirements. A contract defines the parties' legal relationship and spells out their rights and duties.

1
Q

Written instrument that serves to transfer the rights and interests of one person to another.

A

assignment

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2
Q

An agreement wherein both parties are legally obligated to each other to perform.

A

bilateral contract

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3
Q

An employment contract with a purchaser.

A

buyer brokerage agreement

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4
Q

A party to a contract who possess the legal capacity to enter into a binding contract.

A

competent

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5
Q

An agreement between two or more competent parties to do, or not to do, some legal act for a legal consideration.

A

contract

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6
Q

A legally binding contract that the law recognize.

A

enforceable contract

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7
Q

Employment contract given to one real estate broker as the sole agent for the sale of an owner’s property.

A

exclusive-agency listing

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8
Q

exclusive-right-of-sale listing
An employment contract given to one real estate broker as the sole agent for the sale of an owner’s property, with the commission going to that broker regardless of who actually sells the property during the employment contract period.

A

exclusive-right-of-sale listing

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9
Q

A promise that cannot be measured in terms of money, such as love and affection.

A

good consideration

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10
Q

The amount of valuable consideration specified in an agreement as a penalty for default.

A

liquidated damages

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11
Q

The point when two people, thinking of the same thing, reach an agreement through an offer and acceptance.

A

meeting of the minds

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12
Q

The making and acceptance of an offer.

A

mutual assent

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13
Q

An agreement or contract to sell or rent a property for a specified minimum net amount for the owner.

A

net listing

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14
Q

The substitution of a new party and/or new terms to an existing obligation.

A

novation

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15
Q

An employment contract given to any number of brokers who work simultaneously to sell the owner’s property.

A

open listing

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16
Q

A right or privilege to purchase or lease real property at a specified price during a designated period based on a sufficient consideration.

A

option contract

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17
Q

An agreement that is not in writing.

A

parol contract

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18
Q

The person whose efforts are the cause of an executed sale contract, regardless of who actually writes the contract.

A

procuring cause

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19
Q

An act that requires that certain real estate instruments and contracts affecting title to real property be in writing in order to be enforceable.

A

statute of frauds

20
Q

An act that prescribes specific time restrictions for enforcement of rights by action of law.

A

statute of limitations

21
Q

A contract that was valid when made but either cannot be proved or will not be upheld by a court.

A

unenforceable contract

22
Q

Sufficient to be legally binding; enforceable.

A

valid

23
Q

The money or a promise of something that can be measured in terms of money.

A

valuable consideration

24
Q

The buyer or purchaser of real property under an agreement of sale.

A

vendee

25
Q

The seller of real property in an agreement of sale.

A

vendor

26
Q

Invalid; without force; no longer effective.

A

void

27
Q

A contract that because of the manner or method in which it was brought about, one of the parties is allowed to avoid contractual duties.

A

voidable

28
Q
  1. Which group of legal instruments may legally be prepared by a licensed real estate broker?
    a. Listing contracts, buyer brokerage agreements, commercial leases, and deeds
    b. Leases, option contracts, promissory notes, and buyer brokerage agreements
    c. Listing agreements, buyer brokerage agreements, sale contracts, and option contracts
    d. Mortgages, promissory notes, commercial leases, and option contracts
A

C

29
Q
  1. Failure to comply with the statute of frauds
    a. may not constitute an illegal act but would always invalidate a sale contract.
    b. would have to do with whether a contract is in writing.
    c. concerns adherence to prescribed time frames of enforcement.
    d. is prima facie evidence that there is intent to commit fraud.
A

B

30
Q
  1. Which contract does NOT come under the jurisdiction of the statute of frauds?
    a. Lease agreements for one year or less
    b. Option contract
    c. Sale contract
    d. Listing agreement for more than one year
A

A

31
Q
  1. A valid real estate sale contract is one that
    a. contains all of the essential elements and is in writing.
    b. has been acknowledged.
    c. requires witnessing.
    d. transfers title to real property.
A

A

32
Q
  1. An adult contracting with a minor is an example of failure to meet which essential of a real estate contract?
    a. Legality of the object
    b. Offer and acceptance
    c. Meeting of the minds
    d. Competent parties
A

D

33
Q
  1. Canceling a daughter’s property indebtedness in a contract due to love and affection is an example of
    a. good consideration.
    b. valuable consideration.
    c. insufficient consideration.
    d. inadequate consideration.
A

A

34
Q
  1. A contract that is NOT in writing is referred to as
    a. formal contract.
    b. a parol contract.
    c. a unilateral contract.
    d. an executory contract.
A

B

35
Q
  1. When a contract has been formed but an undertaking remains to be performed by one or both parties, it is an example of
    a. an implied contract.
    b. an express contract.
    c. an executory contract.
    d. a unilateral contract.
A

C

36
Q
  1. Which statement is FLASE regarding counteroffers?
    a. The original offer is terminated by the counteroffer/
    b. The original offeree becomes the offeror.
    c. A contract is created when the new offeree accepts the counteroffer and communicates the acceptance to the new offeror.
    d. The offeror and offeree remain the same even though the terms are modified.
A

D

37
Q
  1. An offer is NOT terminated by
    a. a counteroffer.
    b. an acceptance.
    c. a rejection.
    d. an extension.
A

D

38
Q
  1. A contract may be terminated for which reasons?
    a. Mutual rescission
    b. Performance.
    c. Breach.
    d. All fo the above.
A

D

39
Q
  1. A woman gave an exclusive-right-of-sale listing to a broker to find a buyer for her residential lot. While the woman was vacationing with her family, a buyer signed an offer to purchase the woman’s lot at the full price and terms of the listing agreement.
    a. Because this is an exclusive-right-of-sale listing, the broker is authorized to accept the offer on the woman’s behalf.
    b. The broker may accept the offer on the woman’s behalf, as long as she gets the woman’s signature on the contract immediately upon the woman’s return.
    c. The exclusive-right-of-sale listing does not give the broker the authority to accept the offer on the woman’s behalf.
    d. The broker may accept the offer because it is a full-price offer.
A

C

40
Q
  1. A man and a woman enter into a written agreement. The man will mow the woman’s lawn every week during the mowing season and every third week during the winter. In the middle of the summer, the man has back surgery. He hands over his lawn maintenance contracts to a friend, who assumes the responsibility for all of the man’s customers for the remainder of the contract period. Which term describes this situation?
    a. Breach
    b. Assignment
    c. Specific performance
    d. Mutual rescission
A

B

41
Q
  1. Which applies to exclusive-right-of-sale listings?
    a. The broker is due a commission regardless of who finds the buyer.
    b. The listing may be submitted to the MLS by the listing broker.
    c. The seller must consent to the terms of the listing agreement.
    d. All of the above apply.
A

D

42
Q
  1. Which disclosure regarding radon is required when purchasing or leasing real property in Florida?
    a. A disclosure statement in the contract indicating that the house has been tested for radon and that the test indicated a safe level of radon.
    b. An estimate of the cost for a required radon test.
    c. A disclosure statement in the contract indicating that the seller is required to have the property tested for radon at the seller’s expense if requested by the buyer.
    d. A disclosure statement in the contract explaining radon gas.
A

D

43
Q
  1. A 15-year-old teenager entered into a contract with a man, who is of legal age to contract.
    a. The teenager is obligated to honor the terms of the contract.
    b. The man may divest himself of his obligations under the contract because the contract is invalid.
    c. The teenager may choose to divest himself of his obligations under the contract.
    d. This contract is a void contract.
A

C

44
Q
  1. Normally, a slae contract involving real property contains a provision that in case of breach, by the buyer, the earnest money deposit will be regarded as
    a. compensatory damages to the seller.
    b. liquidated damages to the seller.
    c. compensatory damages to the broker.
    d. liquidated damages to be divided between seller and buyer.
A

B

45
Q
  1. The most advantageous type of listing from the broker’s point of view is
    a. an open listing.
    b. an exclusive-agency listing.
    c. an exclusive-right-of-sale listing.
    d. a net listing.
A

C

46
Q
  1. Which statement is FALSE concerning Florida’s building code violation disclosure?
    a. The seller is responsible for the costs associated with the code violation.
    b. The seller must inform the code enforcement agency regarding the name and address of the buyer within five days of the title closing.
    c. Copies of the pleadings and other documents concerning the code violation must be given to the buyer.
    d. The disclosure requires a statement that the buyer is responsible for compliance with the building code.
A

A

47
Q
  1. A couple have decided to make a written offer to purchase a quaint little home built in the 1950s. Which task is NOT required prior to signing the sale contract?
    a. The couple must be given a copy of the EPA pamphlet concerning lead-based paint hazards in the home.
    b. The seller must disclose any known presence of lead-based paint.
    c. The couple must have the home inspected for lead-based paint.
    d. The real estate sale contract must indicate a disclosure concerning lead-based paint.
A

C

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