Chap 6: Real Estate Contracts

Question 1

6. 1. An agreement of sale transaction requires two closings, one for possession and one for title. Which charge is not included in both closings?
      a. Title Search
      b. Escrow fee
      c. Preparation of documents
      d. Conveyance tax

Answer 1

d. Conveyance tax

ANSWER: D

Question 2

6. 2. When Mr. Fusato buys a condo by way of an agreement of sale he receives all but which one:
      a. Equitable title
      b. Possession
      c. Membership in the homeowner’s association
      d. Legal title

Answer 2

d. Legal title

ANSWER: D

Question 3

6. 3. John Freemont, buyer, could NOT cancel his Purchase Contract and expect to have his earnest money deposit returned by:
      a. Disapproving the disclosure statement
      b. Disapproving the property inspection
      c. Failure to receive loan approval
      d. Dying

Answer 3

d. Dying

ANSWER: D

Question 4

6.4. Joseph Jehosaphat refused to provide a disclosure statement when he accepted an offer on his personal residence. What should his agent do?

a. Report him to the Real Estate Commission
b. Provide a written notice to the buyer of his rights to the statement and his right of recission, plus keep a written record of the actions she has taken to effect compliance.
c. Cancel the listing and tell the seller she cannot work with him unless he complies.
d. Fill out a disclosure statement herself, answering the questions to the best of her ability.

Answer 4

b. Provide a written notice to the buyer of his rights to the statement and his right of recission, plus keep a written record of the actions she has taken to effect compliance.

ANSWER: B

Question 5

6.5. The seller’s responsibilities on a listing contract include:

a. Making the house available for showings and open houses.
b. Paying for advertising.
c. Helping the agent fill out the disclosure statement.
d. Giving a tour of the house to anyone who sees the sign and rings the doorbell asking for information.

Answer 5

a. Making the house available for showings and open houses.

ANSWER: A

Question 6

6.6. On both a Listing Contract and Purchase Contract which of the following is true:

a. All terms, except those required by law, are negotiable.
b. Buyers and Sellers are required to mediate and arbitrate if problems arise.
c. Either party can cancel at any time, unilaterally.
d. Supplementary verbal agreements are enforceable, as long as the agent makes a note of them.

Answer 6

a. All terms, except those required by law, are negotiable.

ANSWER: A

Question 7

6. 7. The listing states that the refrigerator belongs to the tenant and is not included in the sale of the property. The Purchase Contract includes the sale of the refrigerator. The seller signs the Purchase Contract and subsequently realizes that it includes the sale of the refrigerator. Which is binding?
      a. The Listing
      b. The Seller’s Instructions to the agent
      c. The Landlord-Tenant code
      d. The Purchase Contract

Answer 7

d. The Purchase Contract

ANSWER: D

Question 8

6.8. In which of the following situations would you most likely attach a Plain Language Addendum to the Purchase Contract?

a. A time share unit selling for $27,500 FS.
b. An oceanfront leasehold condo selling for $85,000
c. An undeveloped vacant lot near Puna on the Big Island selling for $21,000
d. A three bedroom home on 2 acres in Kula being purchased by Korean nationals.

Answer 8

c. An undeveloped vacant lot near Puna on the Big Island selling for $21,000

ANSWER: C

Question 9

6.9. Who is responsible for preparing Hawaii’s Seller Disclosure Statement?

a. Seller
b. Listing Broker
c. Selling Broker
d. Escrow Agent

Answer 9

a. Seller

Question 10

6.10. Under the 1997 Hawaii law regarding “de minimus” structure position discrepancies in residential property, whih of the following would NOT be considered an encroachment?

a. A swimming pool that was built 1 foot into the neighbor’s property.
b. The corner of a roof that overhangs 9 inches onto a neighbor’s yard.
c. A chain link fence that crosses the next door back yard four inches beyond the boundary.
d. A driveway that overruns the County right of way by 2 inches.

Answer 10

c. A chain link fence that crosses the next door back yard four inches beyond the boundary.

Question 11

6.11. Under Megan’s Law,

a. A licensee would most likely personally search the police records on the Internet for the names of any convicted sex offenders who live in the area where a buyer client is considering buying a home.
b. Neither the Seller nor the Licensee is required to obtain information regarding sex offenders.
c. A Licensee should knock on all the doors on the streets where she has listings and inquire as to whether or not any convicted sex offenders live there.
d. A Seller has full disclosure responsibilities under Megan’s Law.

Answer 11

b. Neither the Seller nor the Licensee is required to obtain information regarding sex offenders.

ANSWER: B

Question 12

6.12. The statute of limitations on undisclosed defects in a residential real property transaction, provided the seller acted in good faith and provided the statement, is:

a. Two years from the discovery of the defect
b. Two years after closing
c. Two years from the date the buyer received the disclosure statement
d. Two years after acceptance of the Purchase Contract.

Answer 12

c. Two years from the date the buyer received the disclosure statement

ANSWER: C

Question 13

6.13. All of the following pairs of standard Purchase Contract terms are mutually exclusive (i.e., you must choose one or the other) EXCEPT:

a. Survey AND Staking
b. Unilateral one-time right to extend closing date AND Time is of the Essence.
c. Mediation AND Arbitration
d. Buyer to earn interest on deposits AND Buyer not to earn interest.

Answer 13

c. Mediation AND Arbitration

ANSWER: C

Question 14

6.14. Which of the following is NOT addressed by a standard term of the Purchase Contract?

a. Buyer’s right to inspect the property after acceptance.
b. Termite inspection and treatment
c. Pet related treatment
d. Tenant’s rights regarding notice of eviction.

Answer 14

d. Tenant’s rights regarding notice of eviction.

ANSWER: D

Question 15

6.15. Which of the following is NOT provided to the buyer at closing, per the Purchase Contract?

a. Keys
b. Possession
c. Marketable title
d. Preliminary title report

Answer 15

d. Preliminary title report

ANSWER: D

Question 16

6.16. Which of the following is mentioned in the Purchase Contract, but left open to negotiation if and when the situation arises?

a. Proration of existing assessments between the Buyer and the Seller.
b. Transfer of the tenant’s security deposit from seller to buyer.
c. Proration of a new assessment against the property that is not authorized between the acceptance date and the scheduled closing date.
d. Removal of all trash, junk and brush on the property prior to closing.

Answer 16

c. Proration of a new assessment against the property that is not authorized between the acceptance date and the scheduled closing date.

ANSWER: C

Question 17

6.17. Under the residential disclosure law, a licensee would most likely

a. Personally search the police records on the Internet for the name of any convicted sex offenders who live in the area where a buyer client is considering buying a home.
b. Inform a seller client that he has a duty to disclose any certain knowledge he has of a convicted sex offender living next door to his listed home.
c. Knock on all the doors on the streets where he has listing and inquire as to whether or not any convicted sex offenders live there.
d. A licensee has no responsibilities under the residential disclosure law.

Answer 17

b. Inform a seller client that he has a duty to disclose any certain knowledge he has of a convicted sex offender living next door to his listed home.

ANSWER: B

Question 18

6.18. Regarding an Exclusive Right to Sell Listing Agreement, which is NOT true?

a. It must be signed by all owners of record and the listing broker.
b. It must be dated.
c. The seller must be accept any full price offer that meets all the terms and conditions of the listing agreement.
d. It must contain a specific expiration date.

Answer 18

c. The seller must be accept any full price offer that meets all the terms and conditions of the listing agreement.

ANSWER: C

Question 19

6.19. In order to enter a listing into the MLS

a. the property must be located on the same island as the brokerage of the listing agent.
b. the listing agent may do so without the seller’s express permission
c. a data input sheet must be submitted to the MLS and becomes Exhibit A of the listing agreement.
d. All of the above.

Answer 19

c. a data input sheet must be submitted to the MLS and becomes Exhibit A of the listing agreement.

ANSWER: C

Question 20

6.20. Under an Exclusive Right to Sell Listing Agreement the seller agrees to pay the listing broker a 6% commission. Under what circumstances will this commission be paid?

a. The Seller accepts an offer that meets most of the conditions of the listing agreement.
b. A ready, willing but financially unqualified buyer is found who makes a full price offer that meets all the terms and conditions of the listing agreement.
c. The seller counters a buyer’s offer at less than full price but the buyer rejects the counter offer.
d. The seller does not respond to the buyer’s offer that is full price but contingent upon the sale of his existing home.

Answer 20

a. The Seller accepts an offer that meets most of the conditions of the listing agreement.

ANSWER: A

Question 21

6.21. A buyer and seller go through several rounds of negotiations on an offer. Which statement is true?

a. When opening escrow after reaching a meeting of the minds, the original Purchase Contract plus all counter offers should be submitted in order to provide a complete paper trail.
b. If the only change on a counter offer is the price, it is preferable to simply cross out the original price on the Purchase Contract and write in the new price, initialed by all parties.
c. Only the seller may make a counter offer. The buyer must create a new Purchase Contract to continue negotiations.
d. Each counter offer rejects the original offer and cancels all previous counter offers.

Answer 21

d. Each counter offer rejects the original offer and cancels all previous counter offers.

ANSWER: D

Question 22

6.22. The use of HAR Standard Forms

a. requires the services of a licensed attorney for review in order to ensure that the licensee is not committing the unauthorized practice of law.
b. is recommended but not required.
c. is required for every residential real estate transaction.
d. is required for every residential real estate transaction in which one or more licensees is involved.

Answer 22

b. is recommended but not required.

ANSWER: B