Chapter 10

Question 1

A ________________ is a contract between a property seller and a broker or principal broker which authorizes the broker to act as an agent of the seller for compensation to offer the real property for sale or to find and obtain a buyer.

Answer 1

Listing agreement

Question 2

A _________________ is the document a prospective buyer signs once he or she decides to work with a buyer’s agent at a particular brokerage.

Answer 2

Buyer representation agreement

Question 3

A ____________ is a condition that must be met before the contract is enforceable.

Answer 3

Contingency

Question 4

It is possible for both buyers and sellers to abuse contingencies in order to leave themselves a convenient way to cancel without defaulting. To avoid problems, the statement of a contingency should:

Answer 4

1) be explicit and clear
2) have an expiration date
3) expressly require diligence in the effort to fulfill the requirement

Question 5

Unless expressly excluded, items commonly construed as ________ are included in the sale. Similarly, items commonly considered _________________ are not included unless expressly included.

Answer 5

Fixtures, personal property

Question 6

A _________ is a contractual arrangement calling for the lessee (user) to pay the lessor (owner) for use of an asset.

Answer 6

Lease

Question 7

A lease may be terminated sooner than its end date by:

Answer 7

1) Break/Cancellation (this depends upon the terms of the lease)
2) A negotiated deed of Surrender
3) Forfeiture
4) By operation of statute (rare)

Question 8

What does the escrow clause in a sales contract do?

Answer 8

It provides for the custody and disbursement of the earnest money deposit, and releases the escrow agent from certain liabilities in the performance of escrow duties.

Question 9

The relationship between the tenant and the landlord is called what?

Answer 9

Tenancy

Question 10

An ____________ authorizes a broker to represent an owner or landlord.

Answer 10

Owner listing

Question 11

A ______________ or _______________ agreement authorizes a broker to represent a buyer or tenant.

Answer 11

Buyer agency or tenant representation

Question 12

The _____________ is a legally-binding contract that creates an agency relationship authorizing a broker to serve as the agent for a principal in a real estate transaction.

Answer 12

Listing agreement

Question 13

Most listing agreements are ___________ employment contracts – meaning that the owner hires the broker and promises to pay a commission in exchange for the broker’s promise to locate a “ready, willing and able” buyer or tenant for the owner.

Answer 13

Bilateral

Question 14

If the ______________ is not in writing, a broker could not collect his or her commission if the seller refused to pay.

Answer 14

Listing agreement

Question 15

Under this arrangement, the broker has the exclusive right to market the property for a specified period of time.

Answer 15

Exclusive right to sell

Question 16

An _______________ listing gives the broker the greatest assurance that he or she will receive compensation for his or her marketing efforts. And as a result, sellers usually see a quicker and more profitable sale of the property.

Answer 16

Exclusive right to sell

Question 17

An ________________ listing agreement gives a broker the right to market and sell a property for a specified time period, while the owner retains the right to find a buyer and sell the property without owing the broker a commission. The seller must pay a commission only if the home is sold by the broker or an authorized agent or subagent of the broker.

Answer 17

Exclusive agency

Question 18

An _______________ is a non-exclusive contract, authorizing a broker to serve as the agent for either the sale or the purchase of property. With this type of listing, a broker is not under the same obligation to perform as with other listing agreements, so an open listing is often considered to be a unilateral contract.

Answer 18

Open listing

Question 19

A _______________ is not technically a type of listing agreement. In a net listing, an owner sets a minimum amount that he wants to receive from the sale of the property and lets the broker have as commission any amount above the set minimum.

Answer 19

Net listing

Question 20

How does a net listing create a conflict of interest for a broker?

Answer 20

It violates the broker’s fiduciary responsibility of putting the client’s interests above his or her own.

Question 21

Most buyer agent agreements have an enforceable _________________ clause that allows the broker legal recourse for compensation if the buyer purchases a property without compensating the broker during the period of the agreement, even if the broker did not show the buyer the property.

Answer 21

Exclusive right-to-purchase

Question 22

The agent who ultimately caused the buyer to purchase the home and earned the commission is generally the _______________ agent.

Answer 22

Procuring cause

Question 23

True or false: The Texas Real Estate License Act states that only brokers may list, sell or rent property. Agents have authority to list, but all listings must be done in the name of a licensed broker.

Answer 23

True

Question 24

Which type of listing provides the most incentive for a broker to market a property?

Answer 24

Exclusive right to sell

Question 25

A party’s failure to meet a contingency entitles the parties to:

Answer 25

Cancel the contract

Question 26

What type of listing authorizes a broker to represent an owner or landlord?

Answer 26

An owner listing

Question 27

Another term for leasehold estate is “__________________”.

Answer 27

Less-than-freehold estate

Question 28

Leasehold estates are distinguished from freeholds by their _________________.

Answer 28

Temporary nature