Chapter 11 Flashcards
Real Estate Contracts
1
Q
An owner promises to give a listing to only one broker, setting forth the price, terms, time, and commission, but reserves the right to sell the property without paying any commission. What type of listing has the seller given? A. Exclusive right of sale B. Exclusive C. Net D. Open
A
B. Exclusive
2
Q
What type of listing best protects the broker? A. exclusive right of sale B. exclusive C. open D. net
A
A. exclusive right of sale
3
Q
Complete this sentence. Valuable consideration \_\_\_\_? A. can only be money B. could be a promise C. is a requirement of all contracts D. refers to "love and affection"
A
B. could be a promise
4
Q
If no clause appears in a contract concerning damages, what are any damages awarded as a result of a breach of contract? A. revocable B. extraordinary C. liquidated D. unliquidated
A
D. unliquidated
5
Q
Complete this statement. A listing contract would not terminate as the result of \_\_\_\_\_. A. the death of the seller B. The death of the broker C. destruction of the improvements D. abandonment by the seller
A
D. abandonment by the seller
6
Q
If a seller revoked an exclusive right of sale listing without cause and then sold the property to a neighbor, which statement would be true?
A. a seller always has the right to revoke a listing
B. only the broker may revoke the listing
C. the broker is due a commission based on the sales price
D. the broker may sue for damages for time and expenses
A
C. the broker is due a commission based on the sales price
7
Q
If a sales associate is entitled to 60% of all commissions earned, and sells a property for $64,000 with a 7% commission due to the broker, how much should the broker pay the sales associate? A. $1,726 B. $1,792 C. $2,688 D. $4,480
A
C. $2,688
8
Q
The horizontal strip of land 6 miles wide immediately north of the Tallahassee baseline would be: A. township 1 east B. section 1 north C. range 1 north D. township 1 north
A
D. township 1 north
9
Q
What type of listing can be held by more than one broker? A. open listing B. exclusive right of sale listing C. exclusive listing D. net listing
A
A. open listing
10
Q
Which action can terminate a contract? A. novation B. performance C. rejection D. subrogation
A
B. performance
11
Q
Which item is an essential element of a sales contract? A. an offer and and acceptance B. witness C. a notary seal D. an earnest money deposit
A
A. an offer and and acceptance
12
Q
What does the statue of Frauds require?
A. lawsuits about oral contracts must be filed within 4 years
B. all contracts must be in writing
C. to be enforceable, a contract transferring an interest in real estate must be in writing
D. violations are punishable by fines not to exceed $1,000
A
C. to be enforceable, a contract transferring an interest in real estate must be in writing
13
Q
What is stated in the Statute of Limitations?
A. the sentencing guidelines for violations of the law
B. the time frame in which a contract can be enforced
C. to be enforceable, real estate contracts must be written
D. contracts must be notarized to be enforceable
A
B. the time frame in which a contract can be enforced
14
Q
The essential elements of a contract include all of the following, EXCEPT: A. consideration B. offer and acceptance C. competent parties D. notarized
A
D. notarized
15
Q
Which remedies are available when a seller breaches a contract? A. a suit for specific performance B. buyer gets deposit returned C. A or B but not both D. notifying FREC
A
C. A or B but not both
16
Q
A property that listed for $400,000 sold for 93% of the listing price with a 5% commission. It was sold by another office. The commission is to be split 50% to the listing office and 50% to the selling office. If the sales associate is to receive 40% of the listing office share, how much will the listing broker receive? A. $4,000 B. $4,650 C. $5,580 D. $6,000
A
C. $5,580
17
Q
Broker Bob has an exclusive listing. The owner calls and asks if Bob has any offers. Bob says no. Broker Charles submits an offer to the owner that is accepted. Which statement is correct?
A. Bob can sue for unliquidated damages but not commission
B. Bob and Charles must share the commission
C. Bob receives no commission and can do nothing about it
D. Bob is entitles to full commission
A
A. Bob can sue for unliquidated damages but not commission
18
Q
Broker Brown gets a listing from Mr. Jones. Broker Brown agrees to advertise, caravan and print material intended to help in the sale of the house. Mr. Jones agrees to pay a commission to Broker Brown no matter who sells the house. Which type of listing is in place? A. an exclusive listing B. an implied listing C. a general agency agreement D. an exclusive right of sale listing
A
D. an exclusive right of sale listing
19
Q
What is the most likely consequence for a broker who negotiates a contract for the sale of a house between the owner and purchaser in violation of the Statute of Frauds?
A. have his or her registration suspended
B. have his or her registration revoked
C. lose his or her commission on the sale
D. not be disciplined
A
D. not be disciplined
20
Q
Which of the following is a characteristic of a parol contract? A. in writing B. signed by two witnesses C. covered by statue of frauds D. oral
A
D. oral
21
Q
Which item creates a formal contract? A. an acknowledgement B. signatures C. a written form D. a notary's statement
A
C. a written form
22
Q
A broker accepts a listing that has an un-merchantable title. A sales contract is signed, and a deposit is obtained contingent upon the owner clearing title. At closing, the owner cannot give a clear title. The deposit is returned to the buyer. Which statement applies to this situation?
A. the broker is entitles to a full commission
B. the owner can sue the broker and the buyer
C. the buyer can sue the owner
D. the contingency was not met, so the contract is dead
A
D. the contingency was not met, so the contract is dead
23
Q
Which statement is correct regarding a lease agreement for 12 months or less?
A. must be in writing to be valid (enforceable)
B. must be writing to benefit the lessee
C. must be in writing to benefit the lessor
D. should be in writing to avoid misunderstanding
A
D. should be in writing to avoid misunderstanding
24
Q
Which of the following is a characteristic of an option contract? A. executed B. unilateral C. bilateral D. parol
A
B. unilateral
25
The buyer signs an offer with a deposit, but the seller changes the price. What should the sales associate do?
A. makes the necessary changes, have the seller sign and initial the changes, and then have the buyer initial the changes
B. make the changes, have the buyer sign, and then have the seller sign
C. prepare a new offer reflecting the changes and then have all parties sign
D. advise the seller that there can be no changes
A. makes the necessary changes, have the seller sign and initial the changes, and then have the buyer initial the changes
26
```
What type of listing is held by two or more licensed brokers?
A. a multiple listing
B. an exclusive right of sale listing
C. an open listing
D. a net listing
```
C. an open listing
27
What is an option contract?
A. a unilateral contract, binding both parties
B. a bilateral contract, binding only on the optionee
C. a unilateral contract, binding only on the optionor
D. a bilateral contract, binding on both parties
C. a unilateral contract, binding only on the optionor
28
```
What title does a buyer have when he or she signs a sales contract (or has purchased under contract for a deed)?
A. ostensible title
B. real title
C actual title
D. equitable title
```
D. equitable title
29
```
The sales price is $62,300 and the brokerage fee is 7%. The commission will be split as follows: MLS 5%, with the remaining 95% split between the sales associate (65%) and broker (35%). How much commission will the sales associate receive?
A. $2,834.65
B. $2,692.92
C. $1,526.35
D. $1,450.03
```
B. $2,692.92
30
```
A seller wishes to net $55,000 after paying a 7% commission. What should the selling price be?
A. $55,000
B. $58,000
C. $58,850
D. $59,140
```
D. $59,140
31
Owner Tim was in need of cash and contacted broker Mildred to list his property. Mildred inspected the property and advised Tim that the house was worth $90,000. Since Tim had to sell quickly, he listed the property for $84,000. Mildred acquired a 60-day option for $$1,500 consideration and sold the property 2 weeks later for $92,000. Which choice is correct?
A. Mildred has committed fraud
B. Mildred may retain the difference
C. Tim only owes Mildred a commission
D. Tim should file a civil action against Mildred
B. Mildred may retain the difference
32
A broker lists an owner's property for 6 months on an exclusive listing agreement for $80,000 at a commission of 7%. Three months later the owner sells the property to a nephew for $74,400. Which statement is correct?
A. the owner owes the broker a commission based on the listed price of $80,000
B. the owner does not owe the broker a commission
C. the owner is liable to the broker for damages
D. the owner owes a commission based on the sale price of $74,400
B. the owner does not owe the broker a commission
33
Broker Dan and broker Fred both have an open listing on Gail's home. Broker Dan showed Gail's home to customer Paula. Six months later broker Fred shows Gail's home to Paula and Paula buys it. Which is correct?
A. Gail owes Fred a commission
B. Gail owes Dan a commission
C. Fred and Dan must share the commission
D. Gail must pay both brokers a commission
A. Gail owes Fred a commission
34
Broker A has an exclusive agency listing on Mary's property. Broker B showed Mary's home to a customer and succeeded in obtaining a full price contract, which Mary accepted. Mary paid broker B a commission. Which is correct?
A. Mary owes a commission to broker A
B. broker B must share the commission with broker A
C. Mary owes both brokers a commission
D. Mary is liable to broker A for damages
D. Mary is liable to broker A for damages
35
A listing contract may be terminated in all of the following ways, EXCEPT:
A. cancellation of the contract
B. fulfillment of the contract
C. mutual abandonment of the contract
D. acceptance of an offer on the property
D. acceptance of an offer on the property
36
```
A tenant orally makes an offer to lease a house for 2 years at $600 a month. What makes this offer unenforceable?
A. The statute of Frauds
B. the statute of limitations
C. no witnesses
D. no binder deposit
```
A. The statute of Frauds
37
```
What type of contract is formed when a buyer calls an agent on the phone wanting to buy a certain property?
A. a unilateral contract
B. a bilateral contract
C. a valid contract
D. an unenforceable contract
```
D. an unenforceable contract
38
```
What instrument gives the broker authority to represent the seller in a real estate transaction?
A. listing agreement
B. buyer broker agreement
C. sales contract
D. agency disclosure
```
A. listing agreement
39
A valid real estate sales contract requires all of the following, EXCEPT:
A. an offer and acceptance communicated to all parties
B. a substantial earnest money deposit
C. a written form
D. the signatures of all parties
B. a substantial earnest money deposit
40
When a buyer withdraws an offer prior to it being accepted by the seller, what should the broker do?
A. give the deposit back to the buyer
B. give the deposit to the seller
C. retain the deposit as a commission
D. call the division of the real estate for instructions
A. give the deposit back to the buyer
41
```
What term is used to refer to damages that are specified in a contract?
A. liquidated damages
B. unliquidated damages
C. punitive damages
D. compensatory damages
```
A. liquidated damages
42
When should a broker earn commission when employed to find a purchaser?
A. when a successful closing is completed
B. when a signed offer from a ready, willing and able buyer is brought to the seller
C. when the terms are acceptable to the seller
D. B and C
D. B and C
43
```
What type of listing allows the seller to list their home with more than one broker?
A. open listing
B. exclusive listing
C. exclusive right to sell listing
D. exclusive right of sale listing
```
A. open listing
44
```
Complete the sentence. an oral lease, in excess of 1 year, may also be referred to as:
A. invalid
B. a tenancy at will
C. a tenancy at sufferance
D. a freehold estate
```
B. a tenancy at will
45
```
Which of the following elements must an option contract contain?
A. valuable consideration
B. a competent grantor
C. a competent mortgager
D. good consideration
```
A. valuable consideration
46
```
Which would never appear in a real estate sales contract?
A. remedies for breach
B. exculpatory clause
C. time for occupancy and closing
D. financing provisions
```
B. exculpatory clause
47
```
Complete this sentence. When all terms and conditions have been clearly stated, a contract is said to be:
A. expressed
B. formal
C. parol
D. executed
```
A. expressed
48
Farmer Jones meets broker Brown at a cocktail party. Jones and Brown agree that if Brown sells Jones's farm for $650,000 within 30 days, Jones will pay Brown 6% commission. Which applies?
A. a fiduciary relationship has been established
B. this is a contract, and Brown is entitled to a commission if the broker performs
C. under the statute of Frauds, this listing is not enforceable
D. this is an exclusive right of sale listing
B. this is a contract, and Brown is entitled to a commission if the broker performs
49
complete the sentence. Real estate commissions are usually based on the total sales price:
A. including encumbrances
B. not including seller's closing expenses
C. not including encumbrances
D. including the commission, but not encumbrances or expenses
A. including encumbrances
50
Broker Greer closed down his real estate office and sold his inventory of listings to M and M Realty, Inc., an office down the street. This is:
A. legal, since listings are assignable
B. not legal without the knowledge and consent of the listing sales associate
C. not legal, since listings are not assignable
D. legal since the broker can do anything he wants with the listings because he owns them
C. not legal, since listings are not assignable
51
```
All listings should be in writing:
A. to be enforceable
B. to avoid any misunderstanding
C. because F.S. 475, requires it
D. because the statute of frauds requires it
```
B. to avoid any misunderstanding
52
A seller and a broker make an agreement that the broker may receive 100% of the deposit if the buyer defaults. In this locality, a 50/50 split of forfeited deposits is customary. What may the broker do?
A. take only 50%
B. take 100%
C. take only his or her customary commission
D. nothing, but they may be disciplined for unfair business practice
B. take 100%
53
```
After negotiating all terms of a contract with a seller, a buyer signs the contract and then makes a minor change in the terms and conditions before it is presented to the seller for signatures. What is the status of the offer?
A. it is now void
B. it is still in effect
C. it is now executed
D. it is now a counteroffer
```
D. it is now a counteroffer
54
```
Who are the parties to the contract after a sales contract has been completed, and the money placed into escrow pending closing of the transaction?
A. buyer and seller
B. trustee and seller
C. buyer, seller and broker
D. vendor, vendee, and broker
```
A. buyer and seller
55
```
What is the status of an option without valuable consideration?
A. void
B. voidable only by the optionor
C. voidable only by the optionee
D. unenforceable
```
A. void
56
```
A broker had a listing in which part of it was oral and part of it was written and signed above the initials "L.S.", but all parties understood all of the terms and conditions and agreed to them. Which best describes this agreement?
A. parol
B. formal
C. unilateral
D. parol and formal
```
D. parol and formal
57
```
What may a broker be guilty of if he or she does NOT perform under the terms and conditions of a listing contract?
A. larceny
B. bad faith
C. abandonment
D. renunciation
```
C. abandonment
58
A buyer makes an offer, which the seller accepts. Before the broker can tell the buyer of the acceptance of his offer, the buyer dies. What is the most likely status of the contract?
A. valid because the buyer accepted
B. valid but will be voided at time of closing
C. void because the buyer did not know the offer was accepted before he died
D. void because the buyer did not initial the seller's acceptance
C. void because the buyer did not know the offer was accepted before he died
59
```
A property owner told a broker that he would list his home if a net of $120,000 could be received from the sale. If the broker's commission is 6% and the closing costs are estimated to be $2,200, what should the listing price be?
A. $122,200
B. $130,000
C. $127,200
D. $129,532
```
B. $130,000
60
```
If the commission on the sale is $4,599, and the broker charged 7%, what was the sales price?
A. $32,193.00
B. $42,770.70
C. $49,451.61
D. $65,700.00
```
D. $65,700.00
61
```
Complete the sentence. An agreement between two parties for the purchase of real estate must be:
A. an oral contract
B. a parol contract
C. an informal contract
D. any of the above
```
D. any of the above
62
A seller listed a house with a broker. The seller informed the broker that he has had a change of heart and refuses to pay the broker's commission. The broker immediately files suit and places a lien on the seller's house. How has the broker acted?
A. properly and efficiently
B. within the limits imposed under F.S. 475
C. legally, if the listing contract with the seller allowed him or her to do this
D. illegally, regardless of what is contained in the listing contract
C. legally, if the listing contract with the seller allowed him or her to do this
63
```
Where is the right of the broker to accept earnest money on behalf of the seller created?
A. sales contract
B. agency disclosure form
C. listing agreement
D. real estate license law
```
C. listing agreement
64
A prospect steps into a broker's office and tells the broker that he or she wants to buy property in an area called Everglades Estates. The broker informs the prospects that he does not have the property listed, but that he will take the prospect over to meet the owner. The owner tells the broker that he will NOT deal through real estate brokers. The next day, the owner contacts the prospect and a deal results. What may the broker do?
A. collect a commission from the seller as the seller cannot make use of the "fruit of the broker's labor"
B. sue the buyer
C. bring court action against the seller
D. under the circumstances, do nothing
D. under the circumstances, do nothing
65
When can a sales contract that is witnessed, executed, and acknowledged be recorded in the public records of the county in which the property is located?
A. when the licensee thinks the seller may back out
B. when the licensee hears rumor that the seller may accept a contract from someone else
C. when the seller requests it
D. when it will not delay the closing
C. when the seller requests it
66
```
An offer can be terminated by all of the following actions EXCEPT:
A. a counteroffer
B. acceptance
C. breach
D. withdrawal
```
C. breach
67
```
The period of time in which a contract may be legally enforced is governed by which of the following?
A. statute of frauds
B. statute of limitations
C. Florida real estate law
D. statute of relict-ion
```
B. statute of limitations
68
```
A buyer makes a written offer to purchase. The seller changes the terms or conditions, initials the changes, signs the contract and sends it back to the offeror. In contract law, what is the seller's changed contract?
A. an offer
B. a counteroffer
C. a binder offer
D. illegal
```
B. a counteroffer
69
```
Broker Max agrees to pay sales associate Sally 60% of all commissions she generates for the office. If Sally sells a property for $72,000 at a 7% brokerage commission, what is her share of the commission?
A. $5,040
B. $3,024
C. $2,520
D. $2,016
```
B. $3,024
