Chapter 11 : Contracts for Real Estate Transactions

Question 1

What happens when a contract contains a subject clause that is too subjective?

Answer 1

When a contract contains a subject clause that is too subjective, the courts will declare that the contract process must still be regarded as at the offer stage until the subject clause is removed.

Question 2

A deposit is:

(1) an amount deposited with a brokerage by the purchaser when an offer to purchase is made.
(2) an amount deposited with a sales agent by the purchaser when an offer to purchase is made.
(3) an amount deposited with a brokerage by the purchaser before the offer to purchase is made.
(4) Both (1) and (2) are correct.

Answer 2

A deposit is:

(1) an amount deposited with a brokerage by the purchaser when an offer to purchase is made.

Question 3

Define listing agreement.

Answer 3

A listing agreement is a contract between an owner (vendor) and a real estate licensee whereby the licensee agrees to try to find a purchase for the listed property in return for the vendor paying a stipulated amount of commission should the licensee be successful.

Question 4

A time clause in a contract of purchase and sale allows a party to invoke a time period in which a ________ precedent must be ________. If this does not occur within the time period, the result would be ________ of the contract.

Answer 4

A time clause in a contract of purchase and sale allows a party to invoke a time period in which a condition precedent must be removed. If this does not occur within the time period, the result would be termination of the contract.

Question 5

A licensee must report a “large cash transaction” to _________ if he or she receives more than $________ in cash in the course of a single transaction.

Answer 5

A licensee must report a “large cash transaction” to FINTRAC if he or she receives more than $10,000 in cash in the course of a single transaction.

Question 6

A brokerage that holds a deposit on behalf of all the parties to a real estate contract, unless agreed to otherwise, holds that deposit as a ___________.

Answer 6

A brokerage that holds a deposit on behalf of all the parties to a real estate contract, unless agreed to otherwise, holds that deposit as a stakeholder.

Question 7

The __________ Act is a _________ statute designed to eliminate privately imposed restraints on trade.

Answer 7

The Competition Act is a federal statute designed to eliminate privately imposed restraints on trade.

Question 8

Which of the following correctly describes a listing price?

(1) The value at which a property will be sold.
(2) The value at which a property is advertised for sale.
(3) The value at which a property is appraised.
(4) None of the above correctly describe a listing price.

Answer 8

A listing price is:

(2) The value at which a property is advertised for sale.

Question 9

A potential purchaser of real estate can enforce the terms of a listing agreement.

(1) True
(2) False

Answer 9

(2) False. Only the parties to a contract can enforce its terms. The parties to a listing agreement are the agent(s) and seller(s). Therefore, purchasers cannot enforce the terms in a listing agreement because they lack privity of contract.