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Real Estate > Chapter 12 > Flashcards

Chapter 12 Flashcards

1
Q

The amount of earnest deposit is determined by:

A

An agreement between parties

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2
Q

The term ‘rescind” means:

A

Cancel

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3
Q

A broker has found a buyer for a seller’s home. The buyer has indicated in writing his willingness to buy the property for $1,000 less than the asking price and has deposited $5,000 in earnest money with the broker. The Seller is out of town for the weekend, and the broker has been unable to inform him of the signed document. At this point, the buyer has signed a (n):

A

Offer

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4
Q

Which one of the following is NOT essential to the formation of a contract?

Offer
Acceptance
Consideration
Performance

A

Performance

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5
Q

Harry agrees to purchase Victoria’s real estate for $230,000, and deposits $86,900 earnest money with Broker Larry. However, Victoria is unable to clear the title to the property, and Harry demands the return of his earnest money as provided in the purchase contract. Broker Larry should:

A

Return the entire amount to Harry

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6
Q

A broker took a listing and later discovered that the client was legally incompetent and had been living in a mental institution for many years, believing himself to be President Taft. The listing is now:

A

Of no value to the broker because it is now void

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7
Q

Every real estate contract must have a(n):

A

Offer and acceptance

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8
Q

An offeree has the right to __________ an offer.

A

Reject

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8
Q

After the buyer and seller have signed a sales contract, the seller changes his mind and defaults. The buyer sues the seller to force him to go through with the contract. This is known as a suit for:

A

Specific performance

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9
Q

Under the statute of frauds, all contracts for the sale of real estate must be:

A

In writing (hard copy or electronic version) to be enforceable

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10
Q

On Tuesday, broker Loren received a $750 earnest money deposit from Gus. The seller accepted the offer on Thursday. Where and when must Loren deposit Gus’s money?

A

In a special non-interest-bearing trust account by Friday

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11
Q

A void contract is one that is:

A

not legally enforceable.

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12
Q

The legal proceeding or legal action brought by the buyer under a purchase contract to enforce the terms of the contract is known as:

A

a suit for specific performance.

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13
Q

The essential elements of a contract include all of the following EXCEPT:

A

notarized signatures.

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13
Q

The essential elements of a contract include all of the following:

A

offer and acceptance, competent parties, consideration.

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14
Q

If, upon the receipt of an offer to purchase his property under certain conditions, the seller makes a counteroffer, the prospective buyer is:

A

relieved of his original offer.

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15
Q

A buyer defaulted some time ago on a written contract to purchase a seller’s real estate. Can the seller sue for damages?

A

Yes, if the seller is not prohibited from doing so by the statute of limitations.

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16
Q

Which of the following gives the best evidence of the buyer’s intention to carry out the terms of the real estate purchase contract?

The “subject to” clause

The agreement to seek mortgage financing

The earnest money deposit

The provision that “time is of the essence”

A

The earnest money deposit

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17
Q

A real estate licensee may draft a contract:

A

never, licensee can only fill in the blanks of a reprinted contract.

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18
Q

An option:

A

keeps an offer open for a specified time.

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19
Q

When a prospective buyer makes a written purchase offer that the seller accepts, then the:

A

buyer receives equitable title to the property.

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20
Q

A bilateral contract is one in which:

A

the promise of one party is given in exchange for the promise of the other party.

21
Q

The law that requires real estate contracts to be in writing to be enforceable is the:

A

statute of frauds

22
Q

If an owner takes his property off the market for a definite period of time in exchange for some consideration, but he grants the right to purchase the property within that period for a stated price, this is called a(n):

A

option.

23
Q

A breach of contract is a refusal or a failure to comply with the terms of the contract. If the seller breaches the purchase contract, the buyer may do all of the following:

A

sue the seller for specific performance, rescind the contract and recover the earnest money, sue the seller for damages.

24
Q

A breach of contract is a refusal or a failure to comply with the terms of the contract. If the seller breaches the purchase contract, the buyer may do all of the following EXCEPT:

A

sue the broker for nonperformance.

25
Q

To assign a contract for the sale of real estate means to:

A

transfer one’s rights under the contract.

26
Q

None of the following are essential to a real estate contract:

A

grantor and a grantee, acknowledgment by a notary, legal description.

27
Q

None of the following are essential to a real estate contract EXCEPT:

A

offer and acceptance.

28
Q

Two salespeople working for the same broker obtained offers on a property listed with their firm. The first offer was obtained early in the day. A second offer for a higher purchase price was obtained later in the afternoon. The broker presented the first offer to the seller that evening. The broker did not inform the seller about the second offer so that the seller could make a decision about the first offer. Which of the following is true?

A

The broker has no authority to withhold any offers from the seller.

29
Q

In an option to purchase real estate, the optionee:

A

has no obligation to purchase the property.

29
Q

A broker has an exclusive right-to-sell listing on a building. The owner is out of town when the broker gets an offer from a buyer to purchase the building providing the seller agrees to take a purchase money mortgage. The buyer must have a commitment from the seller before the seller is scheduled to return to the city. Under these circumstances, the:

A

broker must obtain the signature of the seller to effect a contract.

30
Q

On Monday the seller offers to sell his vacant lot to the buyer for $112,000. On Tuesday, the buyer counteroffers to buy for $110,500. On Friday the buyer withdraws the counteroffer and accepts the original offer of $112,000. Under these conditions:

A

there is not a valid agreement because the buyer’s counteroffer was a rejection of the seller’s offer and, once it was rejected, it cannot be accepted later.

31
Q

The broker receives an earnest money deposit with a written offer to purchase that includes a ten-day acceptance clause. On the fifth day, before the offer is accepted, the buyer notifies the broker that she is withdrawing the offer and demands the return of the earnest money deposit. In this situation:

A

the buyer has the right to revoke the offer at any time until it is accepted and recover the earnest money.

32
Q

At the time a buyer was negotiating the purchase of a lot on which to build a new home, the seller represented that the soil was firm enough to support the construction of a building. In fact, the seller knew that any new construction would very likely sink up to fifteen feet below the surface. This contract is:

A

voidable by the buyer because of fraud.

33
Q

After the buyer and seller have signed a sales contract, the seller has a change of heart and defaults. The buyer sues the seller. Is this action legal?

A

Yes. The buyer can sue for specific performance.

34
Q

All of the following are false regarding the acceptance of an offer:

A

Death of the offeror does not affect the status of the offer, In real estate, once an offer has been accepted, the offeror has three days to rescind the contract, Destruction of the premises will not affect the status of the offer.

35
Q

All of the following are false regarding the acceptance of an offer EXCEPT:

A

An offer can be rescinded at any time prior to acceptance.

36
Q

A contract agreed to under duress is:

A

voidable.

37
Q

A real estate sales contract becomes valid or in effect when it has been signed by:

A

the buyer and seller.

38
Q

All of the following will terminate an offer:

A

revocation of the offer before acceptance, death of the offeror before acceptance, a counteroffer by the offeree.

39
Q

All of the following will terminate an offer EXCEPT:

A

an offer from a third party.

40
Q

If a broker deposits the buyer’s earnest money in a trust account, at what time is the seller entitled to receive it?

A

At the time of settlement

41
Q

Which of the following best describes a contract that is voidable?

The contract has no legal effect
.
The contract is oral.

The contract may be declared void.

The contract has not been signed.

A

The contract may be declared void.

42
Q

What is the status of an option contract that has been exercised?

A

bilateral contract

43
Q

Of the following, who would have equitable title to property?

The buyer in a sales contract and the vendor in a land contract.

The buyer in a sales contract and the vendee in a land contract.

The seller in a sales contract and the vendor in a land contract.

The seller in a sales contract and the vendee in a land contract.

A

The buyer in a sales contract and the vendee in a land contract.

44
Q

All of the following are false regarding the status of a sales contract:

A

Death of the seller will not affect the status of the sales contract, Death of the buyer would terminate the sales contract, Death of the broker would terminate the sales contract.

45
Q

All of the following are false regarding the status of a sales contract EXCEPT:

A

Destruction of the premises would terminate the sales contract.

46
Q

At what age is an Illinois resident considered to be of legal age?

A

18

47
Q

In Illinois, a deed or contract executed on a Sunday or legal holiday is:

A

valid and enforceable.

48
Q

Broker Hannah is about to present a form contract to her client. The contract is intended to become a binding real estate contract as soon as the client signs it. How must the contract be headed, under Illinois law?

A

real estate sale contract

49
Q

Under the administrative rules all brokers must:

A

establish a special escrow account for the deposit of all earnest money received.

50
Q

A buyer and a seller sign a binding sales agreement. Three days before closing, the property is destroyed by a tornado. Under Illinois law, which of the following is true?

A

The seller cannot enforce the contract and must return all earnest money to the buyer.

Real Estate (22 decks)

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