Chapter 14: Real Estate Contracts

Question 1

Bilateral Contract

Answer 1

A contract in which both parties enter into mutual promises

Question 2

Competent

Answer 2

Having the mental and age capacity to enter into a contract

Question 3

Contract

Answer 3

An agreement between two or more competent parties, supported by consideration, to do, or not to do, a certain legal act

Question 4

Exclusive Agency Listing

Answer 4

Listing agreement whereby the seller may find a buyer without owing a commission, although the seller agrees not to list the property with any additional brokers

Question 5

Exclusive Right of Sale

Answer 5

Listing agreement whereby the broker earns a commission no matter who procures the buyer

Question 6

Liquidated Damages

Answer 6

A specific dollar amount of damages to be paid by a breaching party as specified in the contract

Question 7

Meeting of the Minds

Answer 7

An agreement and understanding between the parties concerning the intent of their contractual terms

Question 8

Net Listing

Answer 8

A listing agreement whereby the broker keeps any funds over a definite net amount to be received by the seller

Question 9

Novation

Answer 9

Substitution of a contract and a party for another contract and another party

Question 10

Open Listing

Answer 10

Listing agreement whereby the seller promises to pay a broker a commission if that broker procures a buyer. The seller may sell the property itself without owing a commission, and the seller may enter an open listing with several different brokers simultaneously.

Question 11

Option

Answer 11

A right, given as a continuing offer, to purchase real property upon specific terms within a given period of time

Question 12

Statute of Frauds

Answer 12

Body of law that states that certain types of contracts must be in writing to be enforceable

Question 13

Statute of Limitations

Answer 13

Establishes time limits for filing litigation

Question 14

Unenforceable

Answer 14

Status of a contract when it violates the Statute of Frauds

Question 15

Unilateral Contract

Answer 15

A contract whereby only one party undertakes a promise or obligation

Question 16

Valid

Answer 16

When a contract satisfies all legal requirements

Question 17

Void

Answer 17

A contract the law will not recognize under any circumstances

Question 18

Voidable

Answer 18

Contract involving a minor or other incompetent party wherein the incompetent part has a choice to enforce or rescind the contract

Question 19

The type of listing that is most beneficial to a real estate licensee is the:

Answer 19

Exclusive Right of Sale listing

Question 20

Which type of listing is disfavored in Florida and should be avoided:

Answer 20

Net listing

Question 21

An option contract is a type of:

    A     Unilateral contract
B	Bilateral contract
C	Voidable contract
D	Unenforceable contract

Answer 21

Unilateral contract

Question 22

All of the following are essentials of a valid contract except:

    A     Capacity of the parties
B	Legality of subject matter
C	Consideration
D	In writing

Answer 22

D In writing

Question 23

Which of the following is an example of a voidable contract?

    A     An oral lease for 6 months
B	A real estate contract signed by a 17 year old 
            seller.
C	A verbal contract wager on the Super Bowl
D	A contract to pay a kickback

Answer 23

A real estate contract signed by a 17 year old seller.

Question 24

Which of the following conditions must have occurred if an oral real estate sale and purchase contract is enforceable under the partial performance doctrine?

    A     Part of the purchase price must be paid
B	The buyer must take possession
C	The buyer must make improvements
D	Both B and C

Answer 24

A Part of the purchase price must be paid

Question 25

Which type of listing must be in writing?

Answer 25

Exclusive right of sale

Question 26

The Florida Statute of Limitations requires actions based upon breach of a written contract to be filed within what period of time:

Answer 26

5 years

Question 27

On Saturday, Broker Barbara shows a house to Sandy, a prospective buyer. On Sunday, Broker Al shows the same house to Sandy, but on Sunday Sandy decides to make an offer on the house, and that offer is accepted. When Barbara learns about the contract, she declares that she is entitled to the commission since she showed the house to Sandy first. Which of the following statements is most accurate?

    A     Barbara is correct. Since she showed the 
            house first, she should receive the sales 
            commission.
B	Barbara is partly correct. Since she showed 
            the house first, she should receive one-half of 
            the commission.
C	Barbara is incorrect. Since she was not the 
            procuring cause of the sale, she is entitled to 
            no commission.
D	Barbara is incorrect. The person who shows 
            the house last always earns the commission.

Answer 27

C Barbara is incorrect. Since she was not the procuring cause of the sale, she is entitled to no commission.

Question 28

Buyer Tom has lawfully assigned his rights to a Purchase and Sale Agreement to Jeff. One day before closing, Jeff announces he is not going to perform and defaults the contract. What are the Seller’s rights?

Answer 28

The seller can sue either Tom or Jeff for specific performance or compensatory damages

Question 29

Offers can be terminated in each of the following ways except:

    A     Acceptance
B	Rejection
C	Counteroffer
D	Closing

Answer 29

Closing. - Offers can be terminated by Accepting, Withdrawal or Rejecting the offer, producing a counter offer, Lapse of time, Destruction of the property or death or Insanity of either party.

Question 30

If a listing agreement is in writing, the seller is entitled to a copy of the agreement within:

Answer 30

24 hours

Question 31

Most real estate sale and purchase contracts provide that if the Buyer defaults, the seller may retain the earnest money deposit as:

Answer 31

Liquidated damages

Question 32

A parol contract:

    A     Is an oral contract
B	Is also known as a formal contract
C	Is unenforceable
D	Has nothing to do with real estate

Answer 32

Is an oral contract

Question 33

Federal law requires lead based paint disclosures for properties that were constructed prior to:

Answer 33

1978