Chapter 6

Question 1

A provision in a contract stating the purchase depends on the buyer qualifying for a loan is called a:

Answer 1

“subject to” provision or contingency clause.

Question 2

Buyer makes a written bonafide offer to purchase, and seller signs the acceptance. A contract is first created:

Answer 2

when buyer receives proper communication of seller’s acceptance

Question 3

The law that sets the time period in which a legal action must be filed by the wronged party, is called the statute of:

Answer 3

limitations

Question 4

When an existing contract is replaced with an entirely new contract, it is called:

Answer 4

novation

Question 5

All of the following are essential for a valid real estate contract, except:

Answer 5

parole evidence

Question 6

An executory contract is a contract that:

Answer 6

is yet to be completed

Question 7

Which of the following is a classification of a contract?
  Valid 
  Voidable 
  Unenforceable 
  All answers are correct

Answer 7

All answers are correct

Question 8

An assignment:

Answer 8

transfers a person’s right in a contract.

Question 9

According to the CAR Deposit Receipt in the textbook, the:

Answer 9

buyer’s signature constitutes an offer to purchase

Question 10

When the owner of a piece of leased property gives the lessee an option to buy, the option:

Answer 10

is not a purchase contract until exercised

Question 11

When a buyer wishes the property instead of money damages, the buyer will sue for:

Answer 11

specific performance

Question 12

A buyer makes an offer on a lot for $105,000 and the seller counter offers for $108,000, the buyer is:

Answer 12

relieved from any further liability

Question 13

If the property in question is intended to be the home of the buyer, the CAR deposit receipt liquidated damage clause limits the buyer’s liability upon default. The maximum liability for the buyer is the amount of the deposit or what percentage of the sales price whichever is the lesser?

Answer 13

3%

Question 14

Which of the following is FALSE concerning purchase agreement contracts?

Answer 14

Promissory notes and post-dated checks are never acceptable as consideration.

Question 15

Which of the following is NOT considered a basic element of any contract?

Answer 15

Enforcement

Question 16

Consideration can best be described as:

Answer 16

anything of value

Question 17

According to the CAR deposit receipt in your textbook, if a buyer and seller get together and cancel a sale after the broker had secured an offer and acceptance, and the seller instructs the broker to return the buyer’s full deposit, the broker may:

Answer 17

ask the seller for the commission, but return the full deposit

Question 18

A broker’s commission is most likely earned when the broker:

Answer 18

communicates acceptance to the offeror

Question 19

Broker Wilson took a listing. Wilson’s salesperson brought in an offer. One hour later another offer on the same property came in from a different real estate company. The salesperson from Broker Wilson’s office submitted the first offer first. Which of the following is correct?

Answer 19

Broker Wilson must inform the seller of both offers or be subject to disciplinary action

Question 20

If one of the parties doesn’t go through with a contract (nonperformance), it is called a(n):

Answer 20

breach

Question 21

Which of the following indicates the greatest progress toward completion of a sale?

Answer 21

broker notified buyer of seller’s signed acceptance of buyers offer

Question 22

Which of the following is used to change the original terms of the purchase agreement?

Answer 22

Counter offer form

Question 23

While a transaction is in escrow, a property suffers $10,000 in fire damage. Per the CAR purchase contract and receipt for deposit:

Answer 23

the buyer is entitled to the return of the entire deposit

Question 24

Six separate co-buyers of a parcel of land signed a deposit receipt contract at different times and places. A copy must be:

Answer 24

given to each at the time they sign

Question 25

A signed written contract takes precedence over oral agreements or prior written agreements based on:

Answer 25

the parol evidence rule.

Question 26

When a buyer backs out of a home sale, the most common outcome is:

Answer 26

buyers get back the deposit, seller hopes to find another buyer

Question 27

What is a contract called where the seller agrees to pay a commission and the broker agrees to use diligence in finding a buyer?

Answer 27

bilateral executory contract

Question 28

At what minimum age is a civilian single person, who has not had any court or guardianship intervention, legally capable of entering into an enforceable real estate contract?

Answer 28

18 years

Question 29

The listing agreement stated that the existing loan was to be assumed. The broker received an offer per the exact terms of the listing except that the buyer wanted to put on a new loan. The seller refused the offer. The broker would be:

Answer 29

entitled to no commission

Question 30

Under an option agreement, the grantor/owner of the property is the:

Answer 30

optionor