Chapter 7: Specific Real Estate Contracts

Question 1

Harry purchased a duplex that has one unit leased by Mary for seven more months. Harry’s purpose for purchasing the duplex was to occupy one unit and his brother, Kyle, the other. Upon closing, Mary:

Answer 1

has the legal right to occupy the unit for the balance of her lease term.

Question 2

John has entered into a five-year lease that provides for an annual rent increase of $500 per month. John’s agreement is known as:

Answer 2

a Graduated Lease.

Question 3

A provision in the purchase and sale agreement that stipulates the contract will not be binding unless the buyer can obtain a 30-year fixed conventional loan with an interest rate not to exceed 7% is called:

Answer 3

a contingency.

Question 4

Name two real estate documents are unilateral contracts?

Answer 4

Option Contract

Listing Agreement

Question 5

When a tenant transfers the right to possess a leased property to another for less than the unexpired term of the lease, __________ has occurred.

Answer 5

a sublease

Question 6

The money deposited at the time of an offer to purchase that will be used for liquidated damages to the seller in the event of buyer breach is known as:

Answer 6

an earnest money deposit.

Question 7

A unilateral agreement to market and procure a buyer for a property that establishes an agency relationship with a homeowner is known as:

Answer 7

a Listing Agreement.

Question 8

Under a contract for deed (also known as a land contract), the seller:

Answer 8

retains naked title to the property until the property is paid for in full by the buyer.

Question 9

To be the procuring cause of a sale occurring, a real estate agent must:

Answer 9

be the person primarily responsible for bringing a ready, willing, and able buyer who enters into a sale agreement with the seller.

Question 10

A lease created to include certain expenses on a property in addition to a stipulated monthly rate is called:

Answer 10

a Net Lease.

Question 11

An agreement that binds the seller to pay a commission regardless of who sells the property is known as:

Answer 11

an Exclusive Right to Sell Listing.

Question 12

If a property owner has signed an agreement with a real estate agent setting forth the amount he/she wants to realize from the sale of his/her property and agrees that the real estate agent’s commission will be any amount over that amount, the owner has signed:

Answer 12

a Net Listing.

Question 13

The purpose of the Multiple Listing Service (MLS) is to:

Answer 13

enable real estate agents to share information on their listings with other real estate agents.

Question 14

The Statute of Frauds requires all real estate contracts be in writing except for a:

Answer 14

lease with a term of less than one year.

Question 15

A Gross Lease is one in which there is:

Answer 15

a fixed rental amount.

Question 16

An agreement wherein an owner of property establishes an agency relationship with one licensee, but retains the right to sell the property without the payment of any commission, is known as:

Answer 16

an Exclusive Agency Listing.

Question 17

A real estate contract can be terminated with no duty of further performance on the part of either party if: (name 3 things)

Answer 17

1. there is a contingency which is not satisfied.
2. an event occurs creating the impossibility of performance.
3. either party declares bankruptcy prior to closing.