Contracts Flashcards
The law of agency states that real estate agents have legal responsibilities to their principals. Which of the following does not apply?
a. Treat all parties involved fairly
b. Ensure all documents are signed and received by the proper parties involved
c. Research what the reserves and expected expenses may be for the maintenance of a business.
d. Disclose all material facts about the real property
Research what the reserves and expected expenses may be for the maintenance of a business.
*The broker has a fiduciary duty to disclose all material facts that they were made aware of by the seller.
To be enforceable, a contract for a real property must:
be in writing
Mr. and Mrs. Childers bought a property and they were not informed that it contained an oil tank buried in the ground that is used for heating the home. They would have the right to:
rescind the contract
An individual who is delegated to legally act for another person is known as:
An attorney in fact
Why is it considered essential that every party to a real estate transaction receive a full and complete disclosure of who is representing whom?
a. Imputed authority
b. Ethical and professional responsibility
c. All of these
d. Legal effect
All of these
In order for a seller who owns 1-4 units to be in compliance with the California Civil Code regarding Real Estate Transfer Disclosure Statements, the owner must:
make a reasonable effort to inspect the property, then complete the disclosure.
*A seller must always make a reasonable effort to inspect the property and complete the form.
If a contract is obtained under duress, that contract is:
voidable
When transferring certain real property, the California Civil Codes states that a transfer disclosure statement is to be delivered by which of the following?
The transferor
For a contract of real property to be enforceable, the consideration must be relative and of sufficient value in order to enforce a suit for:
specific performance
When is a real estate agent obligated by law and the state regulations to communicate any offers to a principal?
only if it’s in writing
What is the name of a contract between the seller of real property and a licensed real estate agent, in which the seller agrees to pay a commission to the licensee if they produce a “ready, willing and able” buyer for the real property and the licensee complies and does all the due diligence procuring a buyer?
a bilateral executory contract
A licensee who is working with their client to sell their real property to a third party is said to be operating under the law of
agency
A licensee receives an offer for a property they have listed. It’s in writing, however it’s below the asking price and they know the seller will never accept it. Of the following, which would not be acceptable for the licensee to do?:
change the terms to what the licensee thinks the seller would accept
When a false transfer disclosure statement is given to a buyer that omits facts about the property , how long does the buyer have to bring a lawsuit against the seller and the broker?:
2 years
Along with due diligence, care, and skill, a real estate agent must also fully disclose all material facts of the property to the principal. If there is any purposeful concealment of material facts by the agent, this could be regarded as:
fraud
The Law of Agency consists of the rights, liabilities, and duties between:
a. the principal and the third party whom the agent deals with
b. all of these
c. the principal and their agent
d. the agent and the third party
all of these
Agent Mitchell has a listing to sell a home owned by owner Donald. Which of the following actions by the licensee would result in creating an agency relationship with a potential buyer?:
negotiating for the buyer.
In order for a contract to be legal, which of the following would be considered consideration?
a. A promise to clean someone’s pool once a week for 10 years
b. a promissory note that has a set amount of interest
c. a promise to apply clay roofing tiles on a building that has yet to be built
d. all of these
all of these
Seller Andrew sold a home to Buyer Bill. Buyer Bill was deemed to be legally mentally incompetent. In this type of situation, the contract would be:
void
The very best way to create an agency relationship is:
in writing
Of the following, what is not needed in the formation of a contract?
performance
- parties may enter into a contract, however they may never fulfill (perform) the obligations of the contract.
During an “exclusive right to sell” listing contract, the principal no longer wishes the broker to work for them. the principal may:
. revoke the listing, however the seller may be held liable for damages
In the formation of a contract, which of the following would not make the contract voidable?
illegal purpose
Investor Joe owns a duplex priced at $100,000 and has a mortgage debt that is outstanding at $30,000. This property was sold using a 1031 exchange for a four-plex priced at $170,000 with a first mortgage balance of $100,000. For the exchange to be completed, on what profit amount will the owner have to pay property gain taxes on the profit of the first property?
$0
- To take advantage of the 1021 exchange rule, a seller must roll over the property gains into the new property to avoid any property gain taxes. In this scenario, the investor did just that.
When the broker is an agent to a seller, what is owed to the buyer?
the duty to be fair and honest
The broker works on behalf of the principal. All of the following defines the relationship between the two parties except:
a power of attorney relationship
