Contracts Take Home

Question 1

The buyer, seller, and their agents participated in a false, fictitious real estate contract, which they submitted to a lender. Which parties would be guilty of substantial misrepresentation?

1) Buyer and real estate broker
2) Seller and real estate broker
3) Both 1 and 2
4) Neither 1 nor 2

Answer 1

Both 1 and 2

Question 2

Consideration in a contract _______________

1) is not essential.
2) may be an exchange of promises.
3) is more than ten percent of the purchase price.
4) All of the above

Answer 2

may be an exchange of promises.

Question 3

Competent parties are essential for the validity of a contract. In addition, what else is required in order for the contract to be valid?

1) Recording
2) Legality of object
3) Acknowledgement
4) All of these

Answer 3

Legality of object

Question 4

The Uniform Vendor and Purchaser Risk Act provides that when property under contract of sale is destroyed by fire prior to the transaction being closed, at no fault of the purchaser who is not in possession, the assumption of risk falls upon the _______________

1) buyer.
2) lender.
3) seller.
4) insurance company.

Answer 4

seller

Question 5

A listing contract that provides for the payment of a commission to a broker even though the owner makes a sale without the aid of the broker is known as _______________

1) an “Exclusive Agency” listing.
2) an open listing.
3) an option.
4) an “Exclusive Right to Sell” listing.

Answer 5

an “Exclusive Right to Sell” listing

Question 6

The Statute of Frauds involves contracts which must be in writing to be enforceable. Which of the following falls within the Statute of Frauds?
I. A contract for the sale of real property.
II. A contract for the sale of an interest in real property.
III. A contract for the leasing of real property for two years.
1 ) I only
2 ) I and II only
3 ) I and III only
4 ) All of these

Answer 6

All of these

Question 7

Often in real estate documents the legal phrase “et al” is used. The closest English meaning of that phrase is _______________

1) and husband.
2) and others.
3) and wife.
4) and broker.

Answer 7

and others.

Question 8

The substitution of a new contract and/or party for an existing one is _______________

1) novation.
2) breach.
3) option.
4) subterfuge.

Answer 8

novation.

Question 9

In a real estate sales transaction, the amount of the earnest money deposit is determined by _______________

1) the broker.
2) a minimum of 5% of the sale price.
3) agreement of the parties.
4) the real estate license law.

Answer 9

agreement of the parties

Question 10

Before a new condominium can be sold in Oregon, the buyer must receive a copy of the _______________

1) disclosure statement.
2) declaration.
3) bylaws.
4) All of the above

Answer 10

All of the above

Question 11

Which of the following is an example of a unilateral real estate agreement?

1) Mortgage
2) Trust Deed
3) Option
4) Land sale contract

Answer 11

Option

Question 12

Under the Statute of Frauds, all contracts for the sale of real estate must be in writing to be enforceable in court. The principal reason for this statute is to _______________

1) prevent the buyer from defrauding the seller.
2) protect the general public from fraud due to unrecorded deeds.
3) prevent perjury and fraudulent proof of a fictitious oral contract.
4) protect the buyer from the broker.

Answer 12

prevent perjury and fraudulent proof of a fictitious oral contract.

Question 13

In anticipation of a breach of contract, the parties may specify in the contract the amount of damages to be paid in case of a breach. This is known as the _______________

1) collectable damages clause.
2) liquidated damages clause.
3) the habendum clause.
4) declaratory evidence clause.

Answer 13

liquidated damages clause

Question 14

An executory contract is always a _______________

1) contract with an executor of an estate.
2) contract that has been fully performed.
3) written contract that cannot be altered by an oral agreement.
4) contract that is being performed.

Answer 14

contract that is being performed.

Question 15

What is a rescission of a contract?

1) A return to the situation as it was before the contract was executed.
2) A ratification of a contract by all parties.
3) A revision in the terms of a contract.
4) A transfer of responsibility from one of the parties to the contract to an interested third party.

Answer 15

A return to the situation as it was before the contract was executed.

Question 16

A public report, when it is required, must be given to the purchaser prior to _______________ 1) negotiation of the sale.

2) viewing of the property.
3) closing.
4) execution of the binding sales agreement.

Answer 16

execution of the binding sales agreement.

Question 17

When the parties to a contract have fully performed the terms, the contract may properly be described as _______________

1) expressed.
2) secured.
3) acknowledged.
4) executed.

Answer 17

executed

Question 18

Which of the following is the best explanation of specific performance?

1) The date set for closing, at which all parties involved, or their attorneys, must be present and must sign and deliver all documents necessary to close the transaction. 2) When either party has the right to cancel the contract provided legal notice is given. 3) A legal procedure or action brought by either the buyer or seller to enforce the terms of a sales contract.
4) A legal procedure or action brought by the tenant, requiring the lessor to produce a lease.

Answer 18

A legal procedure or action brought by either the buyer or seller to enforce the terms of a sales contract.

Question 19

In order for a broker to recover a commission on an open listing, he must prove _______________

1) that he found a ready, willing and able buyer.
2) that he is duly licensed.
3) that he was the procuring cause.
4) All of the above

Answer 19

All of the above

Question 20

A contract that results from neither a written nor oral agreement, but from the actions of the parties involved, is referred to as _______________

1) an “express” contract.
2) an “implied” contract.
3) an “executed” contract.
4) None of the above

Answer 20

an “implied” contract.

Question 21

Where does a broker get the authority to accept an earnest money deposit?

1) The offer to purchase.
2) The listing agreement.
3) The land sales contract.
4) Escrow instructions.

Answer 21

The listing agreement.

Question 22

When the “time is of the essence” clause is inserted in a contract to purchase real estate, _______________

1) both the buyer and the seller are prohibited from voluntarily extending the time limits set in the contract.
2) punctual performance of the terms is required of the buyer only.
3) punctual performance of the terms is required of the seller only.
4) punctual performance of the terms is required of the principals to the contract.

Answer 22

punctual performance of the terms is required of the principals to the contract.

Question 23

To be legally enforceable an option or contract for the sale of real property must be all of the following EXCEPT?

1) In writing
2) State consideration
3) Signed by all parties
4) Initialed by a principal broker or attorney

Answer 23

Initialed by a principal broker or attorney

Question 24

In a real estate sales transaction, the amount of the earnest money deposit is determined by _______________

1) the broker.
2) agreement of the parties.
3) a minimum of 5% of sale price.
4) the real estate license law.

Answer 24

agreement of the parties.

Question 25

Assuming that there are no other hindrances to closing, if the seller dies before signing the closing papers, the transaction is _______________

1) valid.
2) void.
3) voidable at the purchaser’s discretion.
4) voidable at the discretion of the seller’s heirs.

Answer 25

valid

Question 26

The Oregon Statute of Frauds requires that all legally enforceable \_\_\_\_\_\_\_\_\_\_\_\_\_\_\_ I. listing agreements be in writing. 
II.offers to purchase be in writing. 
1 ) I only 
2 ) II only 
3 ) I and II 
4 ) Neither I nor II

Answer 26

I and II

Question 27

Unless the agreement stipulates to the contrary, as soon as the purchaser receives legal title or possession as an owner of the property, the risk of loss or damage falls on the _______________

1) title insurance company.
2) purchaser.
3) seller.
4) purchaser and seller equally.

Answer 27

purchaser.

Question 28

If, upon receipt of an offer to purchase under certain terms, the seller makes a counter offer, the prospective purchaser is _______________

1) bound by his original offer.
2) bound to accept the counter offer.
3) relieved of his original offer.
4) not allowed to respond with his own counter offer.

Answer 28

relieved of his original offer.

Question 29

An individual may have a contract voided if he can prove that when it was signed he was under _______________

1) duress.
2) undue influence.
3) a threat of force.
4) Any of these

Answer 29

Any of these

Question 30

When a buyer purchases a property from a seller with a Land Sale Contract, until the seller has been paid in full the buyer holds _______________

1) a long term lease.
2) a purchase money mortgage.
3) a defeasible title.
4) an equitable title.

Answer 30

an equitable title