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Unit 11: Real Estate Contracts > In Practice > Flashcards

In Practice Flashcards

1
Q

Real estate licensees should use ___ and ___ forms (contracts) provided by their sponsoring brokers or associations.

A

Preprinted and preapproved

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2
Q

In cases where the statute of frauds applies, offer and acceptance must be…

A

in writing

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3
Q

Proposing any deviation from terms of the offer constitutes a(n) ___ of the original offer.

A

rejection

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4
Q

Proposing any deviation from terms of the offer constitutes a rejection of the original offer and creates a(n)…

A

new offer

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5
Q

The original offer cannot be accepted after a counteroffer unless it is…

A

revived by the offeror

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6
Q

Any offer or counteroffer may be withdrawn at any time before…

A

it has been accepted

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7
Q

A ___ is formed after an offer has been accepted and signed.

A

contract

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8
Q

An offer is not considered accepted until the person making the offer has been…

A

Notified of the other party’s acceptance

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9
Q

After a buyer makes an offer, what 3 options does the seller have?

A

1) Accept
2) Reject
3) Counteroffer

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10
Q

The ___ process is over if the seller accepts or rejects an offer.

A

negotiation

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11
Q

If a seller makes a counteroffer, they are essentially restarting the ___ process.

A

negotiation

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12
Q

When may the offeror revoke the offer?

A

Any time before receiving the acceptance

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13
Q

Revocation of an offer must be communicated to the ___ by the ___.

A

Communicated to the offeree by the offeror

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14
Q

Until a(n) ___ is accepted, property remain son the market, available to other buyers.

A

final offer

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15
Q

A licensee must transmit all offers, acceptances, or other responses ___ to avoid charges of deliberate delay and possible communication problems

A

as soon as possible

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16
Q

A licensee should keep good ___ either written or electronically throughout the negotiation process, because the final contract must reflect any changes made in the negotiation process and agreement of all parties to these changes.

A

Records

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17
Q

If buyers find themselves in a dual offer situation, they will undoubtedly hear what phrase?

A

“Highest and best”

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18
Q

In Illinois, what is the age of contractual capacity?

A

18

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19
Q

If a mistake, fraud, misrepresentation, undue influence, or duress occurred in a contract, and the injured party were to sue for breach of contract, the injured party could argue as a defense that the agreement lacked ___.

A

Reality of consent

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20
Q

A contract entered into under duress or intoxication as a result of fraud, mistake, or misrepresentation is always ___ by the compelled or defrauded party.

A

voidable

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21
Q

A contract with a minor is ___ because minors are permitted to disaffirm real estate contracts at any time while underage and for a certain period of time after reaching majority age.

A

voidable

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22
Q

A contract with a minor is voidable because minors are permitted to ___ real estate contracts at any time while underage and for a certain period of time after reaching majority age.

A

disaffirm

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23
Q

A contract entered into by a mentally ill person is usually ___ during the mental illness and for a reasonable period after recovery.

A

Voidable

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24
Q

A contract made by a person who has been found to be insane by a court is ___ at the outset based on insanity judgments being a matter of public record.

A

void

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25
Q

Most contracts entered into by a minor in Illinois are ___ until the minor reaches the age of 18 and for a reasonable time afterward.

A

voidable

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26
Q

In Illinois, although there is no statutory period within which a person may void a contract signed as a minor after reaching majority age (18), the courts tend to allow a maximum time period of ___.

A

6 months

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27
Q

In Illinois, contracts made by a minor for what the law terms necessaries are generally ___.

A

Enforceable

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28
Q

___ includes items such as food, clothing, shelter, and medical expenses.

A

Necessaries

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29
Q

In Illinois, leases or rental agreements signed by minors are generally ___ because short-term housing is usually considered a necessity.

A

enforceable

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30
Q

In Illinois, leases or rental agreements signed by minors are generally enforceable because short-term housing is usually considered a(n) ___.

A

Necessity

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31
Q

In Illinois, leases or rental agreements signed by minors are generally enforceable because short-term housing is usually considered a necessity. True or false?

A

True

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32
Q

A contract is ___ when the agreement is terminated.

A

Discharged

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33
Q

A contract is discharged when the agreement is ___.

A

Terminated

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34
Q

A contract ___ when it has been completely performed, with all its terms carried out.

A

terminates

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35
Q

A contract may be ___ for a party’s breach or a default.

A

terminated

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36
Q

Many contracts provide that “___” meaning that the contract must be performed within the time limit specified.

A

Time is of the essence

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37
Q

If a contract provides that “time is of the essence,” and a party fails to perform on time, they may be liable for…

A

Breach of contract

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38
Q

When a contract does not specify a date for performance, the act requires it should be performed…

A

within a reasonable time

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39
Q

Courts sometimes have declared contracts to be ___ because they did not contain a time or date for performance.

A

invalid

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40
Q

In Illinois, a deed or contract executed on a sunday or legal holday is ___ and ___.

A

Valid and enforceable

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41
Q

In Illinois, if the last day on which a deed or contract must be executed is on a holday or a sunday, when may the deed or contract be executed?

A

The next business day

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42
Q

Rights may be assigned to a third party (assignee) unless…

A

The contract forbids it

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43
Q

Obligations may be assigned (or delegated), but the ___ remains primarily liable unless specifically released.

A

original party

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44
Q

An assignment may be made without ___ of the other party unless the contract includes a clause that permits or forbids assignment.

A

consent

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45
Q

An elderly widower wants to move closer to his children. His house has been on the market for some time. The widower is in the hospital at the time a buyer makes an offer to purchase, so he assigns his contract rights to his son. This was allowed because the assignment allowed the property to be sold in a real estate closing without…

A

The widower being present or signing documents

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46
Q

When a real estate purchaser assumes the seller’s existing mortgage loan, the lender may choose to release the seller and substitute the buyer as the party primarily liable for the mortgage debt. This is an example of what?

A

Novation

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47
Q

A seller who fails to deliver title to the buyer ___ a sales contract.

A

breaches

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48
Q

After a breach of contract, the ___ party assumes certain burdens.

A

Breaching (defaulting)

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49
Q

After a breach of contract, the ___ party has certain remedies.

A

nondefaulting

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50
Q

If either the seller or buyer breaches a real estate sales contract, the nonbreaching party may sue for ___ unless the contract specifically states otherwise.

A

specific performance

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51
Q

In a suit for ___, the buyer asks the court to force the seller to go through with the sale and convey the property as previously agreed.

A

Specific performance

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52
Q

In a suit for ___, the buyer may choose to sue for damages.

A

Specific Performance

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53
Q

In a suit for ___, the buyer seeks to hold the seller liable for any costs and hardships suffered by the buyer as a result of the seller’s breach.

A

Specific performance

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54
Q

If a buyer rescinds the contract, the seller must return any ___

A

earnest money deposit

55
Q

The seller can sue for damages or sue for the purchase price if the buyer ___.

A

Defaults

56
Q

A suit for purchase price is essentially a suit for ___.

A

specific performance

57
Q

If a seller declares that the contract forfeited, the contract usually permits the seller to retain the buyer’s earnest money as ___.

A

Liquidated damages

58
Q

A seller may sue for ___ if the buyer’s breach resulted in further financial losses for the seller.

A

Compensatory damages

59
Q

In Illinois, the statute of limitations for oral contracts is ___ years.

A

five years

60
Q

In Illinois, the statute of limitations for written contracts is ___ years.

A

ten

61
Q

If a newly constructed addition to a home were finished except for polishing the brass doorknobs, the contractor would be entitled to the final payment. This is an example of ___.

A

Substantial performance

62
Q

To avoid charges of unauthroized practice of law, real estate licensees should avoid…

A

offering legal advice

63
Q

What are licensees generally permitted to do as directed by the client on certain approved preprinted documents, such as sales contracts?

A

Fill in the blanks

64
Q

Can a real estate licensee charge a separate fee for filling in the blanks on a sales contract or completing forms?

A

No

65
Q

Because so many real estate transactions are similar in nature, ___ are available for most kinds of contracts.

A

Preprinted

66
Q

Parties in a real estate transaction should have sales contracts and other legal documents examined by ___ before signing to ensure that agreements accurately reflect their intentions.

A

a lawyer

67
Q

If preprinted forms do not sufficiently address the unique provisions of a transaction, the parties should have an attorney…

A

Draft an appropriate contract

68
Q

If a change is made to a preprinted form / contract, all changes and additions are usually ___ in the margin by both parties when signing.

A

initialed

69
Q

The Illinois Supreme Court decision in the case of Chicago Bar Association, et al. v. Quinlan and Tyson, Inc placed certain limitations on real estate licensees in…

A

Drafting a contract of sale

70
Q

The Illinois Supreme Court decision in the case of Chicago Bar Association, et al. v. Quinlan and Tyson, Inc ruled that licensees are authorized only to….

A

Fill in the blanks on printed form contracts

71
Q

Advising a buyer or seller of the legal significance of any part of a contract, or writing any change to the form language constitutes…

A

unauthorized practice of law

72
Q

A licensee may not request or encourage a party to sign a contract or document containing blank spaces to be “___.”

A

filled in later

73
Q

A licensee cannot make changes to a signed contract without…

A

written consent of the parties

74
Q

If changes are made by the agreement of all principals, buyers and sellers must ___ any changes they agree to add.

A

initial

75
Q

All licensees are required to give each person signing or initialing the contract a(n) ___ within 24 hours of signing.

A

original true copy

76
Q

All licensees are required to give each person signing or initialing the contract an original true copy within ___ of sigining.

A

24 hours

77
Q

A licensee is permitted to prepare or complete any document subsequent to the sales contract or related to its implementation, such as a deed, bill of sale, affidavit of title, note, mortgage, or other legal instrument. True or false?

A

False

78
Q

In Illinois, a licensee should not use any form titled “___” if the form is intended to become a binding real estate contract.

A

Offer to Purchase

79
Q

Illinois law requires that sales contracts indicate “___” at the top in bold.

A

Real Estate Sales Contract

80
Q

In Illinois, a Real Estate Sales Contract is an offer to purchase real estate as soon as it has been prepared and signed by the ___.

A

Purchaser

81
Q

In Illinois, the sale of a residence often includes ___ such as drapes as well as items that are ___.

A

Personal property and fixtures

82
Q

Screens and storm windows or a built-in range are included in the sale of a residence because they are ___

A

fixtures

83
Q

In Illinois, any fixtures that might be questioned as fixtures are listed in the ___ to help eliminate possible arguments at the time of the final walk-through.

A

Sales contract

84
Q

A seller may purchase a transferable ___ for their kitchen appliances in anticipation of selling because it makes for an attractive benefit to the buyer of the home

A

home warranty

85
Q

How long do construction warranties generally last?

A

6 months to 2 years

86
Q

In Illinois, many contracts provide that the earnest money deposit become the ___ property as liquidated damages if the other party defaults.

A

seller’s

87
Q

In Illinois, many contracts provide that the earnest money deposit become the seller’s property as ___ if the buyer defaults.

A

liquidated damages

88
Q

In Illinois, many contracts provide that the earnest money deposit become the seller’s property as liquidated damages if…

A

the buyer defaults

89
Q

What is required to release earnest money in Illinois for any reason?

A

Signatures of both parties

90
Q

In Illinois, if one or more parties doesn’t sign for the release of earnest monies, either party can file a civil lawsuit for…

A

the disbursement of earnest money

91
Q

In Illinois, if one or more parties doesn’t sign for the release of earnest monies, either party can file a civil lawsuit for the disbursement of earnest money, or the release can be negotiated by….

A

the parties’ attorneys

92
Q

In Illinois, if one or more parties doesn’t sign for the release of earnest monies, either party can file a civil lawsuit for the disbursement of earnest money, or the release can be negotiated by the parties’ attorneys. If no agreement is reached, the funds are released to…

A

the state treasurer

93
Q

The escrow account is non-interest-bearing, unless…

A

both parties agree in writing

94
Q

All earnest money and security deposits must be deposited into the escrow account no later than….

A

the end of the next business day following the acceptance of the contract

95
Q

Escrow reconciliations must be completed within ___ after receipt of the monthly bank statement.

A

10 days

96
Q

Escrow reconciliations must be kept on record for a minimum of ___ years.

A

5

97
Q

Who may withdraw funds from the escrow account?

A

Sponsoring broker or an authorized agent

98
Q

When does legal title transfer?

A

On delivery and acceptance of a deed

99
Q

After both buyer and seller have executed a sales contract, the buyer acquires…

A

an interest in the land

100
Q

Illinois’ Uniform Vendor and Purchaser Risk Act states that the ___ bears any loss that occurs before the title passes.

A

Seller

101
Q

In Illinois, if the entire premises or a material part is destroyed, the seller cannot enforce the contract against the buyer and all ___ must be returened.

A

Earnest money

102
Q

If the parties agree to change a closing date or alter a list of personal property items included in the sale, this is an example of…

A

an amendment

103
Q

Illinois requires that dual agency confirmation be included in the ___.

A

Sales contract

104
Q

The Illinois Electronic Commerce Security Act allows for certain documents, such as disclosures, offers, and contracts to be…

A

signed electronically

105
Q

In Illinois, certain documents, such as a will or any document that transfers title, and negotiable instruments may not be…

A

signed electronically

106
Q

In Illinois, brokerages are permitted to store electronic documents in the ___ as long as they can be retrieved in a timely fashion.

A

Cloud

107
Q

In the case of a letter of intent, it is best to include language stating that negotiations are ___ until a formal contract is actually executed.

A

Nonbinding

108
Q

Letters of intent are ___ and intended simply for the purposes of ___.

A

nonbinding
negotiation

109
Q

Contracts may be classified according to whether the parties’ intentions are ___ (stated) or ___ (by actions).

A

express or implied

110
Q

Contracts may be classified as ___ when both parties have obligated themselves to act.

A

Bilateral

111
Q

Contracts may be classified as ___ when one party is obligated to perform only if the other party acts

A

unilateral

112
Q

Contracts may be classified to their legal enforceability as ___, ___, ___, or ___.

A

Valid
Void
Voidable
Unenforceable

113
Q

A(n) ___ contract is one that has been fully performed

A

Executed

114
Q

A(n) ___ contract is one in which some act remains to be performed.

A

Executory

115
Q

A valid ___ contract must include a description of the property.

A

Real estate

116
Q

A valid ___ contract must be in writing and signed by all parties to be enforceable in court

A

Real Estate

117
Q

In many types of contracts, either party may transfer his rights and obligations under the agreement by ___ or ___.

A

Assignment or novation

118
Q

Contracts usually provide that the seller has the right to declare a sale canceled if the buyer ___.

A

Defaults

119
Q

What type of contract binds a buyer and seller to a definite transaction as described in detail within the contract?

A

Real Estate Sales Contract

120
Q

Under an option agreement, the ___ purchases or leases from the ___ for a limited time.

A

optionee purchases from the optioner

121
Q

Under an option agreement, the optionee purchase from the optionor, for ___.

A

A limited time

122
Q

A(n) ___ is a seller financing agreement under which a buyer purchases a seller’s real estate over time.

A

Land contract

123
Q

Under a(n) ___ contract, the buyer takes possession of and responsibility for the property, but does not receive the deed until all payments have been made in full.

A

Land contract

124
Q

Under a land contract, the buyer receives a(n) ___ instead of the deed until all payments have been made in full.

A

Equitable title

125
Q

Under a land contract, when does the buyer receive the deed?

A

When all payments have been made in full

126
Q

Real estate contracts undertaken before the age of 18 are usually ___.

A

Voidable

127
Q

Real estate contracts before the age of 18 are usually voidable unless they may be classified as ___.

A

Neccessaries

128
Q

Brokers and managing brokers may only fill in the blanks on preprinted contract forms that are…

A

Customarily used in the real estate industry

129
Q

Brokers and managing brokers may not write ___ or ___ on preprinted contract forms.

A

Addendums or qualifying clauses

130
Q

___ and ___ may be used to facilitate transactions that might not otherwise occur.

A

Land contracts and options

131
Q

Licensees may ___ basic terms in a land contract.

A

negotiate

132
Q

___ must prepare the articles of agreement in a land contract

A

Attorneys

133
Q

An escrow account may only bear interest if…

A

All parties agree in writing

134
Q

It is assumed that escrow money will go to the seller as ___ in the event of a buyer default.

A

Liquidated damages

Unit 11: Real Estate Contracts (3 decks)

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