Module 3 Contracts

Question 1

Define exclusive right-to-sell listing

Answer 1

A listing contract under which the owner appoints a real estate professional as his exclusive agent for a designated period of time to sell the specified property on the owner’s stated terms and agrees to pay the real estate professional a commission when the property is sold, whether by the real estate professional, the owner, or another real estate professional.

Question 2

Define exclusive agency listing

Answer 2

A listing contract under which the owner appoints a real estate professional as her exclusive agent for a designated period of time to sell the specified property, on the owner’s stated terms, for a commission. The owner reserves the right to sell the property without paying anyone a commission if the sale is to a prospect who has not been introduced or claimed by the real estate professional. 177

Question 3

Define net listing

Answer 3

In Massachusetts this type of listing is illegal.

A listing based on the net price the seller will receive if the property is sold. Under a net listing, the real estate professional can offer the property for sale at the highest price obtainable to increase the commission. This type of listing is illegal in many states. 177

Question 4

How is a commission set?

Answer 4

A commission is an agreement between a seller and a broker and is negotiable

Question 5

Define mortgagee:

Answer 5

A lender in a mortgage loan transaction. 243

Question 6

Define mortgagor:

Answer 6

A borrower in a mortgage loan transaction. 243

Question 7

Elements of a contract:

Answer 7

• An Offer in writing 
• Consideration
• Legality
• Competency
• Consent
• Termination of Offer
• Time Limit
• Withdrawal by Offeror
• Acceptance 
•

Question 8

Define revocation:

Answer 8

Canceling or annulling licensed privileges or rights. 204

Question 9

Define valid contract:

Answer 9

A contract that complies with all the essentials of a contract and is binding and enforceable on all parties to it. 205

Question 10

Define void contract:

Answer 10

A contract that has no legal force or effect because it does not meet the essential elements of a contract. 205

Question 11

Define voidable contract:

Answer 11

A contract that seems to be valid on the surface but may be rejected or disaffirmed by one or both of the parties. 205

Question 12

Define purchase option

Answer 12

The right given by a lease to the tenant to purchase the property at a predetermined price within a certain period, possibly the lease term. 356

Question 13

What is the Massachusetts Statute of Frauds

Answer 13

Written p&s

Question 14

Define equitable title:

Answer 14

The interest held by a vendee (buyer) under a contract for deed or an installment contract in which title is not immediately transferred; the equitable right to obtain absolute ownership to property when legal title is held in another’s name. 211

Question 15

Define Legal Title:

Answer 15

After the Closing when the deed is delivered to the buyer

Question 16

Define specific performance

Answer 16

A legal action to compel a party to carry out the terms of a contract. 207

Question 17

Define granting clause:

Answer 17

Words in a deed of conveyance that state the grantor’s intention to convey the property at the present time. This clause is generally worded as “convey and warrant”; “grant”; “grant, bargain, and sell”; or the like. 104

Question 18

Define legal description

Answer 18

A description of a specific parcel of real estate complete enough for an independent surveyor to locate and identify it. 85

Question 19

Define metes-and-bounds:

Answer 19

method A method used to describe a parcel of land that begins at a well-marked point and follows the property’s boundaries, using directions and distances around the tract, back to the place of beginning. 86

Question 20

Define lot-and-block:

Answer 20

(recorded plat) method A method of describing real property that identifies a parcel of land by reference to lot and block numbers within a subdivision, as specified on a recorded subdivision plat. 91

Question 21

Define Torrens system:

Answer 21

A method of evidencing title by registration with the proper public authority, generally called the registrar ; named for its founder, Sir Robert Torrens. 86, 125

Question 22

Define title search:

Answer 22

The examination of public records relating to real estate to determine the current state of the ownership. 122

Question 23

Define chain of title:

Answer 23

The succession of conveyances, from some accepted starting point, whereby the present holder of real property derives title. 122

Question 24

Define abstract of title:

Answer 24

The condensed history of the recorded ownership of a particular parcel of real estate, consisting of a summary of the original grant and all subsequent conveyances and encumbrances affecting the property and a certification by the abstractor that the history is complete and accurate. 122

Question 25

True or False In Massachusetts the sale of property to be enforceable it must be in writing.

Answer 25

True

Question 26

Define installment:

Answer 26

sale A transaction in which the sales price is paid in two or more installments over two or more years. If the sale meets certain requirements, a taxpayer can postpone reporting such income until future years by paying tax each year only on the proceeds received that year. 433