Module 4 Flashcards

1
Q

Which of the following best represents rescission of a contract?
A) Option to purchase can be transferred by a lessee to a lessor
B) Lease was terminated with the mutual agreement of both parties
C) One of the parties can change the contract at a later date
D) Offer to buy

A

B) Lease was terminated with the mutual agreement of both parties

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2
Q

An offer, where no earnest money or deposit is given with the contract, is valid.
A) True
B) False

A

A) True
True. Deposits are not an indication of valuable consideration. There could be no money down and be a valid contract although the seller may question the sincerity of the offer with nothing down.

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3
Q
After signing a contract for the sale of real estate, a deed can be given to a buyer or third party designated as the:
 A) Principal
 B) Assignee
 C) Grantor
 D) Escrow agent
A

B) Assignee

The assignor is still liable for the consummation of the contract if the assignee defaults on the purchase.

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4
Q

An agent is considered to have earned his commission when the:
A) Listing contract is signed by the seller
B) Title insurance policy is delivered to the buyer
C) Title search is completed and title is recorded
D) Purchase agreement is signed and all the conditions are satisfied

A

D) Purchase agreement is signed and all the conditions are satisfied

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5
Q
A "Power of Attorney":
 A) Must be in writing
 B) Is revoked by the death of either party
 C) Both of the above
 D) None of the above
A

C) Both of the above

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6
Q
A salesperson, with full knowledge, writes deceptive information in a sales contract. One of the parties to the contract acts on the information provided and incurs damages. The action of the salesperson constitutes:
 A) Undue influence
 B) Duress
 C) Breach of contract
 D) Misrepresentation or fraud
A

D) Misrepresentation or fraud

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7
Q
A real estate sales contract that binds one party but allows the other party to withdraw is:
 A) A land contract
 B) An installment contract
 C) A voidable contract
 D) A void contract
A

C) A voidable contract

The contract can be voided by the party that is lied to but not by the party that lied.

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8
Q

Which is true regarding a buyer’s earnest money deposit and offer to purchase?
A) They may demand full repayment if they withdraw the offer prior to the seller’s acceptance
B) It is subject to forfeiture to the seller in the event the buyer fails to consummate the agreement
C) Both of the above
D) None of the above

A

C) Both of the above

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9
Q
The buyer can write an initial earnest money deposit check payable to all of the following except:
 A) Salesperson representing the buyer
 B) Escrow company
 C) Buyer's client trust account
 D) Seller's client trust account
A

A) Salesperson representing the buyer

The buyer can write the initial earnest money deposits to everyone but the salesperson representing the buyer. Escrow is preferred.

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10
Q

The seller must give the buyer a disclosure form:
A) Upon receipt of the Purchase Contract
B) Within 5 days of acceptance of the offer
C) Within 10 days of acceptance of the offer
D) Anytime before closing

A

C) Within 10 days after acceptance of the offer

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11
Q
A faxed acceptance is:
 A) Binding with hard copy to follow
 B) Fully binding and effective whether or not originally executed documents are transmitted to escrow
 C) Is not binding if not legible
 D) Must be confirmed
A

B) Fully binding and effective whether or not originally executed documents are transmitted to escrow

The Purchase Contract clearly states that faxed copies are binding on both parties.

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12
Q

A sales agent takes a listing where the owner states that the refrigerator will not be included in the sale. When writing up the Purchase Contract, the sales agent inadvertently checks the “refrigerator included” box. Now both the seller and buyer want the refrigerator.
A) Since the listing and MLS forms state no refrigerator, the buyer has not given legal notice in writing that the refrigerator is included
B) The Purchase Contract is enforceable
C) The listing form takes precedence
D) The sales agent would probably have his license revoked

A

B) The purchase Contract is Enforceable

The sales agent will most likely be paying for a refrigerator from his commission.

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13
Q
A seller signs a contract to sell to a buyer pursuant to the Purchase Contract. The buyer elects to have boundaries surveyed at cost of $800, even though the property is already staked. The survey determines that the stakes are accurate. The seller owes the following:
 A) $0
 B) $200
 C) $400
 D) $800
A

A) $0
The Purchase Contract states in C-41 that if the stakes are visible and the buyer requests C-41 staking and the position of the stakes do not differ from what is in the ground, the buyer is to pay for the survey.

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14
Q
All are elements of a Purchase Contract, EXCEPT:
 A) Location
 B) Sales price and method of payment
 C) Signature of buyers and sellers
 D) Commission rate
A

D) Commission Rate

The commission is usually established in the listing contract.

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15
Q

When obtaining the buyers’ signatures, the buyers’ broker notices errors in the financing computations. The buyer’s broker should:
A) Let escrow fix it
B) Ask sellers’ agent for a new Purchase Contract with changes
C) Correct errors and forward to sellers’ agent without pointing out errors
D) Change the figures and have the buyers initial changes prior to sending to the seller

A

D) Change the figures and have the buyers initial changes prior to sending to the seller

All changes to a contract need to be initialed by all the parties that are signing the contract.

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16
Q

An option is generally defined as:
A) An informal agreement between a prospective purchaser and a listing broker that the purchaser can buy a listed property at a price quoted by the broker
B) A contract by which the seller gives a prospective buyer the right to purchase property at a fixed price within a stated period of time
C) An informal agreement with a listing broker to accept only those offers that meet the listing price
D) A contract by which the purchaser gives the listing broker a bid and down payment on the property

A

B) A contract by which the seller gives a prospective buyer the right to purchase property at a fixed price within a stated period of time

The seller (optionor) is obligated to sell but the buyer (optionee) does not have to buy the property.

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17
Q
Certain elements must be present in a real estate sales contract involving a single-family residence if the contract is to be valid. Although the following elements are recommended, which one is NOT an absolute necessity?
 A) Description of land
 B) Type of deed
 C) Names of the parties
 D) Sales price
A

B) Type of deed

Type of deed is not specified in the Purchase Contract. Most transactions will involve a General Warranty Deed.

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18
Q

If fire destroys a home after the contract of sale is signed by both parties but prior to closing, all of the following are true under the Uniform Vendors and Purchasers Risk Act EXCEPT:
A) The party in possession generally bears the risk of loss
B) The seller bears the risk of loss if in possession and holding legal title at the time of the loss
C) The buyer assumes responsibility on signing the sales contract
D) Responsibility generally passes to the buyer on closing or occupancy, whichever occurs first

A

C) The buyer assumes responsibility on signing the sales contract

Risk of loss does not transfer to the buyer until the buyer has taken title to the property or has taken early occupancy.

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19
Q

A portion of a printed form contract is changed by typing in contrary provisions, which are then initialed by both parties. Which takes precedence?
A) Printing over typing
B) Neither-the contract is voidable because of the changes
C) Typing over printing
D) Neither-the parties may void the contract because of the changes
CORRECT

A

C) Type over printing

Handwritten over typing also prevails in a contract.

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20
Q

A real estate salesperson has been working with buyers. After helping them negotiate for their dream home, the buyers ask the salesperson if she can help them secure a mortgage. The salesperson knows a lender that pays a fee for referring purchasers to them. Should the salesperson refer the buyers to this lender?
A) No, this would be an unwise referral
B) Yes, if the salesperson and the buyers have previously entered into a written buyer agency agreement
C) Yes, if the salesperson discloses the referral fee to the sellers
D) Yes, if the lender offers the best interest rates and terms available in the market

A

A) No, this would be an unwise referral

The agent is not in violation of the law if the agent discloses that a referral fee will be received for referring clients to the lender. The agent should be licensed as a mortgage solicitor and follow the law in being paid. It is not a good idea to refer clients when referral fees are paid.

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21
Q
If the property sold on March 15th, and you wanted to find out when the grantee recorded title, you would look:
 A) Grantor's index
 B) Grantee's index
 C) Date
 D) Tax map key
A

B) Grantee’s index

Grantee Index has a list of all the buyers for that property.

22
Q

Escrow calls the agent and says that they are ready to close early. In preparation to close:
A) The seller and buyer must set a date
B) The lessor must give permission
C) The seller and buyer must set a date and the lessor must give permission
D) The seller and buyer must set a date, the lessor must give permission, and escrow and mortgage documents must be ready for signature

A

D) The seller and buyer must set a date, the lessor must give permission, and escrow and mortgage documents must be ready for signature

23
Q

Philip wants to convey possession of the property to his mother, but when she dies he wants the property to return to him. What kind of estate should he specify?
A) Reversionary Estate
B) Life Estate with a reversionary interest
C) Remainder Estate
D) State of Confusion

A

B) Life Estate with a reversionary interest

24
Q
he buyer authorizes escrow to withhold for FIRPTA. On a sales price of $1,200,000, escrow will withhold:
 A) $180,000
 B) $150,000
 C) $ 90,000
 D) $ 50,000
A

A) 180,000

15% of the sales price is withheld for FIRPTA

25
Q
All of the following are title search methods commonly used in Hawaii, EXCEPT:
 A) Land court certificate
 B) Title search and opinion
 C) Certificate of title
 D) Abstract
A

D) Abstract

26
Q

In Hawaii, all of the following are true regarding the land court system EXCEPT:
A) Registration is done by the registrar of the land court in Honolulu
B) Title is recorded at the county recorder’s office
C) Title transfers only upon registration of the deed in the records of the land court
D) The deed is accompanied by a transfer certificate of title (TCT)

A

B) Title is recorded at the county recorder’s office

Hawaii records all of its documents at the state Bureau of Conveyances.

27
Q

All of the following is true in reference to the grantor/grantee index at the bureau of conveyances EXCEPT:
A) There are separate books with the seller’s name (grantor) and the buyer’s name (grantee) indexed in alphabetical order
B) The books are not indexed by the year
C) One can find the type of instrument involved and the date of the transaction
D) It includes information about the location of the property (district and island)

A

B) The books are not indexed by the year

The records are indexed by the year the transfer occurred.

28
Q

Regarding land court property in Hawaii, all of the following are true EXCEPT:
A) If the subject property of a power of attorney is registered in land court, a specific description of the property, full names of all parties involved, and a transfer certificate of title (TCT) must be shown
B) A distinctive feature of land court registered property is that title does not pass, or encumbrances are not effective, until they are noted on the original certificate of title
C) Subsequent transfers are more expensive than a transfer in the regular system
D) A title is established that is superior to an abstract or title insurance policy

A

C) Subsequent transfers are more expensive than a transfer in the regular system
The initial registration of the land court property can be very time consuming and costly but subsequent registrations are not expensive nor time consuming.

29
Q

A quitclaim deed always will convey good legal title to real property in which of the following cases?
A) The grantor is living on the property at the time of the conveyance.
B) The grantor has good legal title of the real property
C) The grantee has received a certificate of title from a licensed title company
D) The grantor acquired title under a forged deed

A

B) The grantor has good legal title of the real property

30
Q

The grantor delivers a signed deed to her attorney, but the grantee’s name is omitted. The grantor dies before any name is inserted. The deed is:
A) Invalid when made but valid when the grantee fills in his or her name
B) Invalid when made but valid when recorded
C) Valid if the deed is delivered to the grantee
D) Invalid

A

D) Invalid

Grantor and Grantee must be named on the deed at the time of execution of the document.

31
Q

When does legal title to real property pass from the seller to the buyer?
A) On the date the deed is recorded
B) When the closing statement has been given to the principals
C) When the deed is placed in escrow
D) When the deed is delivered

A

D) When the deed is delivered

Delivery can be made to the grantee or to a third party.

32
Q

Which one of the following situations would make a deed void?
A) The grantor has signed under a power of attorney
B) The deed is made to a fictitious grantee
C) The grantee is not named but is sufficiently described in other terms
D) The signature of the grantor is spelled differently from the typed spelling on the deed

A

B) The deed is made to a fictitious grantee

The quitclaim deed does not give a full guarantee on the validity of the deed.

33
Q
Deed that limits the liability of the grantors to their own acts and all persons claiming by, through and under them, are known as:
 A) Special warranty deeds
 B) General warranty deeds
 C) Quitclaim deeds
 D) Trust deeds
A

A) Special warranty deeds

Special warranty deeds are usually given by foreclosure commissioners, trustees of large trusts, bankruptcy receivers, etc.

34
Q
A private individual could acquire fee title by all of the following, EXCEPT:
 A) Devise
 B) Adverse possession
 C) Demise
 D) Voluntary conveyance
A

C) Demise

Demise is the transfer of leasehold property.

35
Q
All of the following are necessary to the validity of a deed, EXCEPT:
 A) Grantor execution
 B) Delivery to grantee
 C) Recording the deed
 D) Designating the grantee
A

C) Recording the deed

Recording the deed is not necessary to make the delivery valid.

36
Q

All of the following are necessary to acquire title by adverse possession, EXCEPT:
A) Hostile use
B) Continuous use against the will of the owner for the statutory period
C) Payment of just compensation
D) Having claim or color of title

A

C) Payment of just compensation

Payment is not required to acquire title to the land in an adverse possession.

37
Q

Deeds may be prepared by which of the following?
A) A licensed appraiser
B) A lawyer or the owner of the property
C) A licensed salesperson
D) The principal’s broker only
CORRECT!

A

B) A lawyer or the owner of the property

It is not recommended that the owner draft the deed to his own property.

38
Q
Of the following, which statute or act creates the need for a deed to be in writing?
 A) Statute of descent
 B) Recording Act
 C) Statute of frauds
 D) Statute of limitations
A

C) Statute of frauds

39
Q
Marketable title to real property is LEAST likely to be conveyed:
 A) To a minor
 B) By a quitclaim deed
 C) By a minor
 D) By a special warranty deed
A

C) By a minor

40
Q
A deed whereby the grantor makes certain covenants and warrants to defend against certain claims that arose only during the period of the grantor's ownership is a:
 A) Quitclaim deed
 B) General warranty deed
 C) Nominal deed
 D) Special warranty deed
A

D) Special warranty deed

41
Q
C delivers a valid deed to B, who fails to record the deed. B then loses the deed and dies with C in an accident before it is found. Who owns the property?
 A) C
 B) B's heirs
 C) The government
 D) C's heirs
A

B) B’s heirs

42
Q
One tenant in common attempts to convey the entire fee simple interest in the property to a grantee, using a general warranty deed. Which covenant in the deed would be violated?
 A) Covenant of further assurance
 B) Covenant of seisin
 C) Covenant of quiet enjoyment
 D) No covenants would be violated
A

B) Covenant of seisin

The grantor of his portion of the land can only convey his share and not the whole property unless all of the owners agree to convey the property.

43
Q

A nephew was a witness to his uncle’s will. When the will was read after the uncle’s death, the nephew discovered that he was a devisee of his uncle’s will. Which of the following statements is true?
A) Because the nephew is a witness, the devise is void
B) As a witness, the nephew should have read the will
C) Because the nephew is a witness, the will is void
D) The nephew has a right of election

A

A) Because the nephew is a witness, the devise is void

A beneficiary cannot be the witness of the will that will grant him the property mentioned in the will.

44
Q
A declaration made by a person to an official stating that a deed has been freely and voluntarily executed is called a(n):
 A) Acknowledgment
 B) Authorization
 C) Authentication
 D) Execution
A

A) Acknowledgment

The signer must acknowledge that he is signing the document of his own free will to the notary.

45
Q
The recording of a warranty deed:
 A) Guarantees title
 B) Insures ownership
 C) Verifies title
 D) Constitutes constructive notice of ownership
A

D) Constitutes constructive notice of ownership

The recording does not guarantee the validity of the deed if there is fraud or forgery.

46
Q
As far as its validity between grantor and grantee is concerned, a deed that is not dated, acknowledged or recorded is:
 A) Invalid because of these omissions
 B) Void
 C) Revocable by the grantor
 D) Valid despite these omissions
A

D) Valid despite these omissions

47
Q

Which of the following is an essential element of valid deed?
A) Legal description of the property
B) Grantee who is of age and of sound mind
C) Recording
D) Acknowledgment

A

A) Legal description of the property

48
Q

The presence of a corporate seal on a deed:
A) Means that consideration was paid
B) Implies that the proper or authorized person signed the deed
C) Indicates that title is being conveyed to a corporation
D) Indicates there has been a valid delivery

A

B) Implies that the proper or authorized person signed the deed

49
Q

Which of the following statements is true concerning recording a deed?
A) A forged deed is made valid by recording
B) A delivered deed is not valid until it is recorded
C) A deed must be signed by grantor and grantee to be recorded
D) Recording is not needed to make a deed valid

A

D) Recording is not needed to make a deed valid

50
Q

A deed has been properly escrowed with an attorney and closing is scheduled for 13 days later. If the seller dies before closing, when does legal title pass?
A) Title passed when the deed was placed into escrow
B) Title passes when and if the estate provides another deed
C) The escrow dies with the seller, so no deed or legal title will pass at closing
D) Title passes on closing

A

D) Title passes on closing