PRINCIPLES AND PRACTICES CHP 13 Flashcards
Who are the parties to an agreement of sale?
A. buyer and listing broker
B. buyer and seller
C. buyer, seller, and both brokers
D. seller and listing broker
B. buyer and seller
In order to be valid, a real estate purchase agreement must include
A. consideration.
B. a contingency.
C. an option.
D. a “time is of the essence” clause.
A. consideration.
Stella signs Larry’s offer to buy her house, creating a valid contract. They agree to close in 21 days. Under this contract, Larry has
A. actual title in the property.
B. equitable title in the property.
C. legal title in the property.
D. no legal interest in the property.
B. equitable title in the property.
Pam, a victim of identity theft, can’t currently qualify for a loan but wants to buy her friend’s condo. Pam could give him $1,000 now if he promised not to sell to anyone else in the next six months, giving her the opportunity to purchase the property within that time period. This is
A. a land contract.
B. a lease purchase agreement.
C. an option agreement.
D. a right of preemption.
C. an option agreement.
Which statement about an earnest money deposit is TRUE?
A. It is held by the seller until closing to ensure performance by the buyer.
B. It is the required consideration needed to create a valid contract.
C. It must be a specific percentage of the asking price.
D. It shows that a buyer is serious about offering to purchase the property.
D. It shows that a buyer is serious about offering to purchase the property.
Under what circumstance can a seller keep the buyer’s earnest money deposit if the buyer defaults?
A. The purchase agreement includes a forfeiture clause for liquidated damages.
B. The purchase agreement provides for specific performance.
C. The seller breaches the contract.
D. The seller can prove they have suffered financial loss.
A. The purchase agreement includes a forfeiture clause for liquidated damages.
A seller lists her house “as is.” A month after the sale closes, the buyer discovers a number of serious cracks in the basement walls that were covered up with paneling. The paneling looks brand new and was almost certainly intentionally installed to conceal the damage. Which of the following is correct?
A. Only the listing agent is liable.
B. Only the seller is liable.
C. Both the seller and the listing agent may be liable.
D. Neither is liable because the house was sold “as is”
C. Both the seller and the listing agent may be liable.
Which statement about a land contract is correct?
A. The vendee obtains financing from a lender to purchase vacant land.
B. The vendee receives possession, and the vendor retains equitable title.
C. The vendor generally pays the property tax, insurance, and cost of maintenance.
D. The vendor retains the title to the property until the final payment is made.
D. The vendor retains the title to the property until the final payment is made.
Which of the following is a unilateral contract?
A. land contract
B. lease
C. option
D. purchase agreement
C. option
Derrick tells Louisa that he would like to buy her house at some point, and he pays her $2,000 for the opportunity to purchase her house for $200,000 anytime in the next six months. With this option to purchase, Derrick
A. can purchase Louisa’s property only if she receives an offer from a third party.
B. is obligated to purchase the property should Louisa decide to sell.
C. may opt out of the agreement and get his $2,000 back from Louisa.
D. must pay Louisa the $2,000 whether he buys the property or not.
D. must pay Louisa the $2,000 whether he buys the property or not.
A buyer and seller agree upon an option to purchase, with a 60-day option period. When should the parties agree upon the purchase price?
A. any point between the signing of the option agreement and closing
B. at closing
C. before signing the option agreement
D. when the buyer decides to exercise the option
C. before signing the option agreement
Yvonne leases her property to William. Yvonne is the ___ and William is the ___
A. landlord/lessor
B. lessee / lessor
C. lessor/lessee
D. tenant/landlord
C. lessor/lessee
Maria buys a six-unit apartment building with two vacant units. When ownership transfers to her, what happens to the current leases on the four occupied units?
A. The leases are unaffected by the change in ownership.
B. The leases remain in effect for 30 days, at which time Maria can cancel them.
C. The leases remain in effect, but Maria can raise the rent.
D. The leases terminate automatically at the change in ownership.
A. The leases are unaffected by the change in ownership.
Which type of lease is most commonly used for residential rental?
A. graduated lease
B. gross lease
C. net lease
D. percentage lease
B. gross lease
Ursula leases a storefront for her candy business. The rent for the first six months is $500 and is set to increase 3% every month for the next 18 months as business takes off. Ursula has what kind of lease?
A. graduated lease
B. ground lease
C. index lease
D. percentage lease
A. graduated lease
