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Purchase Contracts > Purchase Contracts > Flashcards

Purchase Contracts Flashcards

1
Q

If the buyers in a purchase agreement were killed in an auto accident before closing:

a. the purchase agreement is null and void
b. the purchase agreement is binding on their estate
c. “ “ “ is voidable by their estate
d. their insurance co. is bound to the contract

A

B. binding on their estate

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2
Q

The amount of earnest money is determined by the:

a. buyer
b. seller
c. buyer and seller
d. broker

A

C. buyer and seller

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3
Q

S makes an offer to purchase a home by a broker, but the seller is not available until Wedn. On Tuesday S wishes to withdraw the offer. Which is true:

a. S cannot do this as S has signed the contract
b. S must forfeit the earnest $$
c. the broker must return the deposit and offer
d. the broker should tell S the offer has been accepted

A

C. return the deposit

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4
Q

Between the time the purchase contract is signed by the buyer and seller and title changes hands, the contract is:

a. executory
b. executed
c. voidable
d. unenforceable

A

A. executory

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5
Q

An offer to purchase is:

a. unilateral contract
b. expression of intent to enter a contract
c. bilateral contract to purchase
d. binding on the offeror

A

B. expression of intent

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6
Q

A prop is listed for $45,000. Broker M brings a buyr who offers $44.000. The seller then counters w/ $45,000, but the counter offer is not accepted by the buyer. Later, the seller decides to accept the $44,000 offer. Which statement is correct:

a. broker M is entitled to a commission
b. there is a contract offer in effect for 44k
c. “ “ “ “ “ for 45k
d. there is no contract in effect

A

D. no contract in effect

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7
Q

A seller accepts a purchase contract but makes a minor modification in the terms. The purchaser is:

a. bound by the original offer
b. bound to accept the changes
c. bound by the agent’s decision
d. relieved of the original offer

A

D. relieved…

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8
Q

Earnest money is normally held:

a. by listing agent’s broker
b. by the buyer’s agent’s broker
c. only in a broker’s trust account
d. by the seller

A

B. Buyers agent’s broker

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9
Q

The seller of a property that has been listed for many months is out of town for an extended period of time, and a full price offer is made by a buyer. The listing broker:

a. may accept the offer because the agent is the seller’s atty in fact
b. may not accept the offer
c. may accept bec it is a full price offer
d. may accept the offer based on the broker’s fiduciary duties

A

B. may not accept offer

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10
Q

When a purchase offer indicates that a nominee may be the person closing the purchase:

a. seller does not have the right to approve the nominee
b. buyer must disclose the nominee within 10 days of seller’s acceptance
c. seller may require disclosure of the nominee to determine their ability to close on the purchase
d. the named buyer will forfeit earnest $$ if financing is not available

A

C.

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11
Q

In AZ, a purchase agreement prepared by a licensee must contain which of the following provisions:

a. the manner in which the buyers are taking title
b. the parties’ signatures must be notarized
c. prorations will always be done as of the date of closing
d. the form of earnest money must be stated

A

D. earnest $$ must be stated

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12
Q

P mails an offer to J on March 4 to purchase J’s property. The offer states that J has until no later than March 10 to notify P of acceptance. J accepts the offer immediately and mails it back to P, but due to a postal strike, P does not receive the acceptance by March 10. At this point:

a. J can appeal to the Real Estate Dept
b. there is no contract
c. the broker can mediate
d. there is a valid contract

A

B. no contract

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13
Q

When contracting to buy a new home from a builder, the agreement usually calls for the earnest $$ to be:

a. deposited in escrow
b. deposited in the broker’s trust acct
c. “” the seller’s business account
d. “ “ escrow within 48 hours of acceptance

A

C. deposit in seller’s business account

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14
Q

A seller accepts a buyer’s offer while the seller is out of town. What should the broker do with the earnest deposit?

a. contact the seller and ask the seller where they would like the $$ deposited
b. keep the earnest deposit in a safe in the office until the sellers return
c. immediately deposit into an escrow account
d. have the buyer hold the $$ until the seller is back from vacation

A

C.

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15
Q

Who has primary responsibility for presenting an offer?

a. listing broker
b. selling broker
c. salesperson
d. buyer’s broker

A

A. listing broker

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16
Q

It’s been a seller’s market, and your client keeps getting beaten to the punch on buying a home. So, your client requests they make offers on multiple properties. which is correct:

a. salesperson can tell the buyer that if more than one offer is accepted, they can back out during the inspection period
b. salesperson can submit multiple offers but will need approval from their employing broker
c. the offer must disclose to the sellers that the buyer is making multiple offers
d. multiple offers may not be made

A

C. must disclose…

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17
Q

The standard language that is used on preprinted sales contracts is referred to as:

a. caveat emptor
b. mediation
c. extension
d. boilerplate

A

D.

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18
Q

A mortgage contingency clause in an agreement of sale will include all of the following except the:

a. amount of the mortgage
b. name of the lending institution
c. maximum interest rate
d. commitment date

A

B. name of the lending institution

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19
Q

What type of clause in a contract would protect the buyer’s and/or seller’s agent from being sued:

a. indemnification clause
b. contingency clause
c. due diligence clause
d. liquidate damages clause

A

A.

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20
Q

A provision in a contract to purchase which specifies that the sale depends on whether or not the buyer can obtain financing is:

a. right of first refusal
b. contingency clause
c. option
d. hold harmless clause

A

B.

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21
Q

The amount agreed upon as the full damages in the even a contract is breached is known as:

a. liquidated damages
b. judgment damages
c. punitive damages
d. nominal damages

A

A.

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22
Q

In connection w/ a purchase agreement, the decision of whether to accept an earnest money forfeiture, let the buyer withdraw, or sue for specific performance or damages is made by:

a. seller
b. buyer
c. broker
d. escrow

A

A. seller

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23
Q

Buyer J’s purchase contract is contingent upon a home inspection, qualifying for financing, and a septic tank inspection. The lender wants a well inspection. If there are problems with any of these inspections, which contingency would not allow buyer J to back out?

a. home inspection
b. septic tank
c. well
d. financing

A

C. well

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24
Q

A hazard insurance premium is determined by the:

a. lender
b. property value
c. escrow
d. real estate broker

A

B. property value

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25
Q

Failure to perform or fulfill a contract is termed a:

a. defect
v. fault
c. breach
d. delinquency

A

C. breach

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26
Q

In the event that a property is damaged by fire prior to closing, the:

a. buyer would have to buy the prop
b. risk of loss would be upon the buyer
c. risk of loss would be upon the seller
d. buyer must forfeit the earnest $$

A

C. loss to seller

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27
Q

In a contract for sale of real estate, which of the following terms relates to alternative dispute resolution:

a. arbitration
b. negotiation
c. specific performance
d. contingency

A

A.

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28
Q

If, while showing a home, a real estate agent refers to the home as beautiful and exquisite and omits the fact that there was water damage, the agent could be held liable for:

a. puffing
b. puffing and misrepresentation
c. misrepresentation
d. neither puffing nor misrepresentation

A

C.

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29
Q

A prop that was previously used as a gas station is for sale and priced way below market value. If a buyer is interested in purchasing the prop, the listing agent should:

a. tell the buyer that gas stations are making a comeback in the area
b. inform the buyer that there might be environmental cleanup costs on the property
c. suggest that the buyer offer the full list price
d. provide comps in the area to show what a great value to property is

A

B.

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30
Q

An older home is put up for sale, and the owner doesn’t tell the listing agent about the poor electrical wiring. When a prospective buyer comes to view the home and asks about the electrical wiring, the agent states that it is in “good working condition.” The agent:

a. has made a considerable misrepresentation
b. has not done anything bc they did not know about the problem
c. cannot be held liable for any repairs bc they were unaware of the problem
d. has made a puffing statedment

A

A.

31
Q

Statue of frauds requires RE contracts to be in writing, except

a. leases for 5 yrs or less

b. leases for less than 5 yrs

c. leases for 1 yr or less

d. leases for less than 1 yr

A

C. 1 yr or less

32
Q

A ? expresses a party’s intention to buy a property without creating a binding contract

a. offer

b. good faith

c. earnest money

d. letter of intent

A

D.

33
Q

The individual who is making the offer is the offeree or offeror?

A

Offeror

34
Q

Who is responsible for notifying the offeror of acceptance?

A. Buyer

B. Salesperson

C. Lender

D. Broker

A

D.

35
Q

What term is used to indicate that someone other than the party name in the contract will complete the transaction?

a. boiler plate
b. good faith intention
c. or nominee
d. principal

A

C. Or Nominee

36
Q

Unless prohibited in the agreement, purchase contracts and leases may be assigned to third parties

T/F

A

True

37
Q

The amount of earnest money is determined by the

a. buyer

b. seller

c. buyer and seller

d. broker

A

C.

38
Q

S makes an offer to purchase a home listed by a broker, but the seller is not available until Wednesday. On Tuesday S wishes to withdraw the offer. Which is true

A. S cannot do this as S has signed the contract

b. S must forfeit the earnest money

c. the broker must return the deposit and offer

d. the broker should tell S the offer has been accepted

A

C.

39
Q

Between the time the purchase contract is signed by the buyer and seller and title changes hands, the contract is

a. executory
b. executed
c. voidable
d. unenforceable

A

A.

40
Q

When a buyer’s interest in a purchase contract is assigned to a third party, the seller’s permission

a. is always required

b. is never required

c. must be obtained at time of listing the prop

d. may be req’d

A

D.

41
Q

When contracting to buy a new home from a builder, the areement usually calls for the earnest money to be

a. deposited in escrow

b. “ in the broker’s trust acct

c. “ seller’s business acount

d. “ escrow within 48 hrs

A

C.

42
Q

MEMORIZE ME!! CONTRACT ESSENTIALS

What are the 6 Contract Essentials

COMPETENT PARTIES

VALID CONSIDERATION

OFFER & ACCEPTANCE

LEGAL OBJECT

WRITTEN

LEGAL DESCRIPTION

A
43
Q

A purchaser informs you that the seller has five days in which to accept this offer. The purchaser during this period:
a. may not demand his earnest money be returned
b. must wait the full five days before taking any action
c. may withdraw the offer before acceptance
d. may do nothing unless the time of the listing has expired.

A

C.

44
Q

If the real buyer of a property wants to remain anonymous, what term should be used after the name of the buyer stated in the purchase?
a. or principal
b. or nominee
c. or assignor
d. or nominor

A

B. or nominee

45
Q

Which of the following expresses the parties’ desire to negotiate a sale or lease but is usually a nonbinding agreement?
a. option
b. first right of refusal
c. purchase contract
d. letter of intent

A

D.

46
Q

T made an offer to buy a property which the seller accepted. The acceptance was communicated to T by phone, but T died before receiving the contract. In this situation:
a. There is an enforceable contract
b. T’s heirs are bound to the agreement
c. T’s deach voided the contract
d. The heirs must void the contract within 30 days

A

C.

47
Q

Statute of Frauds requires which contracts to be in writing to be enforceable and must be signed by the parties or their authorized agents:

list the four real estate contracts that must be in writing

A
  1. An employment agreement hiring a broker to provide services adiding the purchase or sale of real property for compensation ex: listing agreements and buyer broker agreements
  2. An agreement for the transfer or sale of real property or an interest ex: deeds, purchase contracts, mortgages, trust deeds, and options
  3. A lease for more than one year ie leases for one year or less are not req’d to be in writing to be enforceable.
  4. ANY agreement that is not to be performed within one year
48
Q

The amount agreed upon as full damages in the event a contract is breached is known as:
a. liquidated damages
b. judgement damages
c. punitive damages
d. nominal damages

A

A.

49
Q

In connection w/ a purchase agreement, the decision of whether to accept an earnest money forfeiture, let the buyer withdraw, or sue for specific performance or damages is made by the:
a. seller
b. buyer
c. broker
d. escrow

A

A. seller

50
Q

An escrow, once established, is subject to rescission by:
a. the broker
b. only the seller
c. only the buyer
d. an agreement between the buyer and seller

A

D.

51
Q

A mortgage contingency clause in an agreement of sale will include all of the following items:

a. amount of the mortgage
b. name of the lending institution
c. max interest rate
d. commitment date

A

B.

52
Q

An agent lists a home during the summer months. The seller tells the agent that a new heating system was installed five years ago. What should the agent say to prospective buyers?
a. “the heating system is fine”
b. “the owner says the heating system is in working order”
c. “there shouldn’t be any problems because the system is only 5 yrs old”
d. “if you are concerned, you should have it inspected”

A

D.

53
Q

What type of clause in a contract would protect the buyer’s and/or seller’s agent from being sued?

a. indemnification clause
b. contingency clause
c. due diligence clause
d. liquidated damages clause

A

A. aka Hold Harmless clause

54
Q

A provision in a contract to purchase which specifies that the sale depends on whether or not the buyer can obtain financing is a(n):
a. right of first refusal
b. contigency clause
c. option
d. hold harmless clause

A

B.

55
Q

When a closing to purchase a property occurs at the same time that the seller is closing on the acquisition of that same property, it is known as:
a. double offer
b. assignment of interest
c. dual agency
d. double escrow

A

D.

56
Q

Which of the following would not reveal insurance claims or losses related to a specific property or claimant?
a. CLUE report
b. claims history
c. loss history report
d. loss payee

A

D.

57
Q

A person named in an insurance policy who will receive the insurance proceeds if the property is damaged is the
a. loss payor
b loss payee
c. additional 3rd party
d. homeowner

A

B. loss payee
remember eeeee= receeeive

58
Q

A buyer and seller enter into a purchase and sale agreement. If the seller wants to rescind the contract and the buyer is willing to allow the rescission, what would have to occur?
a. the seller can keep the earnest money
b. the parties must be restored to their original positions before the contract
c. a quiet title action must be completed
d. the listing must have expired

A

B.

59
Q

After a purchase contract is accepted, the seller continues to put off the closing well beyond the agreed to date. In this situation:
a. contract is null and void
b. buyer has no recourse
c. seller has no liability
d. buyer may sue for specific performance

A

D.

60
Q

Earnest Money in AZ
* No commingling
* No conversion
* If contract rescinded:
a)Broker must follow instructions
b)Broker may not automatically retain $$$

A
61
Q

An individual who is making the offer is the:

Offeror OR Offeree

A

Offeror

62
Q

An individual to whom an offer is made is the:
Offeror OR Offeree

A

Offeree

63
Q

Any change to the original offer creates a:

A

counteroffer

64
Q

If a seller changes any terms of an offer, the original offer is:

A

Null and void

65
Q

Once a purchase agreement becomes binding, the buyer is said to have __________ title.

A

equitable title

66
Q

Earnest money is usually held by the BUYERS or SELLERS broker?

A

Buyer’s

67
Q

An offer to purchase is a(n):
a. unilateral contract
b. expression of intent to enter a contract
c. bilateral contract to purchase
d. binding on the offeror

A

B. expression of intent to enter a contract

68
Q

In a contract for the purchase of land, the closing date was July 30. The buyer and seller realize that they cannot close on that date because the buyer’s loan is going to take a couple of days more. What document do the buyer and seller need to sign to move the date of closing?

a. amendment
b. extension
c. loan estimate
d. estoppel

A

B. extension

69
Q

An older home is put up for sale, and the owner doesn’t tell the listing agent about the poor electrical wiring. When a prospective buyer come to view the home and asks about the electirical wiring, the agent states that it is in “good working condition.” The agent:

a. has made a considerable misrepresentation

b. has not done anything because they did not know about the problem
c. cannot be held liable for any repairs because they were unaware of the problem
d. has made a puffining statement

A

A. considerable misrepresentation

70
Q

When a closing to purchase a property occurs at the same time that the seller is closing on the acquisition of that same property, it is known as a(n):

a. double offer
b. assignment of interest
c. dual agency
d. double escrow

A

D. double escrow

71
Q

Which of the following would not reveal insurance claims or losses related to a specific property or claimant?

a. C.L.U.E. report
b. claims history
c. loss history report
d. Loss payee

A

D. Loss payee

72
Q

A buyer and seller enter into a purchase and sale agreement. If the seller wants to rescind the contract and the buyer is willing to allow the rescission, what would have to occur?

a. The seller can keep the earnest money
b. The parties must be restored to their original positions before the contract
c. A quiet title action must be completed
d. the listing must have expired

A

B. The parties must be restored to their original positions before the contract

73
Q
A

Purchase Contracts (2 decks)

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