Real Estate Contracts

Question 1

Written instrument that serves to transfer the rights and interests of one person to another.

Answer 1

assignment

Question 2

An agreement wherein both parties are legally obligated to each other to perform.

Answer 2

bilateral contract

Question 3

An employment contract with a purchaser.

Answer 3

buyer brokerage agreement

Question 4

A party to a contract who possess the legal capacity to enter into a binding contract.

Answer 4

competent

Question 5

An agreement between two or more competent parties to do, or not to do, some legal act for a legal consideration.

Answer 5

contract

Question 6

A legally binding contract that the law recognize.

Answer 6

enforceable contract

Question 7

Employment contract given to one real estate broker as the sole agent for the sale of an owner’s property.

Answer 7

exclusive-agency listing

Question 8

An employment contract given to one real estate broker as the sole agent for the sale of an owner’s property, with the commission going to that broker regardless of who actually sells the property during the employment contract period.

Answer 8

exclusive-right-of-sale listing

Question 9

A promise that cannot be measured in terms of money, such as love and affection.

Answer 9

good consideration

Question 10

The amount of valuable consideration specified in an agreement as a penalty for default.

Answer 10

liquidated damages

Question 11

The point when two people, thinking of the same thing, reach an agreement through an offer and acceptance.

Answer 11

meeting of the minds

Question 12

The making and acceptance of an offer.

Answer 12

mutual assent

Question 13

An agreement or contract to sell or rent a property for a specified minimum net amount for the owner.

Answer 13

net listing

Question 14

The substitution of a new party and/or new terms to an existing obligation.

Answer 14

novation

Question 15

An employment contract given to any number of brokers who work simultaneously to sell the owner’s property.

Answer 15

open listing

Question 16

A right or privilege to purchase or lease real property at a specified price during a designated period based on a sufficient consideration.

Answer 16

option contract

Question 17

An agreement that is not in writing.

Answer 17

oral contract

Question 18

The person whose efforts are the cause of an executed sale contract, regardless of who actually writes the contract.

Answer 18

procuring cause

Question 19

An act that requires that certain real estate instruments and contracts affecting title to real property be in writing in order to be enforceable.

Answer 19

statute of frauds

Question 20

An act that prescribes specific time restrictions for enforcement of rights by action of law.

Answer 20

statute of limitations

Question 21

A contract that was valid when made but either cannot be proved or will not be upheld by a court.

Answer 21

unenforceable contract

Question 22

Sufficient to be legally binding; enforceable.

Answer 22

valid

Question 23

The money or a promise of something that can be measured in terms of money.

Answer 23

valuable consideration

Question 24

The buyer or purchaser of real property under an agreement of sale.

Answer 24

vendee

Question 25

The seller of real property in an agreement of sale.

Answer 25

vendor

Question 26

Invalid; without force; no longer effective.

Answer 26

void

Question 27

A contract that because of the manner or method in which it was brought about, one of the parties is allowed to avoid contractual duties.

Answer 27

voidable

Question 28

1. Which group of legal instruments may legally be prepared by a licensed real estate broker?
   a. Listing contracts, buyer brokerage agreements, commercial leases, and deeds
   b. Leases, option contracts, promissory notes, and buyer brokerage agreements
   c. Listing agreements, buyer brokerage agreements, sale contracts, and option contracts
   d. Mortgages, promissory notes, commercial leases, and option contracts

Answer 28

C

Question 29

2. Failure to comply with the statute of frauds
   a. may not constitute an illegal act but would always invalidate a sale contract.
   b. would have to do with whether a contract is in writing.
   c. concerns adherence to prescribed time frames of enforcement.
   d. is prima facie evidence that there is intent to commit fraud.

Answer 29

B

Question 30

3. Which contract does NOT come under the jurisdiction of the statute of frauds?
   a. Lease agreements for one year or less
   b. Option contract
   c. Sale contract
   d. Listing agreement for more than one year

Answer 30

A

Question 31

4. A valid real estate sale contract is one that
   a. contains all of the essential elements and is in writing.
   b. has been acknowledged.
   c. requires witnessing.
   d. transfers title to real property.

Answer 31

A

Question 32

5. An adult contracting with a minor is an example of failure to meet which essential of a real estate contract?
   a. Legality of the object
   b. Offer and acceptance
   c. Meeting of the minds
   d. Competent parties

Answer 32

D

Question 33

6. Canceling a daughter’s property indebtedness in a contract due to love and affection is an example of
   a. good consideration.
   b. valuable consideration.
   c. insufficient consideration.
   d. inadequate consideration.

Answer 33

A

Question 34

8. When a contract has been formed but an undertaking remains to be performed by one or both parties, it is an example of
   a. an implied contract.
   b. an express contract.
   c. an executory contract.
   d. a unilateral contract.

Answer 34

C

Question 35

9. Which statement is FLASE regarding counteroffers?
   a. The original offer is terminated by the counteroffer/
   b. The original offeree becomes the offeror.
   c. A contract is created when the new offeree accepts the counteroffer and communicates the acceptance to the new offeror.
   d. The offeror and offeree remain the same even though the terms are modified.

Answer 35

D

Question 36

10. An offer is NOT terminated by
    a. a counteroffer.
    b. an acceptance.
    c. a rejection.
    d. an extension.

Answer 36

D

Question 37

11. A contract may be terminated for which reasons?
    a. Mutual rescission
    b. Performance.
    c. Breach.
    d. All fo the above.

Answer 37

D

Question 38

12. A woman gave an exclusive-right-of-sale listing to a broker to find a buyer for her residential lot. While the woman was vacationing with her family, a buyer signed an offer to purchase the woman’s lot at the full price and terms of the listing agreement.
    a. Because this is an exclusive-right-of-sale listing, the broker is authorized to accept the offer on the woman’s behalf.
    b. The broker may accept the offer on the woman’s behalf, as long as she gets the woman’s signature on the contract immediately upon the woman’s return.
    c. The exclusive-right-of-sale listing does not give the broker the authority to accept the offer on the woman’s behalf.
    d. The broker may accept the offer because it is a full-price offer.

Answer 38

C

Question 39

13. A man and a woman enter into a written agreement. The man will mow the woman’s lawn every week during the mowing season and every third week during the winter. In the middle of the summer, the man has back surgery. He hands over his lawn maintenance contracts to a friend, who assumes the responsibility for all of the man’s customers for the remainder of the contract period. Which term describes this situation?
    a. Breach
    b. Assignment
    c. Specific performance
    d. Mutual rescission

Answer 39

B

Question 40

14. Which applies to exclusive-right-of-sale listings?
    a. The broker is due a commission regardless of who finds the buyer.
    b. The listing may be submitted to the MLS by the listing broker.
    c. The seller must consent to the terms of the listing agreement.
    d. All of the above apply.

Answer 40

D

Question 41

17. Normally, a sale contract involving real property contains a provision that in case of breach, by the buyer, the earnest money deposit will be regarded as
    a. compensatory damages to the seller.
    b. liquidated damages to the seller.
    c. compensatory damages to the broker.
    d. liquidated damages to be divided between seller and buyer.

Answer 41

B

Question 42

18. The most advantageous type of listing from the broker’s point of view is
    a. an open listing.
    b. an exclusive-agency listing.
    c. an exclusive-right-of-sale listing.
    d. a net listing.

Answer 42

C

Question 43

20. A couple have decided to make a written offer to purchase a quaint little home built in the 1950s. Which task is NOT required prior to signing the sale contract?
    a. The couple must be given a copy of the EPA pamphlet concerning lead-based paint hazards in the home.
    b. The seller must disclose any known presence of lead-based paint.
    c. The couple must have the home inspected for lead-based paint.
    d. The real estate sale contract must indicate a disclosure concerning lead-based paint.

Answer 43

C