Sales Contracts Flashcards by Chelsea Iannaccio

Which of the following best describes a clause in sales contact providing for the buyer to obtain with a new first mortgage without which the contract is null and void?

A) Defeasance clause
B) Subordination clause
C) Habendum clause
D) Contingency clause

D) Contingency clause

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The following are true of real estate options:
I. An option is a contract
II. An option, to be enforceable, must be in writing

A) I Only
B) II Only
C) Both I and II
D) Neither I Nor II

C) Both I and II

I. An option is a contract
II. An option, to be enforceable, must be in writing

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In a purchase agreement:

I. Time is of the essence means there is a periodic tenancy
II. The agreement is voidable if the closing date is omitted

A) I Only
B) II Only
C) Both I and II
D) Neither I Nor II

D) Neither I Nor II

Courts can determine a reasonable closing date.

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In a valid contract:

I. Money must be the consideration
II. If the date is left off the contract the contract is voided

A) I Only
B) II Only
C) Both I and II
D) Neither I Nor II

D) Neither I Nor II

Services rendered, personal property, promises are all valuable consideration.

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Under a contract of sale in which the date of possession is later than the closing (settlement) date:

I. The buyer does not acquire legal title upon closing
II. The contract should provide whether the seller is to pay any rent

A) I Only
B) II Only
C) Both I and II
D) Neither I Nor II

B) II Only
II. The contract should provide whether the seller is to pay any rent

Settlement (closing)is normally upon occupancy. However, this can be by agreement, such as delayed or early occupancy.

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When a husband and wife desire to buy a real property in both their names for cash and the husband is not available to sign the purchase contract

I. The purchase contract is voidable if only the wife signs
II. Both husband and wife must sign the contract

A) I Only
B) II Only
C) Both I and II
D) Neither I Nor II

D) Neither I Nor II

Anyone of legal age can sign a binding contract to buy property. The sellers could not, however, sue the husband for specific performances if the wife defaults. They have recourse against wife for damages.

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In a contract of sale, the buyer:

I. Must make an earnest money deposit
II. Will owe the broker a commission in when the contract is accepted even if the sale is never consummated

A) I Only
B) II Only
C) Both I and II
D) Neither I Nor II

D) Neither I Nor II

Earnest money is not essential, though it is recommended. Agent earns his money when he performs a job he was hired to do in the listing contract.

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Which of the following is an essential element for real estate contract

I. Legality of purpose
II. Consideration

A) I Only
B) II Only
C) Both I and II
D) Neither I Nor II

C) Both I and II

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An offer that does not describe any method and terms of financing, but does not state the price is:

I. Voidable
II. Valid

A) I Only
B) II Only
C) Both I and II
D) Neither I Nor II

B) II Only
II. Valid

It could be an all cash deal with no financing.

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An earnest money (binder) given by a buyer in a real estate transaction:

I. May be withdrawn by the buyer any time before the seller signs his acceptance
II. Must be the form of money

A) I Only
B) II Only
C) Both I and II
D) Neither I Nor II

A) I Only
I. May be withdrawn by the buyer any time before the seller signs his acceptance

An offer can be withdrawn anytime before notice of acceptance, written notice is preferred although proof of oral notice is sufficient.

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An illiterate person is considered:
I. Insane
II. Incompetent to contract

A) I Only
B) II Only
C) Both I and II
D) Neither I Nor II

D) Neither I Nor II

An illiterate cannot read or write.

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Real Estate sales contracts are:

I. Assignable by either buyer or seller
II. Can only be assigned with the consent of the seller

A) I Only
B) II Only
C) Both I and II
D) Neither I Nor II

A) I Only
I. Assignable by either buyer or seller

Unless prohibited by a clause in the contract, sales contracts are assignable by either buyer or seller without consent.

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When a purchaser signs an offer allowing the seller three days in which to accept the offer:

I. The purchaser may not withdraw the offer before the expiration of the 3 days
II. The purchaser may withdraw the offer only upon written notice to the seller prior to the seller’s acceptance

A) I Only
B) II Only
C) Both I and II
D) Neither I Nor II

D) Neither I Nor II

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An executory contract is one which:

A) Is made by the executor of an estate for the sale of probate property
B) Is yet to be performed
C) Has been completely performed
D) Has been proposed but not accepted by either party

B) Is yet to be performed

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A voidable contract is one which is:
I. Legally insufficient, not recognized by law
II. Not binding upon either party

A) I Only
B) II Only
C) Both I and II
D) Neither I Nor II

D) Neither I Nor II

It is valid but one party has the right to void it; thus, voidable, and thus binding on only oe of the parties

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A real estate contract may include all but one of the following:

A) An exclusive right to sell
B) An agreement of sale
C) A prospectus
D) A lease

C) A prospectus

A prospectus is an announcement or promotion about a property

Buyers take possession (occupancy) of the property at what time?

A) Upon acceptance of the purchase agreement by the seller
B) As agreed upon the purchase agreement
C) Upon closing of the sale
D) Issuing the warranty deed

B) As agreed upon the purchase agreement

A makes a written offer to B to purchase “B’s” real property. The offer states it is good until Tuesday. Which is true?

I. B can create a contract by accepting the offer on Wednesday
II. A can revoke his offer even though B has not been given a chance to accept or reject it

A) I Only
B) II Only
C) Both I and II
D) Neither I Nor II

B) II Only
II. A can revoke his offer even though B has not been given a chance to accept or reject it

A late acceptance is at most a counter-offer. A’s promise to keep the offer open until Tuesday must be supported by independent consideration from B (such as $100 to keep open)

If an option to purchase is exercised, which of the following is true?
I. The option money is automatically applied to the purchase price
II. The option can be forced to sell the property

A) I Only
B) II Only
C) Both I and II
D) Neither I Nor II

B) II Only
II. The option can be forced to sell the property

What happens to the option agreement money should be covered in the option otherwise the parties may have to go to court to decide. The optionee can demand specific performance.

A broker promises to give $10,000 to the first salesperson who sells ten houses. This is an example of what type of contract?

A) Unilateral
B) Executed
C) Bilateral
D) Nominal

A) Unilateral

A promise made in exchange for the performance of an act.

All but one of the following would result in a termination of an offer to purchase real property:

A) Marriage of buyer
B) Death of buyer
C) Destruction of property
D) Revocation of offer

A) Marriage of buyer

Which of the following has the right to sign a binding contract?

I. An attorney in fact
II. A trust beneficiary to sell trust property

A) I Only
B) II Only
C) Both I and II
D) Neither I Nor II

A) I Only
I. An attorney in fact

Anyone of legal age can sign. Only the trustee, not the beneficiary can sign a trust since he holds legal title.

If an option is due to expire on July 15 and the owner of the property dies July 5, the option is:

A) Binding on the heirs
B) Valid but must be exercised within the statutory period
C) Void
D) Voidable

A) Binding on the heirs

All contracts (except a service contract) are binding on heirs. However, they must be exercised within the option period.

Which of the following is/are true regarding the assignment of sales contracts?

I. An assignment of the sales contract by the buyer is valid
II. Only the original seller can assign rights

A) I Only
B) II Only
C) Both I and II
D) Neither I Nor II

A) I Only
I. An assignment of the sales contract by the buyer is valid

See answer to question 12

X gives Y a check for $4,000 at the time X signs a contract to purchase Ys real property. The terms of the purchase are $95,000 sales price paid as follows: $30,000 in case from X and $65,000 by way of a first mortgage for 30 years at 10% interest. Which of the following terms best describes the $30,000? A) Down payment B) Hand money C) Earnest money deposit D) Binder

A) Down Payment Down payment is difference between purchase price and amount financed

One of the following is not a method by which a contract can be discharged. A) Divorce of either party B) Operation of law C) Agreement D) Performance or breach

A) Divorce of either party A divorce does not terminate contract

When there is a meeting of the minds, which of the following has (have) been accomplished? A) Offer and acceptance B) All elements of the contract have been satisfied C) Settlement has been held D) Acknowledgement and delivery

A) Offer and acceptance

An optionee: A) Has the right to collect rents during the option period B) Can legally enforce the exercise of the option if the optionee changes his mind about selling C) Can occupy the party during the option period D) Cannot legally enforce the exercise of the option if the optionee objects

B) Can legally enforce the exercise of the option if the optionee changes his mind about selling Optionee can enforce contract

A rescission of a contract is: A) Ratification B) Return to the status quo C) Amendment to the terms of the contract D) Escrow arrangement

B) Return to the status quo Recession says contract never existed

One of the principal purposes of the Statute of Frauds is to: I. Eliminate perjury and fraud which frequently occurred in the proof of oral contracts II. Set a time within which a lawsuit must be filed or else barred A) I Only B) II Only C) Both I and II D) Neither I Nor II

A) I Only I. Eliminate perjury and fraud which frequently occurred in the proof of oral contracts Without those things be in wiring fraud may occur. Statute of Limitations has to do with time periods.

A real estate broker will be able to recover his commission in which of the following cases? I. Charging a 13% commission on raw land II. Failing to give the owner a copy of the listing at the time it is signed A) I Only B) II Only C) Both I and II D) Neither I Nor II

C) Both I and II I. Charging a 13% commission on raw land II. Failing to give the owner a copy of the listing at the time it is signed There is no limit on the amount of commission. While failure to give a copy of the listing to the seller is a violation of license laws, it may not affect his commission.