Unit 11 Flashcards
In a unilateral contract, both parties promise to do something—one promise is given in exchange for another.
False
MOST real estate contracts are implied contracts.
False
Rescission returns the parties in a contract to their original position, whereas cancellation terminates a contract without a return to the original position.
True
Substitution of a new contract for an existing contract is called novation.
True
After both a buyer and a seller have executed a sales contract, the buyer acquires an interest in the land. This interest is called equitable title.
True
In some states, instead of preparing a complete sales contract, real estate professionals may prepare a shorter document known as a briefer.
False
What action returns a contract’s parties to their positions before the contract, including return of any deposit?
Rescission
An example of specific performance for breaching a real property purchase contract would be
a court action to force compliance with the contract.
A promise for a promise is one way to describe
a bilateral contract.
A prospective buyer submits an offer to purchase a residential property. All of the following circumstances would automatically terminate the offer EXCEPT
the seller received a better offer from another buyer.
The buyer and seller agreed to a closing date of September 7 and that time is of the essence. Which of these is the closest meaning of the phrase?
Closing must be on or before September 7.
In a land contract, the vendee
obtains legal title at closing.
A buyer purchased a home under a land contract. In this form of seller-carry lending, the seller
holds the deed to the home until final payment.
A buyer and a seller enter a contract for the sale of a three-bedroom residential property. Shortly after the contract is in place, the buyer has an inspection done. As a result of the inspection, the buyer wants the seller to fix the fence and replace the garage door opener. The seller agrees. How should the parties proceed?
The parties should amend the contract.
The purchaser of real estate under an installment contract
has an equitable interest in the property’s title.
A land contract provides for
the conveyance of legal title at a future date.
On March 7, a buyer and a seller execute a contract for the purchase of the seller’s property. Closing is set for June 10. On April 15, the property is struck by lightning and destroyed by the resulting fire. If the Uniform Vendor and Purchaser Risk Act has been adopted by the state in which the property is located, which party bears liability for the loss?
Under the act, the seller bears the loss alone.
The sales contract says the buyer will purchase only if an attorney approves the sale by the following Saturday. The attorney’s approval is
a contingency.
Which of the following describes an executed contract?
All obligations under the agreement have been performed
A deposit provided when making an offer to purchase real estate is known as
earnest money.
Which of the following is FALSE about assignments?
All contracts must allow assignments.
An amendment
changes the contract.
The courts usually do NOT inquire into
the adequacy of the consideration provided in a contract.
The property owner has given a potential buyer the right to buy the property at a set price for a set period of time; this is
An option
All of the following are essential elements of a contract EXCEPT
words of conveyance.
An option to purchase binds which of the following parties?
The seller
Should the buyer default, an example of liquidated damages to the seller in a purchase contract could be
forfeiture of the earnest money deposit.
A buyer and a seller sign a contract to purchase. The seller backs out, and the buyer sues for specific performance. What is the buyer seeking in this lawsuit?
Transfer of the property
In a preprinted sales contract, several words were crossed out or inserted by the parties. To eliminate future controversy as to whether the changes were made before or after the contract was signed, the usual procedure is to
have both parties initial or sign in the margin near each change.
A contract is said to be executed when it includes
the signatures of the parties.
The main difference between an amendment and an addendum is that an amendment
Once a sales contract is completed with all parties fulfilling their promises, the ownership changing hands, and the seller receiving the purchase price, the sales contract is
an executed contract.
If a buyer defaults on a purchase agreement and the seller keeps the buyer’s earnest money, which of the following remedies has the seller elected?
Liquidated damages
Under what circumstances may a real estate professional practice law?
Only if the real estate professional is also a licensed attorney
