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Real Estate Exam! > Unit 11: Real Estate Contracts > Flashcards

Unit 11: Real Estate Contracts Flashcards

1
Q

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

A

Contract

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2
Q

An agreement binding on both parties and legally enforceable against all parties to the agreement.

A

Valid Contract

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3
Q

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

A

Competent

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4
Q

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

A

Meeting Of The Minds

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5
Q

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

A

Valuable Consideration

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6
Q

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

A

Good Consideration

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7
Q

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

A

Statute Of Frauds

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8
Q

A legally binding contract that the law will recognize.

A

Enforceable Contract

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9
Q

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

A

Statute Of Limitations

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10
Q

An agreement that does not meet all the required elements of a valid contract and has no legal effect.

A

Void Contract

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11
Q

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.

A

Voidable Contract

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12
Q

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

A

Unenforceable Contract

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13
Q

True/False Love and affection is an example of valuable consideration.

A

False. Love and affection is an example of good consideration because it cannot be measured in terms of money.

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14
Q

True/False Brokers and sales associates should NOT prepare deeds, mortgages, or promissory notes.

A

True.

Unless they are also attorneys, brokers and sales associates who prepare such legal documents could jeopardize their real estate licenses.

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15
Q

True/False A buyer brokerage agreement is an employment contract between the brokerage and a buyer.

A

True

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16
Q

True/False The statute of limitations for an oral contract is five years.

A

False. The statute of limitations for an oral contract is four years.

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17
Q

An agreement that is not in writing.

A

Parol Contract

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18
Q

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

A

Bilateral Contract

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19
Q

An agreement in which only one party promises to perform without receiving a reciprocal promise to perform from the other party.

A

Unilateral Contract

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20
Q

True/False A real estate contract that includes a radon gas contingency is a voidable contract.

A

True

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21
Q

True/False A signed sale contract between the time of signing and the time of title closing is an executed contract.

A

False. A sale contract between the time of signing and the time the title is conveyed from the grantor to the grantee is an executory contract.

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22
Q

True/False An implied contract is one in which some or all of the obligations or conditions of a contract are NOT stated expressly.

A

True

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23
Q

True/False A real estate sale contract is an example of a bilateral contract.

A

True

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24
Q

True/False An electronic signature can be accepted as part of a real estate contract.

A

True

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25
Q

True/False A counteroffer will extend an offer.

A

False. A counteroffer kills the original offer.

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26
Q

True/False The person making an offer is the offeree.

A

False. The offeree is the person receiving the offer.

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27
Q

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

A

Liquidated Damages

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28
Q

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

A

Assignment

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29
Q

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

A

Novation

30
Q

True/False Regarding the parties in a contract, novation is the substitution of a new party for the original one.

A

True

31
Q

True/False When a wronged party in a breached contract sues for compensatory damages, it is to have the courts force the other party to perform as the contract specifically states.

A

False. Specific performance is when an injured party sues to have the courts enforce the terms of a contract. A suit for compensatory damages is a suit that seeks money damages.

32
Q

is an employment agreement between a property owner and a real estate broker authorizing the broker to find a buyer (or tenant) for a certain property.

A

A listing contract

33
Q

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

A

Open Listing

34
Q

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

A

Exclusive-agency Listing

35
Q

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.

A

Exclusive-right-of-sale Listing

36
Q

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

A

Net Listing

37
Q

An employment contract with a purchaser.

A

Buyer Brokerage Agreement

38
Q

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

A

Procuring Cause

39
Q

True/False In a net listing agreement, the broker retains the proceeds in excess of the seller’s net as commission.

A

True

40
Q

A real estate licensee must give the owner a copy of a written listing agreement within 48 hours.

A

False. A real estate licensee must give the owner a copy of a written listing agreement within 24 hours.

41
Q

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

A

Option Contract

42
Q

True/False An option contract is a bilateral contract.

A

False. In an option contract, the owner (optionor) is bound to perform the terms of the option if required to do so by the optionee. The optionee, however, may elect to walk away from the contract because the option contract grants the optionee a right, not an obligation to buy the property.

43
Q

True/False In an option contract, the optionor has an exclusive right to buy the property within a specified period.

A

False. In an option contract, the optionee (not the optionor) has the exclusive right to buy the property within a specified period for a specified price and terms.

44
Q

The seller of real property in an agreement of sale.

A

Vendor

45
Q

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

A

Vendee

46
Q

One who is authorized to perform certain acts for another under a power of attorney.

A

Attorney-in-fact

47
Q

True/False The signatures of both spouses are required if the property is titled in both spouses’ names.

A

True

48
Q

True/False The consideration in a sale contract is the promises each party makes to one another.

A

True

49
Q

True/False Earnest money is required to make the sale contract valid.

A

False. The consideration in a sale contract is the promises the buyer and the seller make to each other. Although it is a good idea to include a provision in the sale contract for a binder deposit, a cash deposit is not required to make the contract valid.

50
Q

An independent special district created pursuant to Florida law to service the long-term specific needs of its community. A CDD constructs, operates, and maintains communitywide infrastructure and services for the benefit of its residents. CDDs provide an alternative way to fund and construct capital infrastructure to service projected growth.

A

Community Development District (CDD)

51
Q

True/False Florida statute mandates that real estate licensees must disclose to a prospective buyer that a former occupant of the property committed suicide in the home.

A

False. Florida statute mandates that the fact that a property was the site of a homicide, suicide, or death is not a material fact in a real estate transaction.

52
Q

True/False The use of an “as is” provision in a contract for sale eliminates liability for failure to disclose all known material defects that affect the value of residential property.

A

False. The use of an “as is” provision in a contract for sale does not eliminate the duty to disclose all known material defects.

53
Q

True/False A community development district (CDD) is an independent special district created, pursuant to Florida law, to service the long-term specific needs of its community.

A

True

54
Q

A false or misleading statement of a material fact; concealment of a material fact.

A

Misrepresentation

55
Q

The intent to misrepresent a material fact or to deceive in order to gain an unfair advantage or to harm another person.

A

Fraud

56
Q

True/False Misrepresentation is the misstatement of fact or the omission of a factual matter.

A

True

57
Q

True/False A key element of a cause for action for fraud is that the party to whom a misstatement was made was damaged as a result of the misstatement.

A

True

58
Q

True/False A radon gas disclosure is required before or at the time of executing real estate sale and lease contracts. The disclosure explains what radon gas is and the possible health hazards associated with radon gas; however, it does not require a radon gas inspection.

A

True

59
Q

True/False A lead-based paint disclosure must be given to buyers and renters of residential units built before 1978. Sellers must disclose the presence of any known lead-based paint, and buyers and renters must be given an EPA pamphlet.

A

True

60
Q

True/False At the time of or prior to signing the sale contract, purchasers must receive an informational brochure about energy efficiency that informs them of the right to have an energy-efficiency rating performed on the structure.

A

True

61
Q

A buyer has breached a real estate sale contract. The seller wants to recover damages in excess of the earnest money deposit. Which remedy for breach should the seller use?

A) Compensatory damages
B) Rescission on breach of contract
C) Liquidated damages
D) Specific performance

A

A) Compensatory damages

The party bringing suit seeks an amount of money equal to the extent of loss suffered (compensatory damages).

62
Q

A seller receives an offer from a buyer to purchase a property for $300,000. The seller changes the price to $320,000 and submits it to the buyer. Which term describes the price change?

A) Annulment
B) Breach of contract
C) Counteroffer
D) Meeting of the minds

A

C) Counteroffer

63
Q

What does Florida’s homeowner associations law require of sellers who own property subject to a mandatory homeowners association?

A) Sellers must provide buyers with a disclosure summary regarding the association.
B) Sellers must provide buyers with copies of property tax records from the past three years.
C) Sellers must inform buyers that they will be required to escrow the association dues.
D) Sellers are not required to provide any disclosures to buyers, provided the information is available in the public records.

A

A) Sellers must provide buyers with a disclosure summary regarding the association.

64
Q

What is the purpose of the property tax disclosure?

A) Caution buyers that they cannot rely on the seller’s property tax history as an indication of the buyer’s future property tax bill
B) Explain to buyers how the property taxes are calculated
C) Lower property taxes for first-time homebuyers
D) Inform homebuyers of how to apply for homestead exemption

A

A) Caution buyers that they cannot rely on the seller’s property tax history as an indication of the buyer’s future property tax bill

65
Q

Within what period of time must the seller be given a copy of a written listing agreement?

A) 5 days
B) 24 hours
C) 3 days
D) 48 hours

A

B) 24 hours

66
Q

Who must receive the lead-based paint disclosure?

A) Buyers of all single-family homes
B) Tenants and buyers of all rental property if a family member is younger than age two
C) Tenants and buyers of all residential property
D) Tenants and buyers of all residential property built before 1978

A

D) Tenants and buyers of all residential property built before 1978

67
Q

A contract specifies the amount of money that must be paid if the buyer defaults. Which remedy for breach does this describe?

A)Valuable consideration
B)Liquidated damages
C)Good consideration
D) Compensatory damages

A

B) Liquidated damages

68
Q

Which statement is TRUE regarding the Florida Building Energy-Efficiency Rating Act?

A) Buyers must be given an information brochure notifying the buyer of the right to conduct an energy-efficiency rating on the structure.
B) If requested in writing, sellers must furnish buyers with an energy-efficiency rating for the structure.
C) Sellers are required to pay the cost of an energy-efficiency rating on all homes built before 1978.
D) Most lenders require that an energy-efficiency rating be conducted before approving a mortgage loan.

A

A) Buyers must be given an information brochure notifying the buyer of the right to conduct an energy-efficiency rating on the structure.

69
Q

Which information must NOT be included in a listing agreement?

A)Owner’s signature
B) Commission structure
C) Definite expiration date
D) Automatic renewal clause

A

D) Automatic renewal clause

70
Q

Which court case made clear that material defects affecting the value of residential property must be disclosed to prospective buyers?

A) Johnson v. Davis
B) Jackson v. Johnson
C) Rowe v. Wade
D) Jones v. Mayer

A

A) Johnson v. Davis. Johnson v. Davis is a legal case that took place in Florida that set legal precedence concerning material defects.

71
Q

Which element is NOT required of a valid real estate contract?

A) Offer and acceptance
B) Legality of object
C) Acknowledgment
D) Consideration

A

C) Acknowledgment

72
Q

Which remedy for breach of contract asks the courts to force the other party to proceed as the contract states?

A) Liquidated damages
B) Specific performance
C) Rescission on breach of contract
D) Compensatory damages

A

B) Specific performance

Real Estate Exam! (20 decks)

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