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modern real estate principles 1 > unit 9 > Flashcards

unit 9 Flashcards

1
Q

When a real estate contract is negotiated and signed by both parties, it is which of the following?

A

Executory contract

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2
Q

Who benefits most from the use of TREC-promulgated and/or approved forms?

A

Consumers

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3
Q

A buyer hired a Texas Real Estate Commission (TREC)–licensed property inspector and has received the property condition inspection report in which deficiencies were noted. The buyer’s options for dealing with the reported deficiencies doNOTinclude which of the following?

A

The buyer may request that the TREC-licensed property inspector complete the necessary repairs at the buyer’s expense.

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4
Q

How long does a nondefaulting party have to begin legal action against the defaulting party in a real estate breach of contract?

A

Seven years

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5
Q

After both parties have initialed all changes to a contract and have signed it, which isNOTacceptable notification of contract acceptance?

A

In a buyer brokerage transaction, notification of acceptance must be given directly to the buyer.

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6
Q

If a homebuyer finds a clause objectionable and would like it slightly rewritten, he would

A

have to discuss it with his real estate attorney or write it in himself.

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7
Q

What is the difference between a “TREC-approved” form and a “TREC-promulgated” form?

A

Promulgated forms must be used, while approved forms may be used.

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8
Q

If a home inspector finds a dangerous situation in the course of his inspection—a gas leak or perhaps electrical failing—what is his obligation?

A

Alert anyone in the home that an emergency may be present
Note it in his report to the buyer
Alert the buyer and the buyer’s agent

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9
Q

The period of time prescribed or allowed for negotiating a contract or for meeting a contract obligation

A

is computed using calendar days, not business days.

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10
Q

Which isNOTtypical of a contract for deed?

A

The seller pays real estate taxes and insurance premiums.

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11
Q

Which is an act or a promise that is offered by one party to induce another to enter into a contract?

A

Consideration

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12
Q

Must licensed real estate sales agentsALWAYSuse promulgated forms?

A

No, licensees acting on their own behalf do not have to use promulgated forms.

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13
Q

Which term doesNOTrefer to an agreement by the parties to the terms of the contract?

A

Consideration

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14
Q

If the homesellers are confused about specific sections of a promulgated form, the real estate sales agent

A

may explain the meanings of the confusing sections.

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15
Q

The statute of frauds requires which element?

A

The signature of the party to be charged
The signatures of each seller when sellers are co-owners of property
A spouse’s signature when necessary to release marital rights in community or homestead property

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16
Q

If a seller fails to close on a property after signing an agreement to sell (such as suddenly realizing the land is worth far more than the agreed price), what options does the buyer have?

A

The buyer may sue for specific performance of the contract—requiring enforcement of the agreement as signed.

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17
Q

The difference between forms “promulgated” and forms “approved” by the commission is that

A

the license holder must use the promulgated forms, whereas the license holder may use the approved forms.

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18
Q

If a buyer and a seller orally agree that the seller will pay the appraisal fee, but the final contract states that the buyer will pay, which of the following would affect the admissibility into court of the prior oral agreement?

A

Parol evidence rule

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19
Q

Can a seller challenge an inspection report?

A

Yes, if the seller is presented with a list of items from the report, he may discuss and refute them.

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20
Q

A licensed real estate broker is not authorized to practice law unless also a licensed attorney. Which contract activity is a real estate license holder allowed to perform?

A

Filling in the blanks of a contract form promulgated or approved for that use by the Texas Real Estate Commission (TREC)

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21
Q

The Texas Real Estate Commission warns that there is no promulgated contract-for-deed form, therefore

A

competent legal counsel should be obtained by both seller and buyer.

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22
Q

Mary and Sally, both competent parties, agree that Sally will buy Mary’s house. All terms and conditions have been agreed upon, and a written contract has been signed by both parties. This contract isMOSTlikely

A

valid.

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23
Q

Which person wouldNOTbe considered a competent party for the purpose of creating a valid, enforceable contract?

A

Buyer/seller who has been adjudicated to be incompetent

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24
Q

Who selects the home inspector?

A

The real estate agent for the buyer selects the inspector.

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25
Q

When a contract is terminated because of complete performance, with all terms carried out, the contract is considered

A

executed.

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26
Q

If a home is offered “as is,” is it worth the trouble of hiring a home inspector?

A

Hiring a home inspector helps a buyer identify home flaws and decide whether to pursue the transaction.

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27
Q

Why might an investor offer an option to purchase a property?

A

Because once he has the option, all other potential buyers are locked out at least until the contract expires.
Because he can risk a comparatively small amount of money to hold a property for a specific period without committing to buy it.
Because he believes the value of the property may go up in the near future and the option allows him to lock in a lower price.

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28
Q

Contracts agreed to under undue influence are which of the following at the option of the injured party?

A

Voidable

29
Q

In real estate sales contracts, which term is used to clarify any business aspects of the saleNOTcovered by any provisions of the printed earnest money contract form?

A

Special provisions

30
Q

If one of the parties defaults on a real estate contract, the nondefaulting party may

A

sue for specific performance.

31
Q

In a contract for deed, what are some potential problems a seller might confront?

A

The buyer could lease the property to a third party who could damage it, resulting in a loss of value if the buyer defaults.

32
Q

If a homebuyer makes an oral agreement with a buyer agent, but then finds a home without using the agent, does a fee still need to be paid to the buyer agent?

A

No, if the buyer agent did nothing to secure the home, no money is owed.

33
Q

Through its termination option paragraph, the Texas-promulgated residential sales contract allows the buyer to do what?

A

The buyer may terminate the contract during the option period for any reason.

34
Q

A contract that seems to be valid on the surface but may be rejected by one or both of the parties is

A

voidable.

35
Q

If an option isNOTexercised within the time specified, the

A

optionor’s obligation and the optionee’s right will expire.

36
Q

The Texas Real Estate Commission regulates licensed real estate brokers and sales agents in the state. May only licensees use form promulgated by the Commission?

A

No, anyone can use the forms.

37
Q

Which isNOTa potential hazard in a contract for deed sale?

A

The possibility of the buyer defaulting under the terms of the contract and the seller having no legal recourse to recover the property

38
Q

A contract for the sale of a home has been negotiated between a seller and a buyer. The earnest money deposit put down by the buyer is which of the following?

A

Evidence of the purchaser’s intent to carry out the terms of the contract

39
Q

An option contract is what kind of contract?

A

Unilateral

40
Q

If a real estate agent sees a mistake in a contract after it’s been signed—such as noticing that an HOA fee should be $4,000 per year instead of $400—is it alright for him to just go ahead and change it?

A

No, if the contract is changed without notice to parties, it could be discharged by operation of law.

41
Q

If a builder substantially completes construction on the deck of a home but fails to provide waterproofing or staining as per the contract, must the homeowner pay the builder?

A

Yes, but the contract may be discharged through an agreement to pay the builder less the cost of waterproofing and staining.

42
Q

In a contract for deed, what are some potential problems a purchaser might run into?

A

The seller might default on a previous mortgage, which could result in a lien on the property.

43
Q

Must the buyer be present for the home inspection?

A

No, the buyer is not obligated to attend the inspection.

44
Q

May a real estate broker or sales agent receive a referral fee from a cable service provider?

A

Referral fees may be accepted if they are disclosed to the client ahead of time.

45
Q

Acceptance of a written offer to purchase real estate requires the signature of

A

the offeree.

46
Q

When time is computed in a real estate contract, days counted are

A

all days including weekends and holidays.

47
Q

If a homeseller and a homebuyer draw up a valid real estate contract between them, without the assistance of a real estate broker or real estate attorney, is the transaction legal and enforceable?

A

Yes, it is legal and enforceable provided the principals are of age and sound mind.

48
Q

Are sales agents obligated to list conveying personal property on a TREC-promulgated form?

A

TREC offers an approved form that may be voluntarily used to identify personal property.

49
Q

There are four exceptions to the requirement for a license holder to use a contract that has been promulgated for a particular contract situation. Which isNOTan exception?

A

Transactions in which a relocation company requires a different form to be used

50
Q

If the value of a property decreases dramatically after a buyer has taken out an option, is the buyer still obligated to purchase the property at the higher price?

A

No, the buyer need only let the option contract expire without making a purchase.

51
Q

In an installment contract or contract for deed, the buyer obtains possession

A

before delivery of the deed.

52
Q

Standard contract forms used by real estate license holders in Texas are drafted and revised by

A

the Texas Real Estate Broker-Lawyer Committee.

53
Q

Jerry and Mark agree that Jerry will buy Mark’s farm for $400,000 cash. This is an example of

A

a bilateral contract.

54
Q

Once a home inspector has identified areas of concern in a home, should the inspector be part of the negotiating teams to reduce the cost of the property?

A

The inspector’s report typically will enter into home price discussions, but the inspector does not participate in negotiations.

55
Q

Using force to obtain an agreement is

A

duress.

56
Q

Under the Texas Deceptive Trade Practices Act (DTPA), the statute of limitations is

A

two years from the date a buyer could reasonably have discovered the deceptive act.

57
Q

If a real estate buyer objects to a specific clause in a form promulgated by the Texas Real Estate Commission, the buyer

A

may strike out that clause after consulting with his real estate agent.
may strike out that clause upon the advice of his mortgage lender.
may strike out that clause after consulting with his real estate attorney.

58
Q

Under what circumstances might a person buy a lease-purchase option?

A

If the buyer believes the option would be cheaper than renting the property
If the buyer believes the value of the property will go up in the future
If the buyer is uncertain about his future (such as whether he may be relocated)

59
Q

A seller breaks a sales contract byNOTdelivering title to the buyer under the conditions stated in the agreement. This is called

A

breach of contract.

60
Q

Why might a property owner offer an option contract to purchase her property?

A

Because she believes the value of the property may decline in the near future, meaning the contract will expire unexecuted
Because she believes the property value may go up, but not as high as the contract, meaning the contract would expire unexecuted
Because she needs funding quickly and is willing to lose the property if necessary

61
Q

A contract in which one party is persuaded to act because of a promise made by another party is

A

a unilateral contract.

62
Q
  1. In real estate sales contracts, which term is used to establish the effective date of the contract?
A

Date of final acceptance

63
Q

Which isNOTtypical of a contract for deed?

A

The seller pays real estate taxes and insurance premiums.

64
Q

MOSTTexas real estate contracts provide that

A

reasonable time is permitted for performance of contract rights and duties.

65
Q

Why might an investor offer an option to purchase a property?

A

Because he believes the value of the property may go up in the near future and the option allows him to lock in a lower price.
Because he can risk a comparatively small amount of money to hold a property for a specific period without committing to buy it.
Because once he has the option, all other potential buyers are locked out at least until the contract expires.

66
Q

If you enter into a contract to purchase a home from a 16-year-old boy who inherited the property and the boy signs the sales contract, the contract is

A

voidable.

67
Q

An oral listing agreement is which of the following?

A

Unenforceable

68
Q

In a contract for deed, what are some potential problems a seller might confront?

A

The buyer could lease the property to a third party who could damage it, resulting in a loss of value if the buyer defaults.

69
Q

Which of the following statements regarding the responsibilities of a limited service broker after a contract is received on a listed property isFALSE?

A

A limited service broker may not ask another broker to deliver an offer to the seller.

modern real estate principles 1 (13 decks)

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