Arkansas Real Estate License Real Estate Contracts Questions and Answers

Question 1

A buyer submits a written offer to purchase a home in Little Rock. The seller, unhappy with the price, changes the purchase price to a higher amount, initials the change, and sends the document back to the buyer's agent. What is the legal status of the document at this point?

Accepted Answer

A counteroffer, which terminates the original offer.

Answer

Changing a material term of an offer, such as the price, and communicating that change back to the original offeror constitutes a rejection of the original offer and the creation of a new offer, known as a counteroffer. The original offer is no longer valid and cannot be accepted. The original offeror (the buyer) now has the power to accept, reject, or counter the new offer from the seller.

Question 2

Under the Arkansas Statute of Frauds, which of the following agreements is required to be in writing to be legally enforceable?

Accepted Answer

A contract for the sale of a parcel of land.

Answer

The Statute of Frauds is a legal doctrine that requires certain types of contracts to be in writing to be enforceable. In virtually all states, including Arkansas, a contract for the sale or transfer of an interest in real property falls under this requirement. Leases for a term of one year or less are a common exception to this rule.

Question 3

Which of the following is NOT an essential element for the formation of a valid and legally binding real estate sales contract in Arkansas?

Accepted Answer

An earnest money deposit.

Answer

While an earnest money deposit is customary in most real estate transactions to show the buyer's good faith, it is not a legal requirement for contract validity. The essential elements of a valid contract are: legally competent parties, mutual assent (a meeting of the minds through offer and acceptance), a lawful objective, and consideration. In a real estate contract, the consideration is the mutual exchange of promises—the buyer's promise to pay and the seller's promise to convey the property.

Question 4

A buyer and seller in Fayetteville have a signed purchase agreement. The seller subsequently refuses to complete the sale, even though the buyer has met all of their obligations. Because real estate is considered unique, what is the most likely legal remedy the buyer will seek to force the sale?

Accepted Answer

Specific performance

Answer

Specific performance is a court order that compels a party to perform their contractual obligations. Since every parcel of real estate is considered unique, monetary damages are often considered an inadequate remedy for a buyer. Therefore, a buyer will likely sue for specific performance to force the seller to convey title to the specific property they contracted to buy.

Question 5

In a typical Arkansas residential real estate transaction involving a licensed agent, when should the Seller's Property Disclosure form be delivered to the buyer?

Accepted Answer

Before the buyer signs an offer to purchase.

Answer

While Arkansas state law does not have a statute requiring sellers to provide a disclosure statement, regulations from the Arkansas Real Estate Commission (AREC) require agents to make efforts to ascertain and disclose material facts. The standard practice and forms, like the Arkansas Realtors Association Seller Property Disclosure Form, are designed to be provided to the buyer before an offer is made and accepted. This allows the buyer to make an informed decision when crafting their offer.

Arkansas Real Estate License Practice Test

Arkansas Real Estate License Practice Test

Arkansas Real Estate License Real Estate Contracts Questions and Answers