Real Estate License Practice Test – Contracts

0%

Mr. and Mrs. Collins make an offer on their home to Mr. and Mrs. Gray, but they have yet to hear whether or not the offer has been accepted. In the meanwhile, they have spotted another house that they would want to buy. What is the best course of action for them?

Correct! Wrong!

Explanation:
Before an offer has been accepted, the buyers have the right to withdraw their offer with no penalty. However, if the seller has already accepted the offer, the offer now becomes a contract that carries with it legal obligations.

In order to be enforceable, which of the following contracts must be in writing?

Correct! Wrong!

Explanation:
This is very similar to another question in this section on the Statute of Frauds. A slight derivation on another question will likely exist on the state exam.

The _, also known as the words of conveyance, contains the phrases that describe the grantee's rights.

Correct! Wrong!

Explanation:
The granting clause specifies what you really own when you own a piece of real estate.

When is it not necessary for a broker to propose an offer to acquire real estate to their principal?

Correct! Wrong!

Explanation:
While this is the correct answer, as a matter of prudent practice, an agent is to disclose the existence of all offers to the seller, unless the seller explicitly instructs otherwise.

What is the closest definition of "delivery in escrow" in terms of deeds?

Correct! Wrong!

Explanation:
A delivery in escrow occurs when the grantor delivers the deed to a trustee or escrow agent. Once the grantee completes their required actions, the trustee will release the deed to the grantee. However, once the grantor gives the deed to the trustee, the title is considered legally transferred to the grantee.

Each of the brokers, Jenny and Sam, has an open listing on the same property. The property was shown to a potential buyer by broker Jenny, but the buyer opted not to purchase it. Broker Sam called the same buyer two weeks later and arranged a sale of the property. The vendor is required to pay the following commission:

Correct! Wrong!

Explanation:
An open listing guarantees the entire commission to the procuring broker (Sam in this example).

Broker Tim accepted a listing on a commercial office complex and was given a one-month option to buy the property. Broker Tim decides to purchase the property on the 25th day of the listing. Broker Tim must ____ before purchasing the house.

Correct! Wrong!

Explanation:
This is an example of full disclosure. All of these conditions need to be met in order for the broker to correctly exercise their option to purchase the property.

The ____ has the right of possession and equitable title.

Correct! Wrong!

Explanation:
The reference to “equitable title" indicates this question is framed in the context of a land sales contract in which the participants are the vendor (seller) and the vendee (buyer). In most cases, the party name ending in “or” owns the real estate. The “ee” (vendee) is the buyer and therefore has possession and equitable title of a property, but not legal title.

A typical listing contract gives a broker the authority to ____

Correct! Wrong!

Explanation:
Each of the wrong answers can be seen as incorrect. An agent cannot obligate the seller to accept an offer nor can they transfer property owned by the seller.

____ is referred to as "index," "triple net," and "flat."

Correct! Wrong!

Explanation:
All of these terms relate to leases as they describe how rent is to be calculated and charged.

An implied contract is __, which is a good example.

Correct! Wrong!

Explanation:
The owner shows through his actions that the contract is still valid, even though it is now simply implied.

To avoid paying the broker's commission, a buyer and seller agree to wait until the seller's listing expires before closing the sale. What is the best way for the broker to earn his commission?

Correct! Wrong!

Explanation:
A court will likely grant commission to a real estate broker if he can prove he was the procuring cause of sale, even if the listing has expired. Legally, this is referred to as a broker protection clause.

It is an example of ____ when a current contract is replaced by a completely new contract.

Correct! Wrong!

Explanation:
This question illustrates the need to be familiar with real estate terminology. Under a novation, there is a substitution or exchange of a new obligation or contract for an old one by the mutual agreement of the parties. Refer to the Real estate glossary at the back of this book for definitions to critical real estate terms you are likely to encounter on the state exam.

A single-family home's listing time differs from that of commercial property because:

Correct! Wrong!

Explanation:
All listings should have a fixed expiration date, and this period is negotiable as no laws regulate this aspect of sale. However, most contracts are 60-120 days for a single family home and 6 months— 1 year for a commercial property.

Once a piece of property is _, real estate agents will earn money.

Correct! Wrong!

Explanation:
Once the paperwork is signed for a sale or transfer, the real estate agents earn their pay.

By _, an offer is terminated.

Correct! Wrong!

Explanation:
This requires knowing who is who in the question. The offeror is the person who made the offer. The offeree is the person who may accept or reject an offer.

To be legally entitled to a commission on a nonexclusive listing, a broker must be able to show that ____.

Correct! Wrong!

Explanation:
To collect a commission, the broker needs to locate a buyer who is ready, willing and able to buy, and they must prove they were the procuring cause of the sale.

The legal act of giving and receiving a deed is referred to as .

Correct! Wrong!

Explanation:
When the grantor delivers and the grantee accepts the deed, the transfer of property becomes official. This is also known as passing title.

Except for the _, any of the following may seek particular performance when damages for a breach of contract are insufficient.

Correct! Wrong!

Explanation:
The parties to an escrow do not include the broker. Thus, the damages described do not include the broker’s fee nor would the broker have any authority to demand specific performance.

When put into the deed, deed restrictions and easements on a property are considered ____.

Correct! Wrong!

Explanation:
Exceptions and reservations are restrictions or limitations explicitly described in the deed.

When a buyer defaults on a land sales contract, the seller ____.

Correct! Wrong!

Explanation:
In the instance of a land contract, also known as a contract sale, there is no trustee. Further, the vendor already has legal title to the property so answer selection D would impact them (the seller) rather than the vendee (the buyer). Thus, on a default by the buyer, the seller files a quiet title action.

Carol made a real estate purchasing offer. The seller accepted the offer, but Heather died before the seller's representative informed her of the acceptance. Which of the following statements is true based on these facts?

Correct! Wrong!

Explanation:
Had the buyer’s death occurred after communication of the acceptance of the offer by the seller’s agent, her estate would have been responsible to complete the escrow.

On a handshake, Joan sells her house to her brother Mike. This agreement is:

Correct! Wrong!

Explanation:
In order of a contract of sale to be valid, there must be signatures from both parties.

Broker Jack listed an empty lot for $120,000 with Seller Venus. Mariell, a potential buyer, made a $100,000 purchase offer that was set to expire in 30 days. Seller Venus replied the next day with a bid of $110,000. Mariell, the counter's buyer, turned it down. Seller Venus signed and handed to Broker Jack a signed acceptance of Buyer Mariell's initial $100,000 purchase offer three days later. When Buyer Mariell was informed of Seller Venus acceptance, Mariell replied that he did not intend to purchase the property. As a result of the above activities ____.

Correct! Wrong!

Explanation:
When a counteroffer is made, no matter what the reason may be, the original offer is voided.

Who is in charge of deciding on a property's listing price?

Correct! Wrong!

Explanation:
The property owner is responsible for determining a listing price for their property, although they are often given market information by their real estate broker.

Comments are closed.