Custom Quiz Agency

Question 1

The most common listing agreement allows the broker to
A) guarantee the purchaser will accept.
B) find a purchaser, obtain an offer, and bind the principal to that offer.
C) convey title.
D) find a purchaser, fill out the deposit receipt, obtain an offer, and present the offer.

Answer 1

D) find a purchaser, fill out the deposit receipt, obtain an offer, and present the offer.

Question 2

Franklin offered to perform all of the obligations in a purchase contract. This act is considered a
A) tender.
B) condition.
C) demand.
D) covenant.

Answer 2

A) tender.

Question 3

All of these occurrences would terminate an offer EXCEPT
A) a counteroffer by the offeree.
B) revocation of the offer by the offeror after the offeree posted legal notice of acceptance.
C) the offeror revokes the offer before acceptance is communicated to him.
D) a party to the offer dies.

Answer 3

B) revocation of the offer by the offeror after the offeree posted legal notice of acceptance.
An offeror cannot effectively revoke an offer after the acceptance has been communicated. Acceptance of an offer must be in the manner specified in the offer, but if no particular manner of acceptance is specified, then acceptance may be by any reasonable and usual mode. All other choices express a termination of an offer.

Question 4

A lease for a period of years that is held by the lessor is an example of
A) none of these.
B) personal property.
C) freehold estate.
D) real property.

Answer 4

B) personal property.

Question 5

Jones signed a listing agreement with Broker Brown stating that he would pay 6% commission to Brown upon the sale of his house. Broker Brown promised to use diligence in attempting to find a buyer. This contract is
A) bilateral executory.
B) bilateral executed.
C) unilateral executed.
D) unilateral executory.

Answer 5

A) bilateral executory.
An exchange of promises creates a bilateral contract. Since a listing is for a period of time, the contract is executory during the listing term.

Question 6

A real estate broker cannot accept a listing from a minor appointing the broker as an agent because
A) a minor does not have the capacity to enter into contracts.
B) the broker would breach the fiduciary relationship by misrepresenting a minor who is incapable of making adult decisions.
C) a minor has the right to disaffirm the listing contract during his minority.
D) a minor is incapable of appointing an agent.

Answer 6

D) a minor is incapable of appointing an agent.

A minor lacks the capacity to appoint an agent under state law.

Question 7

A voidable contract is
A) valid until some action is taken to void it.
B) illegal.
C) unenforceable.
D) enforceable.

Answer 7

A) valid until some action is taken to void it.

Question 8

Certain contracts to be held enforceable in court under the statute of frauds must be in writing. Which of these would be required to be in writing?
A) Any agreement not to be performed within one year
B) Employment of a real estate broker to sell stock-in-trade and goodwill of a business
C) Employment of a real estate broker to negotiate one year leases on business property
D) Employment of a real estate broker to find a business to purchase

Answer 8

A) Any agreement not to be performed within one year

Question 9

An executed contract is a contract
A) that has been signed.
B) under the jurisdiction of the probate court.
C) to be rewritten.
D) signed, notarized, and recorded.
Explanation

Answer 9

A) that has been signed.

Question 10

An estate in real property for a definite and specified period of time with an agreement for the payment of rent is known as
A) freehold estate.
B) periodic tenancy.
C) month-to-month tenancy.
D) estate for years.

Answer 10

D) estate for years.
An estate for years is an interest in lands by virtue of a contract (lease) for the possession of them for a definite and limited period of time. The term may be for any specified period of time, even for a certain number of years, months, weeks, or days.

Question 11

The broker's desk fee would most likely be paid
A) by a new licensee.
B) in a 100% brokerage.
C) by an appraiser.
D) in property management.

Answer 11

B) in a 100% brokerage.
In a 100% commission real estate office, an experienced salesperson pays the broker a flat desk fee or a desk fee plus a transaction fee and keeps all of the commission.

Question 12

At what point would an individual be considered incapable of handling his own affairs because of mental incompetence?
A) An individual goes to work every day and visits a psychiatrist twice a week, but is unable to perform his duties at work.
B) An individual voluntarily commits himself to a mental institution for psychiatric treatment.
C) After proper procedures are followed, an individual is committed to a mental hospital for psychiatric treatment.
D) A conservator is appointed by a court to oversee an individual’s business affairs.

Answer 12

D) A conservator is appointed by a court to oversee an individual’s business affairs.
The point at which an individual would be considered legally incapable of handling his own affairs because of mental incompetence “…is when that has been judicially determined.” In other words, a judge must make that determination. At that time, the judge appoints either a guardian or a conservator to handle the affairs of the person so incapacitated.

Question 13

A prospective buyer pays $2,000 for a four-month option to purchase a $300,000 property. All of these statements are true EXCEPT
A) the optionor’s temporary surrender of the right to sell is valuable consideration.
B) the optionee has acquired a legal interest in the property.
C) the agreement imposes no obligation on the optionee to purchase the property.
D) a unilateral contract has been established.

Answer 13

B) the optionee has acquired a legal interest in the property.
An optionee acquires a contractual right but acquires no legal interest in the property until after the optionee exercises the option.

Question 14

A listing agreement is
A) an employment contract.
B) a promise for a promise.
C) a bilateral executory contract.
D) all of these.

Answer 14

D) all of these.

Question 15

In November, a storm caused damage in Able’s house due to a leaky tile roof. In April, Able listed the house with Broker Baker. Broker Baker showed the house to Smith, but did not mention the leaky roof, although Able had mentioned it. After close of escrow, Smith sustained damage to the interior of the house due to this leaky roof. Under these circumstances, buyer Smith
A) had no recourse under the doctrine of caveat emptor.
B) could take legal action against Broker Baker but not against Able.
C) had no recourse since escrow had closed.
D) could take legal action against Able, and if successful, Able could most likely recover the loss from Broker Baker.

Answer 15

D) could take legal action against Able, and if successful, Able could most likely recover the loss from Broker Baker.

Question 16

Smith signed an offer to buy Brown’s property and gave it to the broker. The broker took it to Brown, who signed Smith’s offer, giving an unqualified acceptance of it. Before the broker could deliver the accepted offer back to Smith, Smith died of a heart attack. Which statement is correct?
A) Smith’s death created a revocation of the offer.
B) The offer is void since the deed could not be delivered to Smith.
C) The offer and unqualified acceptance constitute a valid contract.
D) Delivery of the offer to the administrator binds Smith’s heirs.

Answer 16

A) Smith’s death created a revocation of the offer.

Question 17

The term demise means
A) something given to induce entering into a contract.
B) testamentary transferability of real property.
C) transferring the right to or right in an estate.
D) witnessing the signing of a document.
Explanation

Answer 17

C) transferring the right to or right in an estate.

Question 18

Two parties entered into a contract, but one of the parties had previously been adjudged incompetent. The other party to the contract was not aware of this fact. What is the status of this contract?
A) Void
B) Illegal
C) Enforceable if the seller could prove there was no coercion involved
D) Voidable

Answer 18

A) Void
The party who had been adjudged incompetent thus lacked capacity to contract (one of the four essential elements of any contract). This apparent contract would be void, and all void contracts are unenforceable.

Question 19

A listing agreement in which the owner promises to pay a commission under all circumstances of sale, except if he or she sells the property himself, is known as
A) a net listing.
B) none of these.
C) an exclusive-right-to-sell listing.
D) an exclusive-agency listing.

Answer 19

D) an exclusive-agency listing.

Question 20

A broker had several agents working in his office. Two of his agents brought in offers on the same listing, one in the morning and one in the afternoon. The second agent’s offer was $1,000 less than the first agent’s. The broker held the second offer until the first offer was accepted or rejected. This was
A) forbidden in the above circumstances.
B) permissible because of the relationship between the broker and his sales agents.
C) forbidden because of the fiduciary relationship to both buyers.
D) permissible because the second offer was lower.

Answer 20

A) forbidden in the above circumstances.

Question 21

A buyer purchased a single-family dwelling in a subdivision using a land sales contract that provided for monthly payments and prohibited prepayment. Two years later the buyer decided to pay off the balance of the contract, but the vendor refused to accept it. Which statement is correct?
A) The buyer must abide by the terms of the land sales contract.
B) The buyer can make equal monthly interest payments but can pay nothing on the principal before the due date.
C) The inclusion of this clause makes the contract void.
D) The buyer can ignore the clause prohibiting prepayment and pay off the loan after two years.

Answer 21

D) The buyer can ignore the clause prohibiting prepayment and pay off the loan after two years.
Civil Code Section 2985.6 gives a buyer of residential property (up to four units) the right to prepay all or any part of a land contract at any time after 12 months following the sale. The inclusion of such a void prepayment prohibition, however, does not affect the validity of the remainder of the contract.

Question 22

An executed contract is a contract
A) completed and fully performed by both parties.
B) under the jurisdiction of the probate court.
C) signed, notarized, and recorded.
D) to be rewritten.

Answer 22

A) completed and fully performed by both parties.

Question 23

A final, specific, and definite termination date is required by law on all agreements between seller and real estate agent EXCEPT
A) a written instrument giving one agent the right to sell property for a specified time but reserving the right of the owner to sell the property himself without paying a commission.
B) an agreement in writing wherein it is provided that an agent appointed in an exclusive capacity may retain as compensation for his services all sums received over and above a net price to the owner.
C) a written authorization given by a property owner to a real estate agent wherein said agent is given the right along with other brokers to secure a purchaser.
D) a written agreement between owner and agent giving the agent the right to collect a commission if the property is sold by anyone during the term of his agreement.

Answer 23

C) a written authorization given by a property owner to a real estate agent wherein said agent is given the right along with other brokers to secure a purchaser.
The other three choices all describe exclusive listing agreements, which must have a final and definite termination date, unlike open listings.

Question 24

In an assignment of a lease, the assignee becomes the
A) vendor.
B) tenant.
C) sublessee.
D) vendee.

Answer 24

B) tenant.

Question 25

In a sales transaction, an agent is paid by both parties but he did not reveal his dual agency. What could happen in these circumstances?
A) The agent would be subject to discipline by the real estate commissioner.
B) The sale could be rescinded.
C) The agent may not be able to enforce payment of his commission.
D) All of these

Answer 25

D) All of these

Question 26

An offer is terminated by
A) a change in the offer made by the offeror.
B) revocation by the offeror.
C) revocation by the offeree.
D) rejection by the offeror.

Answer 26

B) revocation by the offeror.

Question 27

A licensed real estate salesperson takes a listing that does not authorize her to take a deposit. The salesperson finds a buyer, however, who gives her a personal check as a deposit with an offer on the property. With regard to the deposit, the salesperson’s broker would be
A) the agent of the buyer.
B) the agent of the seller.
C) the agent of the bank.
D) required to place the check in escrow.

Answer 27

A) the agent of the buyer.

Question 28

A lessee assigns all of the leasehold interest. The receiver becomes
A) landlord.
B) tenant.
C) assignor.
D) sublessor.

Answer 28

B) tenant.

Question 29

Which document might be used to convey possessory rights in real property without conveying ownership rights?
A) Sublease
B) Grant of easement
C) Mortgage
D) License

Answer 29

A) Sublease

Question 30

A seller employed a broker through an authorization to sell, which included an authorization to accept deposits. Upon accepting a deposit from a potential buyer, and before presenting the offer to the seller, the broker misappropriated the money. The risk of loss is
A) both the buyer’s and the seller’s because neither was at fault.
B) the buyer’s because the broker was acting as his agent in handling the deposit.
C) the seller’s because he had given the broker specific permission to accept deposits.
D) the buyer’s because he could have avoided any misappropriation by making his check out to an independent escrow company of the seller.

Answer 30

C) the seller’s because he had given the broker specific permission to accept deposits.
The acts of an agent, in transacting his principal’s business, and that are within the scope of his authority, are the acts of his principal; therefore, the seller would be liable to the buyer for the loss.

Question 31

Which document does not qualify for recording?
A) A conditional sales contract
B) A promissory note secured by a deed of trust
C) A trustee’s deed
D) A notice of completion

Answer 31

B) A promissory note secured by a deed of trust
A promissory note is the evidence of the debt and is secured by a deed of trust. The promissory note is not recorded but the deed of trust is. A notice of completion and a trustee’s deed must be recorded. Conditional sales contracts (also called real property sales contracts, installment contracts, or land contracts) are often recorded.

Question 32

A salesperson wrote up an offer to purchase a home and took a “pay to bearer” note from the buyer as a deposit with the offer in the amount of $1,000. When his broker saw the “pay to bearer” note, she would be most likely to tell the salesperson that
A) the seller’s permission must be obtained before a note of this type could be accepted as a deposit.
B) in real estate transactions a “pay to bearer” note is the same as cash.
C) the seller must be told of the note before he agrees to accept the offer to purchase.
D) the note cannot be accepted because the deposit must be cash, personal check, or cashier’s check.

Answer 32

C) the seller must be told of the note before he agrees to accept the offer to purchase.

Question 33

A broker shows a house to a buyer after listing the house. The broker does not disclose the agency relationship the broker has with the seller. The buyers are under the impression the broker is representing them. The agency is
A) ostensible agency.
B) listing only.
C) undisclosed dual agency.
D) voidable.

Answer 33

C) undisclosed dual agency.

Question 34

The legal term laches is best described as
A) a court with no jurisdiction.
B) a writ of attachment.
C) a deficiency judgment.
D) inexcusable delay in asserting a legal right.

Answer 34

D) inexcusable delay in asserting a legal right.

Laches means delay or negligence in asserting one’s legal rights. Such a delay can make a contract unenforceable.

Question 35

John and Mary Jackson gave Broker Jones a $500 deposit to cover closing costs and signed an offer to purchase a home for $65,000 provided they could obtain a loan for the full price of the home. Included in the offer to purchase was a clause that read, “Subject to buyers obtaining a VA loan in the amount for $65,000, secured by subject property, payable over a period of 30 years at 11½% interest with monthly payments to be approximately $644 per month, plus taxes and insurance.” Which statement most nearly represents what was intended by the clause?
A) If the maximum loan available is $63,000, the buyer may pay the difference of $2,000 and proceed with the purchase.
B) If the full $65,000 loan is not obtainable, buyer and seller may renegotiate the sale on different terms.
C) If the $65,000 loan is not obtainable, the buyers may cancel their offer and recover the $500 deposit.
D) Any of these

Answer 35

C) If the $65,000 loan is not obtainable, the buyers may cancel their offer and recover the $500 deposit.
The offer to purchase is expressly conditioned upon the buyer’s obtaining a $65,000 loan payable according to a specific schedule. A contract based upon a condition will be enforceable only upon the happening of such condition. If the condition is not met, there is no contract nor are there any contractual duties. If the full $65,000 loan is not obtainable, renegotiating the sale or paying the difference are alternatives for the buyers. Canceling their offer and recovering the deposit is correct since it most nearly explains the meaning of this clause.

Question 36

An agency contract can be created by all of these EXCEPT
A) 
an implied contract in law.
B) an oral contract.
C) a voluntary offer by the agent.
D)appointment by the principal.

Answer 36

C) a voluntary offer by the agent.

Question 37

At 10:00 AM a broker receives an offer that meets full price and all terms of the listing. At noon, before he or she could submit the first offer, he or she receives a second offer on the same property for less money but all cash. The broker decides to submit the first offer and, if it is rejected, to submit the second offer. Which statement is TRUE?
A) This is proper since one should submit offers in the order received.
B) This is improper since the broker owes a fiduciary relationship to both buyers.
C) The broker could be disciplined by the real estate commissioner.
D) This is proper since the second offer was for less than the listed price.

Answer 37

C) The broker could be disciplined by the real estate commissioner.
All offers should be submitted. For withholding material facts, a broker could be disciplined by the real estate commissioner. While it is correct in that the action is improper, the listing broker owes fiduciary duties to the seller, not to the buyer.

Question 38

Which statement is NOT true regarding an option?
A) An optionee must give valuable consideration.
B) A separate sales agreement must be binding.
C) If the optionee does not exercise the option, he forfeits the thing of value given to the optionor as consideration.
D) An option on a business opportunity can also include the site on which the business operates.

Answer 38

B) A separate sales agreement must be binding.
The option to purchase real estate is a written agreement in which the owner agrees that the buyer shall have the right to purchase the property at a fixed price within a certain time. A separate sales agreement is not necessary for the option to be binding.

Question 39

A real estate broker, as an agent, must follow the lawful instructions of his principal in a real estate transaction. Failing to do so, the broker is
A) subject to a fine or imprisonment according to the law.
B) any of these.
C) liable for damages to the principal as a result.
D) subject to loss of license in a court of jurisdiction.

Answer 39

C) liable for damages to the principal as a result.

Question 40

A broker used the following phraseology in his listing contract: “In consideration of the execution of the foregoing, the undersigned broker agrees to use diligence in procuring a purchaser.” This is best described as
A) an agreement to advertise the property.
B) superfluous in such contracts.
C) a necessary element in the creation of a bilateral contract.
D) a necessary item in the creation of a unilateral contract.

Answer 40

C) a necessary element in the creation of a bilateral contract.

Question 41

All of these are ways by which an offer to purchase real estate would be terminated EXCEPT
A) failure to communicate revocation of the offer before the other party communicates his acceptance.
B) death or incompetency of either offeror and offeree without notice thereof.
C) conditional acceptance of offer by offeree.
D) failure to accept the offer within a prescribed period of time.

Answer 41

A) failure to communicate revocation of the offer before the other party communicates his acceptance.
If you make an offer on a property and the seller accepts the offer and communicates the acceptance to you before you can revoke it, it is a binding contract. Until the contract is binding, death of either party will cancel the offer.

Question 42

When a buyer revokes an offer prior to the acceptance by the seller
A) the broker may sue the buyer for specific performance.
B) the seller may sue the buyer for specific performance.
C) the broker must refund to the buyer any earnest money deposit.
D) the broker is entitled to one half of the earnest money deposit.

Answer 42

C) the broker must refund to the buyer any earnest money deposit.

Question 43

An offer is terminated by
A) a change in the offer made by the offeror.
B) rejection by the offeree.
C) rejection by the offeror.
D) revocation by the offeree.

Answer 43

B) rejection by the offeree.

Question 44

A broker who is not authorized to accept deposits in his listing agreement must inform the offeror that
A) the risk of loss lies solely with the buyer. The seller will not be liable in event of loss of the deposit.
B) an agent must accept all deposits.
C) no deposits will be accepted.
D) it is implied by law that if authorized by the seller, deposits can be accepted.

Answer 44

A) the risk of loss lies solely with the buyer. The seller will not be liable in event of loss of the deposit.

Question 45

A broker was instructed not to present any offers unless accompanied by a deposit. A buyer brings in an offer without a deposit. With regard to the offer, the broker
A) should go back to the offeror and request the deposit.
B) should not present it.
C) cannot present it.
D) must present it.

Answer 45

D) must present it.

Question 46

In the matter of a broker’s commission to be paid by a seller, which statement is TRUE?
A) The broker’s commission earned but not paid creates a lien on the seller’s property.
B) The seller and buyer may rescind sale, thus relieving the seller of the obligation to pay the broker’s commission.
C) Action for the broker’s commission must be brought within four years of earning the commission.
D) A listing agreement signed only by the seller is unenforceable.

Answer 46

C) Action for the broker’s commission must be brought within four years of earning the commission.

Question 47

The broker who most likely has earned a commission is the one who has
A) communicated the buyer’s offer to the seller.
B) secured a substantial deposit with an offer.
C) communicated acceptance by the seller to the buyer.
D) secured acceptance of an offer.

Answer 47

C) communicated acceptance by the seller to the buyer.

Question 48

Broker Fenton has a property listed for $400,000 and submits an offer of $390,500 the next day, with a three-day acceptance period. The seller makes a counteroffer of $395,500. One day after the acceptance period, the seller accepts the buyer’s original offer of $390,500. The buyer decided that he no longer wants the property. In these circumstances the acceptance is
A) voidable.
B) enforceable because of the original offer.
C) valid.
D) not a contract.

Answer 48

D) not a contract.
Under the law of contracts, an offer creating a binding contract must be accepted on time and be unqualified according to the terms. Any change in the terms creates a counteroffer and voids the original offer.

Question 49

If a minority buyer comes into a broker’s office and asks to see a specific listed home, the broker should refuse to show it to him under which condition?
A) When the seller is out of town and has instructed the broker that his house is not to be shown in his absence
B) When the property is listed with a co-op broker
C) When the agent sincerely believes it will produce panic selling
D) Never

Answer 49

A) When the seller is out of town and has instructed the broker that his house is not to be shown in his absence
If the seller has instructed the broker that his house is not to be shown while he is out of town, the broker as an agent of the seller must comply with the seller’s instruction. The instruction not to show the property applies to all prospective buyers, regardless of race.

Question 50

An estate that will continue for a period of six months only, fixed in advance by contractual agreement of the parties, is an
A) estate at sufferance.
B) estate from period to period.
C) estate at will.
D) estate for years.

Answer 50

D) estate for years.
Any lease for a definite period of time creates an estate for years, regardless of the period of time for which it was established.