26-28

Question 1

listing contract

Answer 1

also called a listing agreement and it acts as a contract between a real estate broker and a seller who is the owner of real property. The listing contract gives the broker the authority to act on behalf of the seller as an agent in the sale of real property included in the agreement.

Question 2

Exclusive Agency Listing

Answer 2

A listing agreement employing a broker as the sole agent for the seller of real property under the terms of which the broker is entitled to a commission if the property is sold through any other broker, but not if a sale is negotiated by the owner without the services of an agent.

Question 3

Exclusive Right to Sell Agreement

Answer 3

A listing agreement employing a broker to act as agent for the seller of real property under the terms of which the broker is entitled to a commission if the property is sold during the duration of the listing through another broker or by the owner without the services of an agent. Most common used listing contract and offers most protection to the broker.

Question 4

Listing

Answer 4

An employment contract between principal and agent authorizing the agent to perform services for the principal involving the latter’s property; listing contracts are entered into for the purpose of securing persons to buy, lease, or rent property. Employment of an agent by a prospective purchaser or lessee to locate property for purchase or lease may be considered a listing.

Question 5

Net Listing

Answer 5

A listing which provides that the agent may retain as compensation for agent’s services all sums received over and above a net price to the owner. Net listings are fraught with peril and are illegal in some states.

Question 6

Open Listing

Answer 6

An authorization given by a property owner to a real estate agent wherein said agent is given the nonexclusive right to secure a purchaser; open listings may be given to any number of agents without liability to compensate any except the one who first secures a buyer ready, willing, and able to meet the terms of the listing, or secures the acceptance by the seller of a satisfactory offer.

Question 7

unilateral contract

Answer 7

a legally-enforceable promise, entered into by competent parties, that obligates one party to do as specified legal service for another. A unilateral contract specifies the conditions under which one person pays the other to perform a certain duty.

Question 8

non-exclusive agreement

Answer 8

two parties are entering agreement that services will be performed, but more than one party may be contracted to perform the same services.

Question 9

Comparative Market Analysis

Answer 9

An analysis of the competition in the marketplace that a property will face upon sale attempts.

Question 10

Fiduciary

Answer 10

A person in a position of trust and confidence, as between principal and broker; broker as fiduciary owes certain loyalty which cannot be breached under the rules of agency.

Question 11

Fiduciary Duty

Answer 11

That duty owed by an agent to act in the highest good faith toward the principal and not to obtain any advantage over the latter by the slightest misrepresentation, concealment, duress or pressure.

Question 12

Loyalty

Answer 12

An agent’s duty to place the client’s interest above those of all others, including the agent’s own self-interest.

Question 13

Obedience

Answer 13

This fiduciary relationship obligates the agent to act in good faith at all times, obeying the client’s instructions in accordance with the contract.

Question 14

Reasonable Care

Answer 14

The degree of caution and concern for the safety of himself/herself and others an ordinarily prudent and rational person would use in the circumstances. This is a subjective test of determining if a person is negligent, meaning he/she did not exercise reasonable care.

Question 15

Multiple Listing Service

Answer 15

An association of real estate agents providing for a pooling of listings and the sharing of commissions on a specified basis

Question 16

Nonexclusive Not-for-Compensation Contracts

Answer 16

specifies commission is not due to the broker. The buyer can retain multiple brokers and revoke the contract at any time. If the broker does find a suitable home, commission is paid at that time.

Question 17

Nonexclusive Right-to-Represent Contracts

Answer 17

provides the terms of compensation due if the broker finds a suitable home for the buyer. The buyer may obtain a home on their own or through another broker. This agreement can only be prematurely canceled under specified conditions.

Question 18

Exclusive Right-to-Represent Contracts

Answer 18

This is the most common buyer’s broker contract. This agreement defines broker-agent relationship, which includes the obligations of the buyer and the broker. The buyer cannot retain another broker for the duration of the contract. The broker is due a commission even if the buyer or another broker finds the house the buyer purchases.

Question 19

Puffing

Answer 19

incredulous claims made by sellers or seller’s agents to attract potential buyers. Exaggerating the positive points of a home may seem harmless, but there is a fine line between creative marketing and fraudulent statements that simply aren’t based on facts.

Question 20

Passive Fraud (Intentional Non-disclosure)

Answer 20

the intentional failure to reveal a material fact that impacts a real estate transaction. This is also known as a negative fraud.

Question 21

Active Fraud (Intentional Misrepresentation)

Answer 21

Active fraud occurs when you intentionally deceive a person by misrepresenting a material fact that induces the person to rely upon the fact. This is also known as actual fraud.

Question 22

Self-Dealing

Answer 22

involves a Realtor or broker who acts in his own best interest in a real estate transaction rather than in the best interest of his client, to whom he owes a fiduciary responsibility.

Question 23

Express Contract

Answer 23

A contract that has been put into words, either spoken or written. The parties clearly state all the terms of the agreement, and each party knows what they must do to complete the contract. An express contract may be oral or written and still be enforceable. A contract is an express contract if the parties have expressed all the terms clearly.

Question 24

Implied Contract

Answer 24

An agreement that has not been put into words, but is implied by the actions of the parties. Implied contracts may be implied-in-fact or implied-in-law. Implied contracts usually only arise when essential elements of an express contract are missing—terms haven’t been clearly expressed, or no written agreement exists, or the parties disagree about what was said.

Question 25

Statute of Frauds

Answer 25

A state law, based on an old English statute, requiring certain contracts to be in writing and signed before they will be enforceable at law, e.g.. contracts for the sale of real property, contracts that are not performed within one year. An oral lease for less than a year is enforceable and does need not be in writing.

Question 26

Bilateral Contract

Answer 26

A contract in which each party promises to do something. Bilateral contracts are common in real estate. For example, sales contracts are bilateral agreements. A lease agreement is also a bilateral contract. Most listing agreements are also bilateral.

Question 27

Unilateral Contract

Answer 27

A contract in which one party promises to do something if the other party performs a certain act, but the other party does not promise to perform it; the contract is formed only if the other party does perform the requested act. Unilateral contracts occur in real estate most often as open listings.

Question 28

Valid

Answer 28

Having force, or binding force; legally sufficient and authorized by law. If an apparently valid contract is unenforceable, it’s usually because it’s missing one of these elements.

Question 29

Void

Answer 29

To have no force or effect; that which is unenforceable. An agreement can become a void contract in two ways: it can be void when the parties make it or it can become void when something happens to render it void.

Question 30

Voidable

Answer 30

That which is capable of being adjudged void, but is not void unless action is taken to make it so.

Question 31

Executed Contract

Answer 31

A contract in which both parties have completely performed their contractual obligations.

Question 32

Executory Contract

Answer 32

A contract in which one or both parties have not yet completed performance of their obligations.

Question 33

Sales Contracts

Answer 33

an agreement in which one person agrees to sell real property to another person, who, in turn, agrees to buy the property at a specified price before a specified date.

Question 34

Options contracts

Answer 34

gives a party a right—but not an obligation—to purchase a property at a specified price during a specified time.

Question 35

Time is of the Essence

Answer 35

A condition of a contract expressing the essential nature of performance of the contract by a party in a specified period of time. If the parties haven’t performed by the date set in the clause, they are in breach of contract.

Question 36

Assignment

Answer 36

A transfer to another of any property in possession or in action, or of any estate or right therein.

Question 37

Novation

Answer 37

The substitution or exchange of a new obligation or contract for an old one by the mutual agreement of the parties. Unlike assignment, however, novation requires both parties to agree to it. Novation usually results in a completely new contract, under the same terms, but with different parties. Unlike assignment, novation usually releases one of the original parties from their obligations.

Question 38

Liquidated Damages

Answer 38

A sum agreed upon by the parties to be full damages if a certain event occurs. specifies how much will be paid in damages in the event of a particular event, like a breach or an unforeseen event.

Question 39

Rescission

Answer 39

The cancellation of a contract and restoration of the parties to the same position they held before the contract was entered into.

Question 40

Specific Performance

Answer 40

An action to compel performance of an agreement, e.g., sale of land as an alternative to damages or rescission. The court orders a party to do whatever the contract requires the person to do.

Question 41

Statute of Limitations

Answer 41

A statute prescribing a period of limitations for the bringing of certain kinds of legal actions.