Real Estate Brokerage Activities and Procedures

Question 1

Something of value given to another to compensate them for entering into a contract is termed:
A) Consideration
B) Commingling
C) Chattel
D) Cooperation

Answer 1

A) Consideration

Question 2

A contract is entered into on fraudulent terms introduced by the seller.
Upon discovery of the fraud by the buyer, the contract would be:
A) Voidable by the seller
B) Voidable by the buyer
C) Valid
D) Void

Answer 2

B) Voidable by the buyer

Question 3

Real estate sales contracts, listings, leases, etc. which bind two parties are termed:
A) Voidable contracts
B) Bilateral contracts
C) Option contracts
D) Unilateral contracts

Answer 3

B) Bilateral contracts

Question 4

A counteroffer constitutes:
A) A new contract
B) A void contract
C) A voidable contract
D) A change

Answer 4

D) A change

Question 5

The green ter sale should prose hari the properly damaged on
A) Buyer and seller equally
B) No reference to that possibility should be made in the contract
C) The seller
D) The buyer

Answer 5

C) The seller

Question 6

The amount of earnest money to be deposited for a purchase is:
A) Determined by state law
B) Determine by the Board of Realtors
C) Negotiable between the parties
D) Determined by the Canon of Ethics

Answer 6

C) Negotiable between the parties

Question 7

An option:
A) Gives the optionee an easement on the property
B) Keeps the offer open for a specified time
C) Requires the option or to complete the purchase, if the optionee so elects
D) Makes the seller liable for a commission

Answer 7

C) Requires the option or to complete the purchase, if the optionee so elects

Question 8

The transfer of rights under a contract without the release from obligation
is known as:
A) Succession
B) Novation
C) Assignment
D) Recession

Answer 8

C) Assignment

Question 9

Melissa went to the dry cleaners and dropped off her good wool coat to be cleaned. When the clerk accepted the coat, Melissa and the dry cleaning operation had just entered into what type of contract?
A) lmplied
B) Executed
C) Complete
D) Unilaterali

Answer 9

A) lmplied

Question 10

If, at the last minute, a seller decides he does not want to complete a sale, but the buyer wants to proceed, the buyer’s best remedy would be:
A) Sue the broker
B) Nothing
C) Sue for monetary damages
D) Sue for specific performance

Answer 10

D) Sue for specific performance

Question 11

John and Mary are getting a divorce. John tells Mary that unless she agrees to sell their home immediately and split the proceeds, he will institute legal proceedings to gain custody of the children. If she agrees, the sales contract may then be voidable because of
A) Duress
B) Consideration
C) Offer and Acceptance
D) Legality of object

Answer 11

A) Duress

Question 12

The owner of a farm and an apartment house desires a mortgage loan and offers both properties as security. He will be required to execute:
A) A Blanket mortgage
B) A Building and Farm mortgage
C) A Building and Loan mortgage
D) An Amortizing mortgage

Answer 12

A) A Blanket mortgage

Question 13

The amount of money owing on a note or promise to pay is termed:
A) Dedication
B) Covenant
C) Debt
D) Deed

Answer 13

C) Debt

Question 14

Walton decides to sell his cabin on the lake and offers it in a letter to his regular postman, Bill, at a price of $5,000. The next day, Walton receives a note from a neighbor, a close friend of the postman, who says, “I accept your offer.” Is Walton obligated to sell to the neighbor?
A) Yes, because the acceptance was within three days.
B) No, because only the offeree can accept an offer.
C) Yes, because both the offer and the acceptance were in writing.
D) No, because no licensed agent was involved.

Answer 14

B) No, because only the offeree can accept an offer.

Question 15

Can a buyer tender a personal note rather than cash or check as a good faith earnest money deposit?
A) No, because that would require a credit report.
B) No, because the broker might not get a commission.
C) Yes, if the seller is fully informed and approves in writing.
D) Yes, if the broker will co-sign the note.

Answer 15

C) Yes, if the seller is fully informed and approves in writing.

Question 16

Mr. Jones wants to settle his affairs prior to his death by selling his land and giving the money to his children. Broker Bob lists the property and markets it. After six months, an offer from the impulsive, Widow Smith, who lives in the next county, is received in the mail. Jones immediately signs the contract without change, and Broker Bob drives to the next county to deliver a copy to the widow in person. What might prevent this from being a binding contract?
A) Widow Smith is, in fact, incompetent
B) Nothing
C) Either Widow Smith is incompetent or Widow Smith’s death before Broker Bob can relate Jones’ acceptance
D) Widow Smith’s death before Broker Bob can relate Jones’ acceptance

Answer 16

C) Either Widow Smith is incompetent or Widow Smith’s death before Broker Bob can relate Jones’ acceptance

Question 17

Which of the following would cause a termination of a real estate contract?
A) Fraud
B) Applying for finance
C) Offer and acceptance
D) Completion

Answer 17

D) Completion

Question 18

The amount of money paid in regular intervals to reduce the balance owed on a debt is termed:
A) Disintermediation
B) Dower
C) Dedication
D) Debt service

Answer 18

D) Debt service

Question 19

Contract law requires that the amount of earnest money to submit with a sales contract be:
A) At least $1000
B) No earnest money is required to form a contract
C) 10% of the asking price
D) 06% of the offer

Answer 19

B) No earnest money is required to form a contract

Question 20

When a buyer agrees to purchase a new home on the condition that the salesperson sell his current home, the salesperson should:
A) Execute a memorandum to the buyer to that effect
B) Make such promises in the presence of two witnesses
C) Include a “subject to sale” clause in the agreement of sale for the new property
D) Make a memo to the broker by whom he is employed

Answer 20

C) Include a “subject to sale” clause in the agreement of sale for the new property

Question 21

Seller Stuart calls Buyer Bruce, stating that he has changed his mind and now has no intention, under any circumstance, of coming to the closing table to complete the transaction set forth in their executed contract.
What is this called?
A) Welshing on the deal
B) Disappointing
C) Anticipatory breach or repudiation
D) Mitigation

Answer 21

C) Anticipatory breach or repudiation

Question 22

Commingling refers to:
A) Cooperating with another broker in a transaction
B) Depositing client funds in the broker’s operating account
C) Employing Realtors and Non-Realtors in the same office
D) Meetings with both brokers and sales associates present

Answer 22

B) Depositing client funds in the broker’s operating account

Question 23

When a property is listed it is:
A) An option
B) An offer to sell
C) A contract
D) A solicitation of offers to buy

Answer 23

D) A solicitation of offers to buy

Question 24

A subdivision developer employs agent Sue to sell lots. John, a licensed broker, offers to buy lot B-3 for $20,000, and a sales contract is executed.
However, through a typographical error which no one noticed, the contract identified the lot as D-3 (which was listed at $25,000.) What is the contract status?
A) Enforceable
B) Void
C) Voidable
D) Invalid

Answer 24

C) Voidable

Question 25

Once both parties have signed a purchase and sale agreement and the buyer's earnest money check is deposited in the broker's special trust account, whose money is it? A) The buyer's, up to and including closing B) The seller's, up to and including closing C) The broker's, as a pre-payment of the commission D) Nobody's, until the transaction is either completed, rescinded, or breached.

Answer 25

D) Nobody's, until the transaction is either completed, rescinded, or breached.

Question 26

Salesperson Sue has just completed a purchase and sale agreement with her client Buyer Bob in order to make an offer on a house. The agreement includes a good faith deposit of $5000 in the form of a check, which Bob has given to Sue. Absent any specific instructions, what should Sue do with Buyer Bob's check? A) Deposit the check in her personal savings account B) Turn it over to her broker immediately C) Once the seller has accepted the offer, give the check to her broker to deposit in the brokerage trust account D) Give it to the seller to hold until closing

Answer 26

B) Turn it over to her broker immediately

Question 27

A broker is going through a messy divorce. Rather than see his spouse obtain his savings, he liquidates his savings account and deposits the money into the trust account along with other clients' earnest money. The broker is guilty of: A) Constructive notice B) Condemnation C) Conversion D)Commingling

Answer 27

D)Commingling

Question 28

An earnest money deposit, if any is offered, is usually given to the broker at the time a sales contract is authorized by the buyer and presented to the seller. The broker has a legal responsibility to: A) Deposit the check in the brokerage's escrow account. B) Put the check in the brokerage's fire-proof safe C) Deposit the earnest money in his/her operating account. D) Hold the check in the transaction file until closing.

Answer 28

A) Deposit the check in the brokerage's escrow account.

Question 29

Bruce, on behalf of his client, Jim, who wanted to buy a lot from Tom, submits to Tom a purchase and sale agreement signed by Jim and stipulating a price of $25,000, a sales commission of 6% and closing within 90 days. Tom accepts the price, changes the commission rate to 5%, the closing period to 45 days, initials the changes, then signs and returns the contract to Broker Bruce who gives it to Jim. Is the contract valid? A) No, because there was no meeting of the minds B) No, because the broker's commission is non-negotiable C) Yes, because Tom initialed his changes D) Yes, because it is in writing and signed by both parties

Answer 29

A) No, because there was no meeting of the minds

Question 30

An option agreement allows a prospective buyer a period of time to examine property before deciding to complete the contract. Payments are often made for the privilege of making the examination. What usually happens to those payments if the buyer does not buy? A) They remain in the broker's trust account B) The seller pockets the option payments C) The broker collects a fee, and then gives the rest to the seller D) Whatever the parties decide in the contract

Answer 30

D) Whatever the parties decide in the contract

Question 31

Consideration in a real estate sales contract would be: A) Offer and acceptance B) Money in exchange for real estate C) Contractual capacity D) Love and Affection

Answer 31

B) Money in exchange for real estate

Question 32

Adam and Jenny enter into an agreement wherein Adam will buy Jenny's house at the asking price if Jenny will install a new roof and if Adam can qualify for a loan sufficient to cover the purchase. Until the roof is installed and the financing obtained, the contract is said to be: A) Executory B) Rescinded C) Voidable D) Executed

Answer 32

A) Executory ## Footnote QUESTION RATIONALE An executory contract is one in which the parties have agreed to the terms, but some conditions still remain to be fulfilled by the parties. Once all the conditions are met and all that remains is the closing, the contract is said to be complete, or executed. A voidable contract is one that may be rescinded, and a contract that has been rescinded is void.

Question 33

A makes an offer to buy B's house. B accepts the terms of the offer and evidences his acceptance by signing the offer. Is there a valid real estate purchase contract? A) No, because real estate agents cannot draft real estate contracts. B) Yes, the contract came into existence at time of acceptance. C) No, because the acceptance has not been communicated back to the buyer. D) No, because B still has a 3-Day cooling off period.

Answer 33

C) No, because the acceptance has not been communicated back to the buyer.

Question 34

If, upon receipt of an offer to purchase under certain terms, the seller makes a counteroffer, the prospective buyer is: A) Released from their original offer B) Bound to accept the counter offer C) Bound by the agent's decision D) Bound by their original offer

Answer 34

A) Released from their original offer