Section 11 - Real Estate Contracts

Question 1

True or false,The definition of a contract is a binding agreement between two or more parties. It is an agreement to do illegal act for legal consideration.

Answer 1

True

Question 2

When assigning a contract to another party, novation keeps the original party obligated to the terms of the contract should the new party fail to perform.

Answer 2

False

Novation relieves the original party from the obligation

Question 3

True or false, Options are an agreement between a property owner and a buyer that gives the buyer the right to purchase a contract without the obligation to actually do so.

Answer 3

True

Question 4

True or false, The person who makes the offer is the offeror. While the person who has the offer made to him/her is the offeree.

Answer 4

True

Question 5

True or false, if a buyer rejects a counter offer, the seller can sign the original offer and go forward with the sale obligating the buyer.

Answer 5

False

Upon making the counter offer, the original offer was terminated and cannot later be accepted should the sellers counter not be accepted.

Question 6

True or false, meeting of the minds is when two parties reach an agreement through mutual assent.

Answer 6

True

Question 7

True or false, the promise to perform and fulfill the contract requires either valuable consideration which can be measured in terms of money or good consideration which cannot be measured in terms of money such as love and affection.

Answer 7

True

Question 8

True or false, a contract can only be entered into win the terms are clearly understood and expressed between parties of the contract.

Answer 8

False

The terms of an expressed contract are spelled out in detail in the contract. Implied contracts, on the other hand are contracts where the parties never verbally or in writing formally agreed to enter into a contract but ended up in a contract based on the implication of their actions.

Question 9

True or false, by law, minors have the legal capacity to enter into an enforceable contract.

Answer 9

False

By law, miners do not have the legal capacity to enter into an enforceable contract. Therefore, a minor may enter into a contract, but the contract is voidable by the minor.

Question 10

True or false, working in the role as a real estate licensee automatically gives the broker the right to sign on behalf of the buyer or seller for a purchase and sale agreement.

Answer 10

False

Acting in the role of a real estate licensee on behalf of the buyer or seller does not give the licensee the power to bind a buyer or seller to a sale by signing in their place. Only someone who is an attorney-in-fact and has power of attorney and can sign a contract for another person.

Question 11

Remedies for breach of contract include all of the following except:

1) Execution
2) Liquidated damages
3) Rescission
4) Compensatory damages

Answer 11

Execution

Question 12

For a contract to be valid it must be all which of the following standards?

1) Contractual capacity of the parties
2) Written offer and acceptance
3) Legality of object
4) Consideration

Answer 12

Written offer and acceptance

Question 13

Broker apple daily didn’t know that her agent beth Bagley was acting in a way that would cause harm to the client. Which of the following statements is not true.

1) broker appellee daily could be charged with culpable negligence
2) Beth Begley cannot be charged with culpable negligence since the client actually belongs to broker apple Daily
3) Both broker apple daily and Beth Bagley could be charged as a misdemeanor of the 2nd degree
4) It is unethical for real estate agents to engage in culpable negligence

Answer 13

Beth Bagley cannot be charged with culpable negligence since the client actually belongs to broker apple daily

Question 14

Which of the following is not an example of a bilateral contract?

A purchase and sale contract between a buyer and seller
An option contract
An exclusive right to sell listing agreement between a seller and a broker
A lease agreement

Answer 14

An option contract

Question 15

Which of the following is an example of an executed contract?

Rob waiting to do inspections before completing a home purchase

Mary waiting for financing approval

Todd having signed a deed to transfer property and excepting final payment

Jeb who signed a counter offer

Answer 15

Todd having signed a deed to transfer property and accepting final payment

Question 16

Which of the following actions would not terminate a contract

The contract is performed

Time runs out

Performance is impossible

Both parties agree to extend the contract

Answer 16

Both parties agreeing to extend the contract

Question 17

Which statement is false regarding the required property tax disclosure for the sale of property?

A property tax disclosure must be given before or at the time of signing purchase agreement

Disclosure summary may be included in the wording of the contract

Or if not included in the purchase agreement, then the purchase agreement must include a statement warning the buyer should read the property tax disclosure prior to signing the purchase agreement

The purpose of the disclosure is to reassure the buyer that the amount of ad Valorem taxes won’t change after the sale

Answer 17

The purpose of the disclosure is to reassure the buyer that the amount of ad valorem taxes will change after the sale

Question 18

Harriet and Bob were longtime friends so they entered into a verbal purchase and sale agreement for real estate. Which of the following statements is true:

The contract would be considered valid and enforceable per the statute of fraud‘s

The contract would be considered a parol contract and enforceable per the statute of frauds

Although the contract may be valid it would be unenforceable based on the statute of fraud’s

As a parol contract it would automatically be enforceable

Answer 18

Although the contract may be valid it would be on enforceable based on the statute of fraud‘s

Question 19

Which of the following statements is false regarding the residential lead-based paint hazards reduction act?

A lead-based paint disclosure must be made for residential property sold or rented that were built prior to 1978

Buyers and renters must be given an EPA booklet before the sale or lease

A contract to purchase must allow a 10 day inspection period which buyer can waive

The licensee representing the seller has no duty to the buyer or tenant regarding the disclosure

Answer 19

The licensee representing the seller has no duty to the buyer or tenant regarding the disclosure

Question 20

Kindle had a written contract with Frank. Frank failed to perform. How long does Kendall have to sue freak per the Statue of Limitations?

Three years
Four years
Five years
Seven years

Answer 20

Five years