Unit 11

Question 1

In connection with the sale of real estate, a rider is a (n):

a) amendment.
b) person.
c) lien.
d) contract.

Answer 1

a) amendment.

Question 2

Which of the following is NOT a remedy available to the parties when a contract is breached?

a) Unilateral rescission.
b) Court action for specific performace.
c) Sue for money damages and reimbursement of expenses.
d) File a criminal complaint.

Answer 2

d) File a criminal complaint.

Question 3

When a seller fails to mention the existence of a mortgage on a piece of real estate, but there
is such a mortgage:

a) Seller can compel the buyer to complete the transaction if the seller allows a deduction
from the sale price equal to the amount due on the mortgage.
b) The signing of the contract of sale automatically makes the mortgage void.
c) The buyer has the right to demand a title free and clear of mortgage.
d) Buyer must take title subject to the mortgage.

Answer 3

c) The buyer has the right to demand a title free and clear of mortgage.

Question 4

Prospective purchasers of property, as evidence of good faith, frequently make a deposit
called:
a) consideration.
b) earnest money.
c) collateral security.
d) a deferred purchase money trust.

Answer 4

b) earnest money.

Question 5

A contract which would permit an investor to purchase or not to purchase a property, as he saw
fit, for a stated sum within a limited period of time, is called:

a) an assignment.
b) an option.
c) a deposit receipt.
d) an agreement of sale.

Answer 5

b) an option.

Question 6

In an option, the optionee is the:

a) legal owner of record
b) prospective purchaser.
c) assignor.
d) assognee.

Answer 6

b) prospective purchaser.

Question 7

When a buyer and seller enter into a definite purchase agreement except that no closing date
is specified, the contract is:

a) void for vagueness.
b) voidable.
c) enforceable.
d) not acceptable.

Answer 7

c) enforceable.

Question 8

If, after the signing of the contract for sale of land and before the closing, the seller dies, then:

a) the contract is voidable at the option of the seller’s reprsentative.
b) the contact is voidable at the option of the buyer.
c) the contract is terminated by operation of law.
d) the death of the seller normally does not terminate the contract.

Answer 8

d) the death of the seller normally does not terminate the contract.

Question 9

A contract, the terms of which have not been fully performed, is known as:

a) an executed contract.
b) an executory contract.
c) a unilateral contract.
d) a bilateral contract.

Answer 9

b) an executory contract.

Question 10

Which of the following is NOT true?

a) Once an ageement of sale is signed there is no way to avoid completing the
transaction.
b) A sales contract must include a legal description of the property being sold.
c) A sales contract should include a closing date.
d) A lawful purpose is an essential element.

Answer 10

a) Once an ageement of sale is signed there is no way to avoid completing the
transaction.

Question 11

When Tom and Nancy sold their home they removed a bar sink prior to the closing. The listing
and sales contract did not mention the sink. Which of the following is true?

a) The sink was a trade fixture, and removable.
b) The sink was personal property.
c) The contract should have listed the sink as “items excluded.”
d) Removal was allowed.

Answer 11

c) The contract should have listed the sink as “items excluded.”

Question 12

Which of the following is an essential element of any contract?

a) Written instrument.
b) Consideration.
c) Deposit.
d) Date.

Answer 12

b) Consideration.

Question 13

Reality of consent may be lacking in a contract due to:

a) duress.
b) misrepresentation.
c) mistake.
d) All of the above.

Answer 13

d) All of the above.

Question 14

Acceptance is accomplished when:

a) salesperson signs sale contract.
b) offeree signs sale contract.
c) offeror signs sale contract.
d) broker signs sale contract.

Answer 14

b) offeree signs sale contract

Question 15

The phrase “time is of the essence” means:

a) the lawyer is in a hurry for his client to take possession.
b) the closing must be held in a hurry.
c) things required to be accomplished on dates set forth in the agreement must be
done on or before those dates.
d) time is unimportant.

Answer 15

c) things required to be accomplished on dates set forth in the agreement must be
done on or before those dates.

Question 16

A clause in the contract or a mortgage which requires punctual performance is described as:

a) specific performance clause.
b) time is of the essence.
c) performance clause.
d) subrogation.

Answer 16

b) time is of the essence.

Question 17

Assume that a contract to purchase for all cash is signed by the unmarried seller and by Mrs.
Smith only as buyer. The method of ownership will be tenancy by the entirety. The contract is:

a) enforceable.
b) void.
c) voidable.
d) unenforceable.

Answer 17

a) enforceable.

Question 18

If the buyer withdraws the offer before it has been accepted, the deposit money goes:

a) one half to broker and one half to buyer.
b) to the buyer.
c) to the seller.
d) to the broker.

Answer 18

b) to the buyer.

Question 19

After securing an option to pruchase Binky’s property, Terry sells the option to Ed. Ed is:

a) an assignor.
b) a donee.
c) a vendor.
d) an assignee.

Answer 19

d) an assignee.

Question 20

A contract of sale cannot exist unless thee has been an offer and:

a) an assignment.
b) an assessment.
c) an exception.
d) an acceptance.

Answer 20

d) an acceptance.

Question 21

A buyer withdraws a written offer before the seller has signed. The broker:

a) splits earnest money with seller.
b) gets nothing.
c) is entitled to her commission.
d) can sue the buyer for damages.

Answer 21

b) gets nothing.

Question 22

The law shich bars legal claims after certain time periods is knows as the:

a) Statute of Frauds.
b) Statute of Limitations.
c) Administrative Procedures Act.
d) Real Estate Law.

Answer 22

b) Statute of Limitations.

Question 23

Fire damages a home after the contract of sale is signed by both parties but prior to closing,
therefore:

a) the party in possession generally bears the risk of loss, according to the terms of the
contract.
b) the seller generally bears the risk of loss, according to the terms of the contract.
c) the buyer generally bears the risk of loss, according to the terms of the contract.
d) the contract is voidable by the seller.

Answer 23

b) the seller generally bears the risk of loss, according to the terms of the contract.

Question 24

Amos and Bernie have entered into a contract for the sale of Amos’s house. Therefore:

a) Bernie now has legal title.
b) Bernie now has equitable title.
c) Bernie has no interest until the closing.
d) Bernie has legal title, Amos equitable title.

Answer 24

b) Bernie now has equitable title.

In real estate, equitable title refers to the beneficial interest a party has in a property, granting them the right to use and enjoy it, even though they may not hold legal title. This differs from legal title, which is the formal ownership and control documented on the deed. Equitable title is often seen in situations like land sales contracts, where the buyer has an interest in the property before the final transfer of legal title

Question 25

Which of the following information would NOT generally be found in the purchase and sale agreement ? a) The closing date. b) The type of financing. c) A description of the property. d) The name of the mortgagee.

Answer 25

d) The name of the mortgagee.

Question 26

A real estate seller's agent has a responsibility to inform her client about: a) The terms of financing. b) The form of deposit. c) The customer's willingness to pay more than originally offered. d) All of the above.

Answer 26

d) All of the above.

Question 27

The attorney review clause: a) must be included in all contracts prepared by real estate licensees (except residentail leases for less than one year) and in all post contract addenda or revisions. b) must be included in all contracts prepared by real estate licensees but not in any revisions thereof. c) may be waived by agreement of the parties. d) cannot be extended by agreement of the parties.

Answer 27

a) must be included in all contracts prepared by real estate licensees (except residentail leases for less than one year) and in all post contract addenda or revisions.

Question 28

An offer may be terminated by: a) lapse of agreed period of time. b) acceptance of offer. c) counteroffer. d) All of the above.

Answer 28

d) All of the above.

Question 29

An option is: a) a unilateral contract. b) binding only on one party. c) accepted by performance. d) All of the above.

Answer 29

d) All of the above. A real estate option contract grants a buyer the exclusive right, but not the obligation, to purchase a property within a specific timeframe and at a set price. The buyer pays an option fee to the seller in exchange for this right. If the buyer chooses not to exercise the option, they forfeit the fee, but the seller cannot sell the property to anyone else during the option period.

Question 30

A real estate licensee may legally prepare which of the following contracts? a) A contract for the sale of a three-family house with no attorney review wording. b) A contract for the sale of a cavan one family lot with no attorney review wording. c) A month to month apartment lease tih no attorney review wording. d) A six month lease for a candy store.

Answer 30

c) A month to month apartment lease tih no attorney review wording.

Question 31

Which of the following is an essential element of any contract? a) Writen instrument. b) Words of conveyance. c) Consideration. d) Acknowledgment.

Answer 31

c) Consideration.

Question 32

All of the following are true concerning an option contract EXCEPT: a) the optionee can enforce the sale. b) the option money is usually forfeited if the purchase is not completed. c) the optionee must sign the contract. d) the optionor cannot require speficic performance.

Answer 32

c) the optionee must sign the contract.

Question 33

33) Which of the following is NOT a necessary element in the formation of a contract? a) Offer. b) Consideration. c) Acceptance. d) Performance.

Answer 33

d) Performance.

Question 34

Generally, a contract between a competent adult and a minor is: a) voidable at the option of the minor. b) voidable at the option of the adult. c) voidable at the option of either party. d) enforceable.

Answer 34

a) voidable at the option of the minor.

Question 35

Which of the following parties are NOT competent to enter into a contract? a) Minros. b) Mental defectives. c) Drunks. d) All of the above.

Answer 35

d) All of the above.

Question 36

The withdrawal of an offer before acceptance is called: a) rescission. b) revocation. c) reversion. d) rejection.

Answer 36

b) revocation.

Question 37

A contract made for an illegal purpose is: a) valid. b) void. c) unilateral. d) voidable.

Answer 37

b) void.

Question 38

In a sales contract, the offeror is usually: a) the mortgagee. b) the trustee. c) vendee. d) lienee.

Answer 38

c) vendee.

Question 39

Earnest money may he held in escrow by all BUT ONE of the following: a) A real estate broker. b) An attorney. c) An escrow agent. d) A real estate salesperson.

Answer 39

d) A real estate salesperson.

Question 40

Which of the following is NOT an essential element of a contract? a) Consideration. b) Offer and acceptance. c) Competent parties. d) Earnest money deposit.

Answer 40

d) Earnest money deposit.

Question 41

The transfer of rights under a contract without the release from obligation by the assignor is known as: a) novation. b) supercedence. c) assignment. d) succession.

Answer 41

c) assignment. In real estate, an "assignment" refers to a legal transfer of the rights and obligations under a contract to another party, typically the buyer, before the original buyer closes on the property. This process is commonly used in wholesaling, where an investor finds a deal, secures the property under contract, and then assigns that contract to an end buyer for a profit

Question 42

Failure to perform or fulfill a contract is termed a: a) defect. b) fault. c) breach. d) delinquency.

Answer 42

c) breach.

Question 43

All BUT ONE of the following result in a termination of an offer to purchase real property: a) Marriage of buyer. b) Death of buyer. c) Destruction of property. d) Revocation of offer.

Answer 43

a) Marriage of buyer.

Question 44

A person who secured the right to purchase a property at a fixed price for a designated period of time and has paid a consideration for this privilege would own: a) a lease. b) an agreement to buy. c) an assignment of interest. d) an option.

Answer 44

d) an option.

Question 45

X gives Y a check for $4,000 at the time x signs a contract to purchase Y's real property. The terms of the purchase are $85,000 sale price paid as follows: $30,000 in cash from X and $65,000 by way of a first mortgage for 30 years at 10% interest. Which of the following terms best describes the $30,000? a) Down payment. b) Hand money. c) Earnest money deposit. d) Binder.

Answer 45

a) Down payment.

Question 46

One of the following is NOT a method by which a contract can be discharged: a) Divorce of either party. b) Operation of law. c) Agreement. d) Performance or breach.

Answer 46

a) Divorce of either party.

Question 47

When there is a "meeting of the minds" which of the following has (have) been acommplished? a) Offer and acceptance. b) All elements of the contract have been satisfied. c) Settlement has been held. d) Acknowledgement and delivery.

Answer 47

a) Offer and acceptance.

Question 48

An optionee, by reason of the option contract: a) has the right to collect rents during the option period. b) can legally enforce the exercise of the option if the optionor changes his mind about selling. c) can occupy the poperty during the option period. d) cannot legally enforce the exercise of the option if the optionor objects.

Answer 48

b) can legally enforce the exercise of the option if the optionor changes his mind about

Question 49

A rescission of a contract is: a) a ratification. b) a return to the status quo. c) an amendment to the terms of a contract. d) an escrow arrangement.

Answer 49

b) a return to the status quo. n real estate, rescission refers to the cancellation of a contract, allowing parties to reverse a transaction and return to their original positions before the agreement. This can occur due to various reasons, including misrepresentation, fraud, or breach of contract, but also through mutual consent between the parties

Question 50

A seller agreed to sell a tract of land to a buyer and the usual contract was signed by both parties. Before the transaction was completed, the seller learned that sports complex would greatly increase the value of the property. The seller told the broker to return the buyer's deposit since he would not honor the contract. The buyer refused to accept the return of the deposit and is comtemplating legal action. Of the following, the buyer's least desirable course of action would seem to be: a) action for compensatory damages. b) unilaterla rescission. c) action for spefici performance. d) accept a settlement.

Answer 50

b) unilaterla rescission.

Question 51

In an option contract: a) the buyer is bound to buy. b) the seller is bound to sell. c) a consideration is unnecessary. d) the optionee must sign.

Answer 51

b) the seller is bound to sell.

Question 52

A remedy in court which could compel a party to a valid contract to sign a deed is: a) specific performance. b) foreclosure. c) execution. d) equity of redemption.

Answer 52

a) specific performance. In the context of real estate, "specific performance" is a legal remedy that compels a party (usually a seller) to fulfill their contractual obligations, particularly when a breach of a real estate purchase agreement occurs. It's an equitable remedy because it asks a court to order the breaching party to perform the contract rather than awarding monetary damages.

Question 53

A portion of a printed form contract is changed by typing in contrary provisions and initialing by all parties. Which takes precedence. a) The printed portion of the contract. b) The contract is void because of the changes. c) The typewritten portion of the form. d) The parties may void the contract because of the changes.

Answer 53

c) The typewritten portion of the form.

Question 54

A contract for the sale of real estate is: a) Ab executed agreement. b) an expected agreement. c) an executory agreement. d) an aleatory agreement.

Answer 54

c) an executory agreement.

Question 55

John has signed a contract to purchase Vera's house but the closing will not take place for 90 days. During the 90-day period, John has: a) legal title. b) an encumbrance. c) no legal interest in the property. d) equitable title.

Answer 55

d) equitable title.

Question 55

From the following list, check the statute or act which creates the need for a deed to be in writing: a) The Statute of Descent. b) The Recording Act. c) The Statute of Frauds. d) The Statute of Proff of Eecution.

Answer 55

c) The Statute of Frauds.