Deck 13: The Purchase Contract

Question 1

An attempted acceptance that changes even minor terms is labeled a counteroffer.

Answer 1

True

Question 2

Misrepresentation, to be grounds for rescission, must be shown to have been fraudulent.

Answer 2

False

Question 3

The Interstate Land Sales Full Disclosure Act applies to all subdivision developments.

Answer 3

False

Question 4

The ILSFDA applies only to multi-unit housing.

Question 5

The ILSFDA carries criminal penalties for violation.

Question 6

To deliver marketable title, the seller must deliver property to the buyer that is free from mortgages and other liens.

Question 7

Conditions precedent may serve to excuse the buyer's or seller's performance under the purchase contract.

Question 8

The ability of the buyer to obtain financing is generally an implied condition precedent to performance under the purchase contract.

Question 9

All new homes carry implied warranties for the protection of the buyer.

Question 10

An option for real estate need not be in writing to be valid.

Question 11

An option requires a seller to hold an offer open for the stated period of time and is irrevocable.

Question 12

An option need not have consideration to be valid.

Question 13

The delivery of marketable title is a condition precedent to performance of a contract for the sale of land.

Question 14

A buyer accepts when he changes only immaterial terms.

Question 15

A recipient of a counteroffer must accept the counteroffer upon receipt if they made the original offer.

Question 16

Part performance is an exception to the statute of frauds requirements for land sales contracts to be in writing.

Question 17

Misrepresentation requires proof of intent.

Question 18

In order to establish misrepresentation, the buyer must show the statements were a material part of the decision to buy.

Question 19

A buyer's counteroffer is automatically rejected when the seller sells to someone else.

Question 20

A seller can revoke an option at any time so long as there is proper notification.

Question 21

A seller who has two outstanding counteroffers risks multiple acceptances.

Question 22

A broker need not disclose statutorily protected information if asked directly by the buyer.

Question 23

Some states do not require affirmative disclosure of the presence of AIDS-positive dwellers in a listed property.

Question 24

A contract for the sale of real estate need not be in writing.

Question 25

"I might sell my house for $188,000" is not an offer.

Question 26

The previous presence of meth labs on a property is now a required disclosure in many states.

Question 27

Meth statutes have been declared unconstitutional.

Question 28

An option has the same rights and legal effect as earnest money.

Question 29

Electronic (fax) forms of contracts are valid.

Question 30

Misrepresentation can be based on a statement that is considered puffing.

Question 31

Many states prevent disclosure of psychological impact factors about property unless the buyer asks specifically.

Question 32

"I accept provided that the premises will be vacated prior to March 1, 2015", is a valid acceptance if communicated to the offeror properly.

Question 33

Rescission is generally the remedy for misrepresentation.

Question 34

A real estate agent cannot provide a basis for a buyer's claim of misrepresentation.

Question 35

An option can be revoked any time prior to acceptance.

Question 36

"I am thinking of selling my house. Are you interested?", is not an offer.

Question 37

"I accept, but closing must be by December 31, 2020", is not an acceptance.

Question 38

The failure to meet a condition precedent excuses performance under an otherwise valid contract.

Question 39

Real estate purchase contracts can have only one condition precedent - that of financing.

Question 40

Psychological disclosure statutes cover issues such as AIDS and murder on the property.

Question 41

An option that ends on December 31, 2020 cannot be accepted on January 1, 2021.

Question 42

Multiple offers carry no dangers for the seller.

Question 43

An offer that provides, "This offer good only until April 13, 2021", cannot be revoked prior to April 13, 2021.

Question 44

An offer that requires acceptance by FedEx that is accepted by UPS is a counteroffer and a rejection.

Question 45

The doctrine of partial performance under the Statute of Frauds is not available for oral real estate contracts.

Question 46

The implied warranty of habitability has been extended to apply to buyers who purchase the home within the builder warranty period.

Question 47

The purchase contract must be recorded in order to be valid.

Question 48

Water rights that were not disclosed by the seller affect marketable title.

Question 49

The second-look doctrine applies to the buyer's right to a second inspection before closing on the property.

Question 50

Rescission of a contract is available when there has been misrepresentation.

Question 51

"This offer to remain open until July 7, 2021" in a written offer with no consideration must remain open until July 7, 2021.

Question 52

"I accept your offer, but I must have you cover closing costs," is an example of a counteroffer.

Question 53

"I accept your offer. Please include the floating dock on the lake near the cabin," is an acceptance.

Question 54

A mail offer accepted by mail is effective when the acceptance is mailed.

Question 55

A stipulated means offer is accepted when it is sent.

Question 56

A stipulated means acceptance sent by a different means is effective when it is sent.

Question 57

Under the ILSFDA, pending litigation involving developers is revealed:

A) In the property report.
B) In the statement of record.
C) But, it need not be revealed.
D) In the newspapers.

Question 58

Mrs. Clements gave the University of Iowa a written option on a piece of property she owned. The University paid $300 to keep the option open from January 3, 1982 until April 3, 2010. On February 15, 2010, Mrs. Clements notified the University in writing that she was revoking her offer. Mrs. Clements then sold the property to Douglas (a good faith purchaser who knew nothing about the option).

A) The University can recover the property from Douglas
B) Mrs. Clements properly revoked her offer
C) The University is entitled to damages
D) Because the consideration was inadequate for a 28-year option, the option as rightfully terminated

Question 59

Baker Corporation sent a letter to Sampson Company in which Baker offered to purchase 10 acres of certain real estate from Sampson for $4,000. Sampson responded that it would sell eight of these acres for that price. Baker and Sampson have created:

A) A contract for the sale of 8 acres for $4,000.
B) A contract for the sale of 10 acres for $4,000.
C) A contract to sell 8 acres for $3,200.
D) No contract in this fact pattern.

Question 60

Smith and Jones entered into a contract in which Smith, as seller, promised to deliver the property to Jones "free from all violations of zoning ordinances." To deliver marketable title, Smith:

A) Must clear all existing violations of zoning ordinances.
B) Must clear zoning violations that are major and likely to be cited by city officials.
C) Must clear only those zoning violations greater than those on surrounding properties.
D) Need not clear zoning issues because those issues are not covered under marketable title requirements.

Question 61

Mayer wrote Jackson and offered to sell Jackson a building for $50,000. The offer stated it would expire 30 days from July 1, 2010. Mayer changed his mind and does not wish to be bound by his offer. If a legal dispute arises between the parties regarding whether there has been a valid acceptance of the offer, which of the following is correct?

A)The offer cannot be legally withdrawn for the stated period of time.
B)The offer will not expire prior to the 30 days even if Mayer sells the property to a third person and notifies Jackson.
C)If Jackson phoned Mayer on August 1 and accepted the offer, it would create a contract, provided he had no notice of the withdrawal of the offer.
D)If Jackson categorically rejects the offer on July 10, Jackson cannot validly accept within the remaining stated period of time.

Question 62

An option:

A) Can be revoked at any time.
B) Must be supported by consideration to be valid.
C) Without consideration expires naturally after two weeks for real property.
D) Without consideration expires naturally after 30 days for real property.

Question 63

For a real estate contract to be valid:

A) There must be an agreement evidenced by a record.
B) Both parties must sign.
C) It must be notarized.
D) There must be an escrow deposit.

Question 64

For the doctrine of part performance to apply:

A) There must have been some form of closing.
B) There must be possession and partial payment.
C) There must be some written evidence.
D) There must be some recorded document.

Question 65

Earnest money:

A) Is the deposit on a land purchase.
B) Is the same as an option.
C) Is paid by the seller.
D) Is an example of a condition precedent.

Question 66

In new home sales:

A) There is an implied warranty of habitability.
B) There is no implied warranty of habitability.
C) An ILSFDA report is required.
D) The seller must have registered under the ILSFDA.

Question 67

Which of the following need not be disclosed by a seller?

A) Termite damage
B) Presence of pipe that is the subject of a class action litigation
C) Roof leak
D) That the seller will be paying an agent a commission

Question 68

Which of the following is not an example of a condition precedent?

A) Seller delivering marketable title
B) Buyer obtaining financing
C) Buyer retaining employment
D) Buyer paying the real estate agent's commission

Question 69

Liquidated damages in real estate contracts:

A) Can be the earnest money deposit.
B) Are in addition to actual damages.
C) Are illegal.
D) Are generally not enforced.

Question 70

A failure by a broker to inspect a listed property:

A) Will not result in liability for the broker so long as the broker did not have actual knowledge of any effects.
B) Will result in liability for the broker if the inspection would have flagged defects.
C) Will not result in liability to the brokers.
D) Results in exclusive liability to the seller.

Question 71

To which type of sale does the ILSFDA not apply?

A) Sale of lots in subdivision
B) Sale of one-acre parcels in a rural area with full services
C) Sale of industrial lots in Buffalo
D) Sale of 60-acre ranch properties

Question 72

Which of the following will defeat marketable title?

A) Zoning restrictions
B) Public utility easements
C) Claim of reversionary interest of an heir
D) Recorded easements

Question 73

Joan offered to buy John's house for $250,000. John responded, "I accept, for $250,000 and you pay all closing costs."

A) Joan and John have a contract for sale at $250,000
B) Joan and John have a contract for sale at $250,000 with Joan paying closing costs
C) Joan and John do not have a contract
D) There is a contract and a court will need to determine the damages

Question 74

The difference between a contract with earnest money and an option is:

A)The contract is enforceable.
B)The option can be revoked at any time.
C)The option is not a contract for purchase and sale.
D)The option need not be in writing.

Question 75

An example of a condition precedent in a real property purchase contract is:

A)The statute of limitations.
B)A buyer's financing clause.
C)The earnest money requirement.
D)The type of deed.

Question 76

Seller A has two counteroffers outstanding to Buyer B and Buyer C. B and C both accept the counteroffers.

A) A need not perform on either acceptance.
B)A must perform for the first party to accept.
C)A has a valid contract with both B and C.
D)A must perform for the acceptance that is closest to his desires.

Question 77

The following exchanges occurred in a series of faxes:

Day 1 - "I would be interested in purchasing your citrus grove in Mesa, AZ." /s/ John Duggan
Day 2 - "I might consider selling my citrus grove if the price is right." /s/ Maurice Germaine
Day 3 - "I could offer $3.2 million." /s/ John
Day 4 - "I'll sell." /s/ Maurice

A) There was an offer on Day 1
B) There was an offer on Day 2
C) There was an offer on Day 3
D) There was an offer on Day 4
E) None of the above

Question 78

The following exchanges occurred in a series of faxes:

Day 1 - "I would be interested in purchasing your citrus grove in Mesa, AZ." /s/ John Duggan
Day 2 - "I might consider selling my citrus grove if the price is right." /s/ Maurice Germaine
Day 3 - "I could offer $3.2 million." /s/ John
Day 4 - "I'll sell." /s/ Maurice

A) The fact that these communications were faxes is irrelevant.
B) The fact that these communications were faxes is irrelevant if the parties follow up with written agreements.
C) The fact that these communications were faxes makes every communication invalid.
D) The fact that these communications were faxes makes them void.

Question 79

The following exchanges occurred via fax:

Buyer, Day 1 - "I offer to buy (legal description of property) for $350,000."
Seller, Day 2 - "I will sell (legal description of property) for $375,000."
Buyer 2, Day 3 - "I will buy (legal description of property) for $380,000."
Seller, Day 3 (later) - "I accept your offer of $380,000."
Buyer 1, Day 3 (even later) - "I accept your counter offer of $375,000."

A)The seller has a contract with Buyer 2
B) The seller has a contract with Buyer 1
C)The seller has a contract with both Buyer 1 and Buyer 2
D)The use of fax communications does not satisfy the statute of frauds

Question 80

Which of the following is not an example of a condition precedent?

A) Buyer of a house retaining employment
B) Buyer of a house obtaining financing
C) Buyer requiring an environmental assessment of the property
D) Seller required to obtain a home inspection and report.