Deck 5: Real Estate Contracts and Mandated Disclosures

Question 1

A unilateral contract is:
(a) created by actions.
(b) a completed contract.
(c) a promise for a promise.
(d) a promise for an act.

Answer 1

D

Question 2

A counter offer by the seller:
(a) rescinds the buyer's offer
(b) is used as a tactic by the seller to drive up the sales price of the property
(c) indicates acceptance of buyer's offer
(d) automatically does away with the buyer's original offer and in reality is an offer made to the buyer from the seller

Answer 2

D

Question 3

A broker receives a deposit from a buyer with no instructions to hold the check uncashed pending the seller's acceptance of the offer. After the offer is accepted, the broker decides to put the check in a safe in the office for security purposes until the broker can get to the bank in two weeks. The broker is:
(a) guilty of conversion
(b) innocent of any wrongdoing
(c) guilty of commingling
(d) required to place the deposit into a trust fund

Answer 3

C

Question 4

A real estate broker takes an exclusive right to sell listing from a seller for $400,000. A buyer makes an offer for $375,000 which the seller accepts. Before the sale closes, the buyer discovers that the broker misrepresented the square footage of the home. Based on this information, the purchase contract is probably:
(a) void
(b) voidable
(c) illegal
(d) valid

Question 5

A properly signed exclusive right-to-sell listing agreement is an:
(a) implied contract
(b) unilateral contract
(c) bilateral contract
(d) purchase contract

Question 6

An executory contract is a contract that:
(a) has been recorded
(b) is in writing
(c) has been fully performed
(d) is yet to be completed

Question 7

Real estate agencies can be created several ways. The most common method is:
(a) agreement
(b) estoppel
(c) ratification
(d) implication

Question 8

Receiving a commission from both the buyer and seller without full disclosure and approval is called:
(a) dual agency
(b) single agency
(c) divided agency
(d) implied agency

Question 9

An owner gives ABC Realty an exclusive agency listing for 60 days. Thirty days later the owner finds a buyer and sells the property without the services of ABC Realty. The:
(a) owner owes ABC Realty a commission
(b) owner does not owe a commission
(c) the sale is invalid
(d) two of the answers are correct

Question 10

Buyer makes a written bonafide offer to purchase, and seller signs the acceptance. A contract is first created:
(a) when buyer receives proper communication of seller's acceptance
(b) immediately upon seller's acceptance
(c) when the buyer and seller sign escrow instructions
(d) when the broker presents the offer to the seller

Question 11

The relationship between an agent and their principal is best described as:
(a) a fiduciary
(b) an advisor
(c) a friend
(d) a customer

Question 12

An agency may not be terminated by
(a) death
(b) agreement
(c) expiration
(d) estoppel

Question 13

A listing contract given to several real estate brokers in which the commission is payable to the first broker who brings in an acceptable offer is what type of listing?
(a) open
(b) net
(c) multiple
(d) exclusive

Question 14

When the owner of a piece of leased property gives the lessee an option to buy, the option:
(a) requires the optionee to complete the sale
(b) is a lien on the seller's title
(c) requires no consideration or fee
(d) is not a purchase contract until exercised

Question 15

The Commissioner's Regulations apply to all California:
(a) REALTORS^®
(b) Realtist
(c) real estate salespersons
(d) all of the above

Question 16

Real estate commissions are:
(a) established by the California Association of REALTORS^®
(b) limited per the Commissioner's Code of Ethics
(c) determined by local Associations of REALTORS^®
(d) negotiable

Question 17

Which of the following is not correct?
(a) all real estate salespersons must have written employment contracts with their brokers
(b) real estate salespersons are able to contract directly in their own name as an agent with the seller
(c) the recovery fund may be used to reimburse qualified principals and buyers for damages suffered because of certain inappropriate acts by real estate licensees
(d) most real estate agency agreements are between sellers and brokers, not buyers and brokers

Question 18

With the permission of the seller, Broker A submits a listing to MLS inviting other brokers to help find a buyer. This is an offer of:
(a) dual agency
(b) general agency
(c) cooperation
(d) power of agency

Question 19

A broker has an agency agreement to represent just the buyer. This is an example of a:
(a) dual agency
(b) single agency
(c) in-house agency
(d) listing agency

Question 20

All of the following are essential for a valid real estate contract, except:
(a) lawful object
(b) mutual consent
(c) capable parties
(d) parole evidence

Question 21

A broker's commission is most likely earned when the broker:
(a) secures acceptance of an offer
(b) secures a substantial deposit with an offer
(c) communicates acceptance to the offeror
(d) communicates offer to seller

Question 22

When a buyer backs out of a home sale, the most common outcome is:
(a) buyer gets back the deposit; seller hopes to find another buyer
(b) seller sues for dollar damages
(c) seller sues for specific performance
(d) broker expects the seller to still pay the commission

Question 23

An oral contract is made between an agent and a seller for the sale of real property. The seller refuses to pay the commission after the sale of the property. This contract between the seller and the agent is:
(a) a valid contract and can be sued upon
(b) a voidable contract because the agent had the option to call it off
(c) an unenforceable contract because the Statute of Frauds requires agreement for compensation to be in writing
(d) an enforceable contract because the agent and seller had an agreement

Question 24

A buyer makes an offer on a lot for $150,000 and the seller counter offers for $158,000. The buyer is:
(a) bound by the original offer
(b) bound by the counter offer
(c) relieved from any further liability
(d) prevented from making another offer

Question 25

Under an option agreement, the grantor/owner of the property is the:
(a) optionee
(b) option holder
(c) option owner
(d) optionor

Question 26

The disclosure requirement that is concerned with special flood areas, dam failure, high fire severity, wild and forest fire, earthquake fault zone, and seismic hazard zones, is the:
(a) Natural Hazard Disclosure Statement
(b) Real Estate Transfer Disclosure Statement
(c) Home Inspection Notice
(d) Real Property Disclosure Act

Question 27

At what minimum age is a civilian single person, who has not had any court or guardianship intervention, legally capable of entering into an enforceable real estate contract?
(a) 21 years
(b) 18 years
(c) 19 years
(d) 16 years

Question 28

Six separate co-buyers of a parcel of land signed a deposit receipt contract at different times and places. A copy must be:
(a) given to the first signer only
(b) given to each at the time they sign
(c) given to the first and last signers only
(d) be sent to each one after the last one signed

Question 29

There are some basic provisions that should be included in a contract. Which one of the following is one of those provisions?
(a) Names of the sellers only.
(b) What is the buyer's income.
(c) Consideration.
(d) All of the above.

Question 30

An owner lists a home for sale with XYZ Realty, with instructions to submit the listing to the multiple listing service and invite other brokers to help find a buyer. This is an example of a:
(a) dual agency
(b) cooperating agency
(c) implied agency
(d) buyer's agency

Question 31

When a buyer is purchasing a condominium or PUD, said buyer must be given which of the following regarding the CC&Rs, homeowner dues, and financial and legal status of the homeowner's association?
(a) Seller Financing Addendum and Disclosure Statement
(b) Common Interest Development General Information
(c) Natural Hazard Disclosure Statement
(d) Real Estate Transfer Disclosure Statement

Question 32

The listing agreement stated that the existing loan was to be assumed. The broker received an offer per the exact terms of the listing except that the buyer wanted to put on a new loan. The seller refused the offer. The broker would be:
(a) entitled to one-half the commission
(b) entitled to no commission
(c) entitled to a reimbursement for expenses
(d) entitled to a full commission

Question 33

Which of the following indicates the greatest progress toward completion of a sale?
(a) buyer advised broker that buyer would sign acceptance of seller's counter offer
(b) broker notified buyer of seller's signed acceptance of buyer's offer
(c) seller informed broker that seller would accept the lower price offered by buyer
(d) broker advises principal that broker has a signed offer to buy per the listing terms

Question 34

What is a contract called whereby the seller agrees to pay a commission and the broker agrees to use diligence in finding a buyer?
(a) bilateral executory contract
(b) unilateral executory contract
(c) bilateral executed contract
(d) unilateral executed contract

Question 35

An exclusive right to sell listing is given to Broker Pardo, a sole owner, but Pardo dies prior to finding a buyer; the listing:
(a) passes to the estate of Pardo
(b) terminates
(c) continues if another broker buys the Pardo real estate office
(d) none of the above is correct

Question 36

According to the exclusive right to sell CAR Residential Listing Agreement, a real estate broker is entitled to the commission if the property is:
(a) withdrawn from the market with the mutual consent of the seller and the listing agent
(b) sold during the listing period
(c) destroyed due to a natural hazard
(d) found to be unmarketable by a title company

Question 37

When would a broker be legally required to reveal the amount of commission under a net listing?
(a) when the property is listed
(b) after the close of escrow
(c) whenever the seller asks
(d) before the seller accepts the buyer's offer

Question 38

Sales price for a mobile home is $145,000; excluding the commission, the seller closing costs are $2,000. Seller's existing loan balance $80,000. Per the terms of the listing, the seller is guaranteed a net of $58,000. What is the broker's commission?
(a) $3,000
(b) $4,000
(c) $5,000
(d) $6,000

Question 39

A real estate agent may legally refuse to show property available for sale to a person of a minority race if the:
(a) agent feels the home was not suited for the people
(b) owners were out of town and had left instructions the home was not to be shown to anyone during their absence
(c) owners had given specific instructions against showing the home to minority buyers
(d) agent felt the buyers would not like the location

Question 40

The sellers have accepted an offer in which they agreed to carry a second trust deed. What contract should be provided to the seller to be sure all the required information is available to them to enter into this type of agreement?
(a) Real Estate Transfer Disclosure Statement.
(b) Common Interest Development Statement.
(c) Seller Financing Addendum and Disclosure Statement.
(d) Buyer's credit report.