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20 Cards in this Set

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If upon the receipt of an offer to purchase his property under certain conditions, the seller makes a counteroffer, the prospective buyer is

a. bound by his original offer
b. bound to accept the counter offer
c. bound by whichever offer is lower
d. relieved of his original offer
d. relieved of his original offer
The amount of earnest money deposit is determined by

a. the real estate licensing statutes
b. an agreement between the parties
c. the broker’s office policy
d. the acceptable minimum of 5 percent of the purchase price
b. an agreement between the parties
If the buyer defaulted some time ago on a written contract to purchase a seller’s real estate, the seller can still sue for damages if he is not prohibited from doing so by the

a. statute of frauds
b. law of agency
c. statute of limitations
d. broker-attorney accord
c. statute of limitations
Which of the following gives the best evidence of the buyer’s intention to carry out the terms of the real estate purchase contract?

a. the “subject to” clause
b. the agreement to seek mortgage financing
c. the earnest money deposit
d. the provision that “time is of the essence”
c. the earnest money deposit
An option

a. requires the optionee to complete the purchase
b. gives the optionee an easement on the property
c. keeps the offer open for a specified time
d. makes the seller liable for a commission
c. keeps the offer open for a specified time
When a prospective buyer makes a written purchase offer that the seller accepts, then the

a. buyer may take possession of the real estate
b. seller grants the buyer ownership rights
c. buyer receives legal title to the property
d. buyer receives equitable title to the property
d. buyer receives equitable title to the property
H agrees to purchase V’s real estate for $230,000, and deposits $6,900 earnest money with Broker L. However, V is unable to clear the title to the property, and H demands the return of his earnest money as provided in the purchase contract. Broker L should

a. deduct his commission and return the balance to H
b. deduct his commission and give the balance to V
c. return the entire amount to H
d. give the entire amount to V to dispose of as he decides
c. return the entire amount to H
A buyer makes an earnest money deposit of $1,500 on a $15,000 property and then withdraws her offer before the seller can accept it. The broker is responsible for disposing of the earnest money by

a. turning it over to the seller
b. deducting the commission and giving the balance to the seller
c. returning it to the buyer
d. depositing it in his or her trust account
c. returning it to the buyer
Broker K arrives to present a purchase offer to D, and invalid, and finds her son and his wife also present. In the presence of Broker K, both individuals persistently urge D to accept the offer, even though it is much lower than the price she has been asking for her home. If D accepts the offer, she may later claim that

a. Broker K should not have brought her such a low offer for her property
b. She was under undue duress from her son and daughter-in-law, and therefore, the contract is void
c. Broker K defrauded her by allowing her son and his wife to see the purchase offer he brought to her
d. Her consumer protection rights have been usurped by her son and daughter-in-law
b. She was under undue duress from her son and daughter-in-law, and therefore, the contract is void
If an owner takes his property off the market for a definite period of time in exchange for some consideration, but he grants the right to purchase the property within that period for a stated price, this is called a(n)

a. option
b. contract of sale
c. right of first refusal
d. installment agreement
a. option
Which of the following best describes earnest money?

a. the consideration for the sale of the property
b. the money put up by the buyer at the time the offer is made
c. the commission to be paid to the broker
d. the money to be used for paying for some of the closing costs
b. the money put up by the buyer at the time the offer is made
When a valid purchase contract is signed by the seller and the buyer,

a. the seller retains reversionary rights
c. The seller transfers legal title
d. The buyer forfeits possessory rights
b. The buyer receives equitable title
Two sales people working for the same broker obtained offers on a property listed with their form. The first offer was obtained early in the day. A second offer for a higher purchase price was obtained later in the afternoon. The broker presented the first offer to the seller that evening. The broker did not inform the seller about the second offer so that the seller could make a decision about the first offer. Which of the following is true?

a. the broker’s actions are permissible provided the commission is split between the two sales people
b. After the first offer was received the broker should have told the salespeople that no additional offers would be accepted until the seller decided on the offer
c. The broker has no authority to withhold any offers from the seller
d. The broker was smart to protect the seller from getting in a negotiating battle over two offers
c. The broker has no authority to withhold any offers from the seller
A broker has an exclusive-right-to-sell listing on a building. The owner is out of town when the broker gets an offer from a buyer to purchase the building providing the seller agrees to take a purchase money mortgage. The buyer must have a commitment from the seller before the seller is scheduled to return to the city. Under these circumstances the

a. broker may enter into a binding agreement on behalf of the seller
b. broker may collect a commission even if the transaction falls through because of the seller’s absence from the city
c. the buyer is obligated to keep the offer open until the seller returns
d. the broker must obtain the signature of the seller to effect a contract
d. the broker must obtain the signature of the seller to effect a contract
On Monday the seller offers to sell his vacant lot to the buyer for $12,000. On Tuesday, the buyer counteroffers to buy for $10,500. On Friday the buyer withdraws the counteroffer and accepts the original offer of $12,000. Under these conditions

a. there is a valid agreement because the buyer accepted the seller’s offer exact as it was made
b. there is not a valid agreement because the buyer’s counteroffer was a rejection of the seller’s offer and, once it was rejected, it cannot be accepted later
c. there is a valid agreement because the buyer accepted before the seller advised the buyer that the offer is withdrawn
d. there is not a valid agreement because the seller’s offer was not accepted within 72 hours
b. there is not a valid agreement because the buyer’s counteroffer was a rejection of the seller’s offer and, once it was rejected, it cannot be accepted later
In a option to purchase real estate, the optionee

a. must purchase the property, but may do so at any time within the option period
b. has on obligation to purchase the property
c. is a limited to a refund of the option consideration if the option is exercised
d. is the prospective seller of the property
b. has on obligation to purchase the property
The broker receives an earnest money deposit with a written offer to purchase that includes a ten-day acceptance clause. On the fifth day, before the offer is accepted, the buyer notifies the broker that she is withdrawing the offer and demands the return of the earnest money deposit. In this situation

a. the buyer cannot withdraw the offer because it must be held open for the full 10 days
b. the buyer has the right to revoke the offer at any time until it is accepted and recover the earnest money
c. the seller and the broker have the right to each retain 1/2 of the deposit
d. the broker declares the deposit forfeited and retains it for his services
b. the buyer has the right to revoke the offer at any time until it is accepted and recover the earnest money
The concept that requires that an injured party to bring an action within a specific period of time after the injury is

a. a variance
b. the statute of limitations
c. the statute of fraud
d. a waiver
b. the statute of limitations
A real estate sales contract becomes valid or in effect when it has been signed by

a. only the buyer
b. the buyer and seller
c. only the seller
d. the broker and the buyer
b. the buyer and seller
If a broker deposits the buyer’s earnest money in a trust account, at what time is the seller entitled to receive it?

a. when the offer is presented to the seller
b. at the time of settlement
c. after the settlement
d. when the seller accepts the offer made by the buyer
b. at the time of settlement