Real Estate Exam Contract

Front 1

An offer on a home listed under an exclusive agency listing was presented to a seller and immediately accepted and communicated to the buyer. Before the deal could be placed in escrow, the seller found another buyer with all cash and notified the broker that the original deal was off. Which of the following statements are true?

Back 1

A. Broker is entitled to no compensation.

B. Broker has an excellent legal basis to collect a commission.

C. The deposit must be reimbursed to the buyer and the buyer has no further claim of right against the seller.

D. All of the above

Hint 1

Since the offer was accepted and communicated to the buyer, we have a valid and binding contract. If the seller wishes to back out of the deal after this, broker has legal right to collect commission.

Front 2

Buyer Patricia presented an offer to Seller Sam for the purchase of Sam's 10-year-old home in a quiet neighborhood. Patricia gave Sam three days from the date of the offer to respond. Sam had another offer to consider, but finally accepted Patricia's offer four days later and asked his broker to communicate his acceptance to Patricia. Under these circumstances:

Back 2

A. A legally binding bilateral contract has been created.

B. Sam created a counteroffer.

C. Patricia has no obligation under her original offer.

D. Patricia is obligated to make a new offer to seller Sam.

Hint 2

Most buyers stipulate a timeframe within which the seller must accept the offer. However, anytime before the seller accepts the offer, the buyer may revoke the offer. If the seller takes no action of the offer, the offer terminates due to lapse of time.

Front 3

Assume an offer has been accepted and the acceptance has been communicated to the buyer. The buyer then changed his mind and decided not to purchase the property. Which of the following is true?

Back 3

A. The broker could sue the buyer for the commission

B.The broker could not sue the buyer for a commission but could bring suit to require performance of the contract

C. The seller could sue for liquidated damages if the parties agreed to liquidated damages in the contract

D. None of the above are correct statements

Hint 3

If the buyer backs out of this purchase contract, the seller is entitled to sue for liquidated damages when the parties agreed to this in the contract.

Front 4

In a lease whose duration is greater than one year, what is not required?

Back 4

A. In writing

B. Signatures from both the lessor and the lessee.

C. Termination date.

D. Amount of rent and the method of payment.

Hint 4

Only the lessor is legally required to sign a written lease.

Front 5

The usual listing contract authorizes a broker to:

Back 5

A. find a purchaser and bind the seller to a contract to sell.

B.find a purchaser and accept a deposit with an offer to purchase.

C. guarantee prospective purchasers that the home is defect free.

D. convey the real property upon the receipt of a perfect offer.

Hint 5

A listing is an employment contract which usually authorizes the broker to find a purchaser and accept a deposit as the seller's agent. Broker is not authorized to do the acts described in the other choices.

Front 6

Which of the following is correct?

Back 6

A. Maximum lease on city property is 51 years.

B. Maximum lease on agriculture property is 99 years.

C. Maximum lease on non-agriculture is 51 years.

D. None of the above.

Hint 6

Just the opposite: Agriculture--51, city and non-agriculture--99.

Front 7

Paul sends Gary a letter that states, “I offer to purchase your house for $290,000, closing to take place by December 31.” Gary writes back, “I accept your offer, but escrow must close before November 30.” Which of the following is true?

Back 7

A. Gary's letter is a counteroffer creating a binding contract.

B. Gary's letter is an acceptance creating a binding contract.

C. Gary's letter is a revocation that Paul can accept or reject.

D. Gary's letter is a counteroffer that Paul can accept or reject.

Hint 7

In order for a contract to be formed, the offeree must accept the offer without making any changes to it. If he does make a change, then the purported “acceptance” has really become a counteroffer.

Front 8

Exculpatory clauses are generally unsuccessful at protecting a licensee from liability to the buyer because they:

Back 8

A. violate public policy.

B. violate the license law.

C. are not recognized by the courts.

D. are often written incorrectly.

Hint 8

Exculpatory clauses are generally unsuccessful at protecting a licensee from liability to the buyer because they violate public policy.

Front 9

A lease to a lessee is comparable to that of:

Back 9

A. a deed of trust to a trustee.

B. an affiant to a deponent.

C. a land contract to the vendee.

D. a mortgage to a mortgagee.

Hint 9

A lease gives the lessee the right of possession and use of the property. Under a land contract the buyer also receives use and possession together with an additional right of future title

Front 10

A broker took a listing for 90 days. During the term of the listing, the owner was declared mentally incompetent. The listing contract is:

Back 10

A. void.

B. binding.

C. enforceable.

D. voidable.

Hint 10

Incapacity on the part of either of the parties to an employment contract will make it void

Front 11

When a minor signs a contract, it is:

Back 11

A. legal.

B. legal if purchased through a guardian with consent of the court.

C. legal if it is not caught at time of minority or shortly thereafter.

D. legal, because anyone can purchase property.

Hint 11

Statement of fact.

Front 12

When damages are not adequate, each of the following may request specific performance, except the:

Back 12

A. buyer from the seller.

B. attorney in fact for one of the principals.

C. seller of a large parcel of land.

D. broker from the principal.

Hint 12

The broker may not seek specific performance from the principal. The broker's remedy is to sue for damages.

Front 13

The penalty for failing to identify a definite termination date in a listing is:

Back 13

A. suspension or revocation of the agent's real estate license.

B. forfeiture of commission by the agent.

C. loss of the listing.

D. revocation of the brokerage license.

Hint 13

If an agent does not comply with several obligations including specifying a definite termination date, the punishment may be suspension or revocation of the real estate license.

Front 14

Ms. Adams made a deposit on the purchase of a property. During the escrow the seller learned of a highway rerouting which would greatly enhance the value of her property. She instructed the broker to return the deposit to the buyer. Ms. Adams refused to accept the deposit. Her most unlikely course of action would now be:

Back 14

A. to institute a civil action for specific performance against the seller.

B. to institute a civil action for dollar damages.

C. to accept a settlement.

D. a unilateral rescission.

Hint 14

Choices (a) , (b), or (c) could give Ms. Adams some degree of remedy. To rescind unilaterally (grudgingly give in) would gain her nothing.

Front 15

An exclusive authorization and right to sell listing

to sell a home, just entered into, can be described as:

Back 15

A. a cash agreement to purchase properties that are bilateral.

B. a bilateral executory contract.

C. a land contract whereby licensee may obtain commissions from both the buyer and seller.

D. all of the above.

Hint 15

The exclusive right to sell listing is a bilateral contract. An executory contract is one which has not been completely performed.

Front 16

Which of the following statements of fact best matches the term surrender?

Back 16

A. Contract of leasing.

B. Contract of conveyance.

C. Contract of money.

D. Contract of pledge.

Hint 16

When a tenant voluntarily gives up a lease before the expiration of its term, it is know as surrender. A lease is a combination of both a conveyance and a contract.

Front 17

An executory contract is a contract that:

Back 17

A. has been fully performed.

B. has been executed.

C. is to be executed.

D. none of the above

Hint 17

An executory contract is a contract that must be performed or must be executed.

Front 18

In an option, which party has a choice about whether to exercise the option or not?

Back 18

A. Optionor.

B. Optionee.

C. Broker.

D. Seller.

Hint 18

The buyer (optionee) is the only one who has a choice, once the contract is signed and the consideration given. The option does not bind the optionee to any performance - he or she does not have to exercise the option.

Front 19

Only the __________ can amend or change a contract.

Back 19

A. principal.

B. broker.

C. agent.

D. licensee.

Hint 19

When corrections or additions must be included on a contract, licensees should not make these changes arbitrarily. Only a principal can amend or change a contract.

Front 20

"A" enters into an agreement to sell a property to "B." "A" deposits a grant deed naming "B" as grantee in escrow. Escrow is closed and the deed delivered to "B." "A" and "B" then decided to rescind the sale. What is the proper procedure to be followed to effect the rescission?

Back 20

A. "B" should endorse the deed and return it to "A"

B."B" should reopen escrow and have the deed certified as "canceled" and have the escrow redeliver it to "A".

C."B" need only destroy the deed after return of his consideration.

D. None of the above.

Hint 20

When using escrow, the escrow does not close, nor title transfer, until the new deed is recorded. Once a deed is recorded a new deed is required for conveyance. "B" would actually have to sell the property back to "A."

Front 21

A void contract is one that is:

Back 21

A. authorized.

B. rescindable.

C. not enforceable by law.

D. not in writing.

Hint 21

Void, meaning no good, is not enforceable in a court of law since it does not contain the legal essentials necessary to create a valid contract.

Front 22

Ms. Olden received an option from Mr. New on a piece of property valued at $1,000,000. As consideration for this option, Ms. Olden gave Mr. New $10.00 in cash. The option is:

Back 22

A. invalid.

B. valid.

C. voidable.

D. unenforceable.

Hint 22

There is no law requiring any specific amount for consideration on an option. Whatever is agreeable among the parties is acceptable. If Mr. New accepts the $10.00, then the option is valid and binding.

Front 23

A sublease is:

Back 23

A. the same as an assignment.

B. a full interest in a leasehold.

C. less than the entire leasehold.

D. an estate at sufferance.

Hint 23

One thing that distinguishes a sublease from an assignment is that the sublease gives up only part of the leasehold.

Front 24

Which of the following statements of fact best matches the term "alienation?"

Back 24

A. Contract of leasing.

B. Contract of conveyance.

C. Contract of money.

D. Contract of pledge.

Hint 24

Property is acquired by transfer when, by an act of the parties or law, title is conveyed, or transferred. Real property may be transferred, or alienated by private grant, public grant, public dedication or operation of law (a court action).

Front 25

A listing contract has the statement, "The undersigned broker agrees to use diligence in procuring a buyer." This is used for what following reason?

Back 25

A. Means nothing and is not required.

B. To make it a bilateral contract.

C. To make it a unilateral contract.

D. None of the above.

Hint 25

Mutual exchange of promises: Bilateral contract. Promise for an act: Unilateral.

Front 26

In what document is a "safety clause" found?

Back 26

A. Deposit receipt

B. Transfer disclosure statement

C. Closing statement.

D. Listing

Hint 26

Definition: A safety clause (also known as an extender clause) is found in most listing forms and provides that the listing will continue for a set period of time and would be renewable until the parties agree to terminate it.

Front 27

Three of the following are quite similar. Which answer does not belong with the others?

Back 27

A. Offer

B. Acceptance.

C. Title.

D. Rescission

Hint 27

Correct answer is (c). Offer, acceptance, and rescission pertain to contract, title does not.

Front 28

A broker is preparing a deposit receipt. Which of the following can be disregarded for the moment and be decided during the escrow period?

Back 28

A. Manner of payment of assessment bonds.

B. Manner of taking title.

C. Payment of title insurance.

D. Financing arrangements

Hint 28

Answers (a), (c), and (d) must be decided before escrow.

Front 29

In the preparation of an exclusive listing contract, a licensee may be disciplined if he fails to include:

Back 29

A. the asking terms of the financing. B. a clause making the agreement bilateral.

C. a clause indicating that time is of the essence in carrying out the terms of the contract.

D. a definite expiration date.

Hint 29

All exclusive listings must have a definite termination date.

Front 30

Failure to perform a duty to fulfill a promise made is considered:

Back 30

A. a cancellation.

B. a breach.

C. illegal.

D. all of the above.

Hint 30

A breach of contract is a failure to perform on part or all of the terms and conditions of a contract (promise to pay).

Front 31

The following terms are closely associated with real estate. Which does not belong with the others?

Back 31

A. Offer.

B. Title.

C. Option.

D. Rejection.

Hint 31

Offer, option, and rejection are terms regarding contracts.

Front 32

Regarding a lease, which of the below-mentioned items is an implied covenant?

Back 32

A. Tenancy.

B. Term of lease.

C. Termination of lease.

D. Quiet enjoyment

Hint 32

The words implied covenant mean an "unwritten promise." Of the four answers given, quiet enjoyment would be covenant in a lease that would not appear in writing.

Front 33

An option is different from other contracts, such as conventional or conditional sales contracts. The difference is due to what characteristic of an option?

Back 33

A. Irrevocability.

B. Mutuality of obligations of the parties.

C. Non-mutuality of obligations of the parties.

D. Both (b) and (c) are correct.

Hint 33

Mutuality of obligations would mean that both parties are obligated to perform, which is the case with most contracts. An option does not have mutuality of obligations in that only the optionor is obligated to perform, not the optionee.

Front 34

The maximum length of time for which a valid lease may be written is:

Back 34

A. 99 years on urban property.

B. 55 years on agricultural property.

C. both (a) and (b).

D. neither (a) nor (b)

Hint 34

The maximum lease on urban property is 99 years.

Front 35

Which one of the following clauses is always in a deposit receipt?

Back 35

A. Alienation clause.

B. Subordination clause.

C. Subrogation clause.

D.Executory clause

Hint 35

The other clauses may be in a deposit receipt, but there is always an executory clause--which is a promise to be performed.

Front 36

A minor is:

Back 36

A. an incompetent.

B. someone under l8 years of age.

C. someone under 2l years of age.

D. someone emancipated.

Hint 36

Parties entering into a contract must have legal capacity to do so. A person must be at least 18 years of age, married, in the military, or declared emancipated by the court. A minor - a person under 18 years of age - is not considered legally capable.

Front 37

An Exclusive Authorization and Right to Sell Listing just entered into can be described as:

Back 37

A. a cash agreement to purchase properties that are bilateral.

B. a bilateral executory contract.

C. a land contract whereby licensee may obtain commissions from both the buyer and seller.

D. all of the above

Hint 37

The exclusive right to sell listing is a bilateral contract. An executory contract is one which has not been completely performed.

Front 38

Prima facie means:

Back 38

A. first in priority.

B. primary evidence.

C. front of the house.

D.principal.

Hint 38

Of the answers given, primary evidence as the correct answer.

Front 39

A voidable contract is:

Back 39

A. invalid.

B. void.

C. valid until voided.

D. none of the above

Hint 39

A voidable contract is one that is valid on its face until it is voided by the injured party.

Front 40

A husband and wife have been searching for a new home. One day when the husband was at work, his wife learns that a new listing has appeared on the MLS. Her agent calls her and urges her to come see it ASAP. She goes to view the property, without her husband, loves the house but cannot reach her husband at work to sign an offer on the home. If the seller accepts the offer, the contract is:

Back 40

A. void.

B. voidable.

C. invalid.

D. valid.

Hint 40

The community property system views marriage as an economic partnership between husband and wife in which the contributions of each are valued equally. In general, the earnings of either spouse during marriage, and all proceeds from those earnings, are deemed community property. During the marriage, the spouses have equal rights to use and control the community property. Therefore, one wife can use community property assets to purchase the home. However, if the husband's signature is required to sell or transfer the property.

Front 41

All of the following will terminate a lease except:

Back 41

A. expiration of term.

B. mutual agreement.

C. eviction.

D. sale of the property.

Hint 41

Other ways to terminate a lease are destruction of the premises, breach of conditions by either lessor or lessee, or eviction. A sale of the property during the term of the lease does not usually terminate the lease.

Front 42

The meaning of the word "waiver," as it is applied to real estate contracts, most nearly means:

Back 42

A. estoppel.

B. unjust enrichment.

C. easements.

D. a unilateral act and its legal consequences.

Hint 42

The word "waiver," as applied to a real estate contract, most nearly means a unilateral act and its legal consequences. One party "waives" the right to have another party perform in the contract.

Front 43

In a real estate contract, the promise to use "due diligence" is made by whom?

Back 43

A. The buyer.

B. The seller.

C. The escrow agent.

D.The listing broker

Hint 43

The seller signs a listing agreement promising payment for service by the listing broker and the broker promises to “use due diligence” in finding a buyer - a bilateral contract in which a promise is given in exchange for a promise.

Front 44

Mr. and Mrs. Flowers made an offer to purchase a house, which was accepted. The escrow was to close in 30 days. Just before the closing, the owner changed his mind and decided not to sell. Which of the following is not an alternative for the buyer?

Back 44

A. They may rescind the contract

B. They may file a writ of execution.

C. They may file an action for specific performance.

D. They may sue the seller for money damages

Hint 44

All except a writ of execution are remedies for breach of contract.

Front 45

A buyer signs a deposit receipt on February 5. The offer will expire at 5:00 pm on the 5th day after the buyer signed the offer. Therefore, the offer is good until 5:00 pm:

Back 45

A. February 8.

B. February 9.

C. February 10.

D. February 11.

Hint 45

The day it is dated counts as the first day: 5 - 6 - 7 - 8 - 9th.

Front 46

A lessor and lessee agree to the terms and the lessor draws up a 5-year lease, signs it, and mails it to the lessee. The lessee does not sign it, but moves in and pays 2 months' rent. After 2 months, the lessee decides to move out and informs the lessor. Which of the following is true?

Back 46

A. There is a valid lease as only the lessor has to sign.

B. There is a valid lease as lessee had moved in and paid 2 months' rent.

C. The lease is invalid, as the Statute of Frauds states that a lease for more than 1 year must be in writing and signed by both the lessor and lessee.

D. The lease is invalid as there is no contract to enforce

Hint 46

Lessee does not have to sign the lease to be bound to it as long as he either takes possession or pays rent in advance

Front 47

A lease that specifies that the lessee is to pay the real estate property taxes and the insurance cost, as well as the rent, is called:

Back 47

A. specific lease.

B. sandwich lease.

C. net lease.

D. percentage lease.

Hint 47

Leases are classified by method of rent payments, such as gross, net, and percentage leases. In a net lease, the tenant pays an agreed-upon sum as rent, plus certain agreed-upon expenses per month (i.e. taxes, insurance and repairs)

Front 48

Ms. Simon is buying a home. The risk of loss due to vandalism or for damage by fire passes to Ms. Simon when:

Back 48

A. the purchase agreement is signed by both parties.

B. escrow is opened.

C. she signs the closing documents.

D. the contingency period is over.

Hint 48

The seller is responsible for the property up until the date of closing. The seller must convey the property in the same conditions as when Ms. Simon signed the purchase agreement and/or completed her inspections

Front 49

The promise given in return for an offered promise in a bilateral contract is:

Back 49

A. acceptance.

B. obligatory trust.

C. partial performance.

D. consideration.

Hint 49

Consideration can be money, property, or a promise.

Front 50

Which of the following would identify a rider?

Back 50

A. People.

B. Amendment.

C. Encroachment.

D. Donee

Hint 50

A rider is an addition or an amendment to an existing document.

Front 51

The words "procuring cause" are most often found in which of the following contracts?

Back 51

A. An exclusive right to sell listing.

B. Deposit receipt.

C. Open listing.

D. Exchange agreement

Hint 51

The "procuring cause" for a sale in an open listing is the broker that first produces a customer ready, willing, and able to buy the property according to the terms of the open listing.

Front 52

All of the following are essential to the validity of a contract, except:

Back 52

A. a meeting of the minds.

B. the adequate capacity of the parties to the contract.

C. the payment of money.

D. a legal purpose.

Hint 52

Payment of money is not required for the validity of a contract. Promises can be the consideration.

Front 53

An option without consideration is:

Back 53

A. illegal.

B. enforceable.

C. invalid.

D. unenforceable.

Hint 53

Unless actual consideration passes to the optionor, the contract cannot be enforced.

Front 54

An affirmed statement sworn to is:

Back 54

A. an affidavit.

B. an acknowledgment.

C. an affirmation.

D. delivered.

Hint 54

An affidavit is a sworn statement written down and made under oath before a notary public or other official authorized by law to administer an oath. Its purpose is to help establish or prove a fact, and it is a complete instrument within itself.

Front 55

An attorney-in-fact under a general power of attorney can do everything except:

Back 55

A. sign his principal's name.

B. encumber the property with another individual as beneficiary.

C. deal with his principal's property for his own benefit.

D. none of the above

Hint 55

Cannot be involved in any act which would reflect a personal benefit.

Front 56

Three of the real estate terms listed below are closely associated. Which one does not fit in this group?

Back 56

A. Offer.

B. Title.

C. Acceptance.

D. Rejection

Hint 56

An offer may be accepted or rejected. An option keeps an offer open. Title refers to how property is owned.

Front 57

A real estate broker included the following clause in her standard listing contract: "In consideration of execution of the foregoing, the undersigned broker agrees to use diligence in procuring purchaser." This is:

Back 57

A. superfluous and unnecessary in current contracts.

B. important to the creation of a bilateral contract.

C. important to the creation of a unilateral contract.

D. important according to the Statute of Limitations.

Hint 57

A bilateral contract requires a promise given in exchange for another promise. This clause is the broker's exchanged promise to the seller.

Front 58

An option to buy real estate become a mutually binding contract, when:

Back 58

A. the option is given to the optionee by the optionor.

B. the optionee exercises the right to purchase.

C. the consideration for the option is given.

D. any of the above happens.

Hint 58

An option to purchase becomes a mutually binding contract when the optionee (buyer) exercises the right to buy.

Front 59

An attorney-in-fact can do all of the following things, except:

Back 59

A. sign his principal's name.

B. perform acts of a general power of attorney.

C. deal in real property without recording his general power of attorney.

D. encumber his principal's property with a deed of trust naming another as the beneficiary.

Hint 59

The attorney-in-fact has no power to act for his principal until the power of attorney is recorded.

Front 60

Broker Jones secured an agency listing in writing from the Johnson Co. on a commercial building that had been vacant for some months. The listing broker entered into a verbal agreement to share his commission with a cooperating broker. The cooperating broker procured a buyer, but Broker Jones refused to split the commission. The cooperating broker:

Back 60

A. may recover his share in court.

B. may not recover his share in court because this was only a verbal agreement.

C. should ask the Commissioner to arbitrate the dispute.

D. should go to the Labor Commissioner.

Hint 60

The Statute of Frauds does not require an agreement between brokers to split a commission to be in writing to be enforceable. If the cooperating broker can prove his case, he can recover his share in court.

Front 61

A broker, who has a listing together with an option on a property, wants to exercise the option and sell the property himself. Which of the following is true?

Back 61

A. He is an optionor. B. He is an agent. C. This is permissible providing he gives notice to the parties that he holds an option and states to the owner how much profit he is to receiveD. This is not permissible since it violates his fiduciary relationship

Hint 61

Correct answer is (c). The broker may take an option along with the listing, provided he divulges his profit and advises the owner in writing prior to exercising the option.

Front 62

An attorney-in-fact can do all of the following things, except:

Back 62

A. sign his principal's name.B. perform acts of a general power of attorney.C. deal in real property without recording his general power of attorney.D. encumber his principal's property with a mortgage naming another as the beneficiary.

Hint 62

The attorney-in-fact has no power to act for his principal until the power of attorney is recorded.

Front 63

Which term or terms would most completely commit the signers?

Back 63

A. Individually B. Jointly C. Severally D. Jointly and severally

Hint 63

Jointly as a group and severally as individuals.

Front 64

An owner gave an open listing to broker Rose and broker Daisy, who have both shown the property to Ms. Lily. Broker Rose gets an offer from Ms. Lily and a signed acceptance. Which of the following is correct?

Back 64

A. The commission will be split between Rose and Daisy B. The commission will be paid to Rose C. No commission paid on an open listing D. The commission will be paid to Daisy

Hint 64

Under an open listing, the broker who presents the first offer to be accepted by the owner is entitled to the commission.

Front 65

A licensee sells property to a young married couple and later learns they are both 17 years of age. This transaction could best be described as:

Back 65

A. void.B. voidable.C. illegal.D. valid.

Hint 65

Married persons under the age of 18 are considered emancipated minors.

Front 66

A non-illusory instrument is a:

Back 66

A. definitive but not binding instrument.B. definitive and binding contract.C. non-definitive and binding contract.D. definitive instrument which becomes a binding contract when executed.

Hint 66

A non-illusory contract is the opposite of an illusory contract. An illusory instrument is an agreement in which one party gives as consideration a promise that is so insubstantial as to impose no obligation. (Black's Law). Therefore, if a contract is non-illusory it is binding and enforceable, has all the basic elements required by law, and is definite in its terms. It is a valid contract. Many times, the DRE gives 2 correct choices. Between choices (b) and (d), Choice (d) is the more complete choice.

Front 67

A broker is preparing a deposit receipt. Which of the following can be disregarded for the moment and be decided during the escrow period?

Back 67

A. Manner of payment of assessment bondsB. Manner of taking titleC. Proof of title insuranceD. Financing arrangements

Hint 67

Answers (a), (c), and (d) must be decided before escrow

Front 68

Of the following, which is most correct concerning the Statute of Frauds?

Back 68

A. Misrepresentation in the making of a contract violates the statuteB. It classifies most oral real estate contracts as unenforceableC. It classifies an oral agreement between brokers to share a commission as unenforceableD. Violations of this statute are prosecuted by the district attorney in the county where the alleged violation occurred

Hint 68

The Statute of Frauds states which contracts must be in writing to be enforceable. Its main function is for the prevention of fraud.

Front 69

A real estate agent has earned a commission when:

Back 69

A. there is a "meeting of the minds" between buyer and seller on price and other terms of a transaction. B. the seller signs the listing. C. the offer is written. D. the offer is presented.

Hint 69

If the broker brings about a “meeting of the minds” of the buyer and seller on price and other terms for the transaction, the broker has earned the commission.

Front 70

Consideration is to a contract, as endorsement is to a:

Back 70

A. mortgage.

B. promissory note.C. land contract.D. option.

Hint 70

Endorsement is the symbol of consideration for the negotiation of a promissory note.

Front 71

When a buyer makes a contract to purchase real property and he acts to fulfill the terms of his contract, this would be a:

Back 71

A. time is of the essence clause. B. tender. C. covenant. D. executory action.

Hint 71

An offer by one of the parties in a contract, to carry out his part of the contract, is called "tender."

Front 72

A listing contract has the statement, "The undersigned broker agrees to use diligence in procuring a buyer." This is used for what following reason?

Back 72

A. Means nothing and is not requiredB. To make it a bilateral contractC. To make it a unilateral contractD. None of the above

Hint 72

Mutual exchange of promises: bilateral contract. Promise for an act: unilateral.

Front 73

In order to record a lease, the document must be acknowledged before a proper official by the:

Back 73

A. public administrator.B. notary public.

C. lessee.

D. lessor.

Hint 73

As a requisite of recording, a document must be acknowledged by the party transferring some right in real property, in this case, the lessor.

Front 74

The most essential element to create an enforceable broker-principal relationship is a:

Back 74

A. written authorization for agent to accept a deposit.

B. written offer to buy. C. written employment contract.

D. written agreement for commission.

Hint 74

A written employment contract is the most essential element. The relationship may be unenforceable without it.

Front 75

A contract obtained through duress, is:

Back 75

A. good. B. voidable. C. void. D. unenforceable.

Hint 75

Correct answer is (b). The injured party has the option to void the contract; therefore, it is voidable.

Front 76

A bilateral contract is one that is a(n):

Back 76

A. promise for performance. B. promise for an act.

C. act for a promise. D. promise for a promise.

Hint 76

A bilateral (two-sided) agreement contains a promise for a promise. For example, an exclusive authorization and right to sell listing (a bilateral agreement) contains the owner's promise to pay a commission if the property sells during the listing period. In exchange for this promise, the broker promises to use due diligence in procuring a buyer for the property.

Front 77

Of the following, which is most correct concerning the Statute of Frauds?

Back 77

A. Misrepresentation in the making of a contract violates the statuteB. It classifies most oral real estate contracts as unenforceableC. It classifies an oral agreement between brokers to share a commission as unenforceable D. Violations of this statute are prosecuted by the district attorney in the county where the alleged violation occurred

Hint 77

The Statute of Frauds states which contracts must be in writing to be enforceable. Its main function is for the prevention of fraud.

Front 78

The word tender, as used in contract law, means:

Back 78

A. money only. B. promissory note only.C. an offer of money or performance.D. none of the above

Hint 78

A tender of performance is an offer by one of the parties to carry out his or her part of the contract.

Front 79

Buyer Baker's agent presented an offer to purchase to seller Susan. Seller Susan was delighted because the offer met all of her terms. She had not expected her home to sell so quickly, so she accepted the offer, but changed the date for closing from 45 days to 90 days. In this situation, buyer Baker is:

Back 79

A. not bound by the original offer he sent to seller Susan.B. bound by seller Susan's acceptance because she only changed the closing date. C. bound by the original offer with the original closing date. D. not bound by the original offer, but is bound by Susan's counteroffer.

Hint 79

By changing the number of days for the closing, seller Susan has created a counteroffer, therefore, the original offer automatically terminates.

Front 80

A broker has an option to purchase in an agreement which also employs the broker to sell the parcel of real property and to obtain a commission from the sale. Before the broker can legally exercise the option, he must:

Back 80

A. make a public notice of his intention to exercise the option. B. put the necessary funds in escrow. C. obtain the written consent of the seller. D. give constructive notice to the seller.

Hint 80

An option listing gives the broker the right to purchase the property that is listed. A broker with an option is acting as a principal as well as an agent. Prior to exercising the option, the seller must be informed for the full amount of the broker's profit and agree to it in writing.

Front 81

A contract is defined as a deliberate agreement between competent parties, upon legal consideration, to do or not to do some legal act. All of the following are correct statements concerning contracts except:

Back 81

A. an offer and valid acceptance are essential to a binding real estate contract. B. a contract signed by an unmarried 18-year-old may be valid. C. an agreement for the sale of real property to be used expressly for an illegal purpose is void.

D. a real estate contract signed on Sunday is voidable.

Hint 81

In order for a contract to be legally binding and enforceable, there are four requirements: 1) legally competent parties, 2) mutual consent between the parties, 3) lawful objective, and 4) sufficient consideration.

Front 82

In real estate contracts, the consideration must be sufficient relative to value in order to win a lawsuit seeking:

Back 82

A. a lis pendens.

B. specific performance. C. an attachment. D. damages.

Hint 82

Specific performance is an equitable remedy. Therefore, the judge must be convinced that the consideration is sufficient for the value of the property. A judge may refuse to grant specific performance if she feels the contract is unfair.

Front 83

In considering a bilateral contract, the offered promise bargains for receipt of a returned promise. If the return promise is given, it is considered:

Back 83

A. an option. B. a consideration. C. a unilateral agreement. D. none of the above.

Hint 83

Correct answer is (b). Consideration for a contract need not be money. It may be a promise.

Front 84

All of the following are essential to create a valid contract, except:

Back 84

A. lawful object.B. writing.C. mutual consent. D. consideration.

Hint 84

Most contracts do not require "writing".

Front 85

A minor, 16 years of age and married, wants to purchase a home. Which of the following statements is true?

Back 85

A. He cannot legally purchase and own a home. B. He can own a home but only if his parents or legal guardian co-signC. He can purchase and own a homeD. None of the above

Hint 85

A married person under the age of 18 is an emancipated minor and can sign a valid binding contract to purchase, rent or lease real property.

Front 86

Broker Bell is reviewing a contract prepared by Salesperson Coral. He notices an unusual contingency in the contract. How should Broker Bell proceed?

Back 86

A. Sign the contract without taking any further action. B. Make an amendment to the contract. C. Have the contract reviewed by an attorney.D. Cancel the agreement.

Hint 86

A salesperson should make sure his or her broker reviews the contract for accuracy, rather than simply signing the contract. Likewise, a broker should have a contract reviewed by an attorney if any unusual contingencies arise.

Front 87

What is NOT necessary for a valid contract?

Back 87

A. Acceptance. B. ConsiderationC. RecordationD. Legal Purpose

Hint 87

Recordation is not a necessity to have a valid contract.

Front 88

The phrase, prima facie, means:

Back 88

A. first in priority. B. primary evidence.C. front of the house. D. principal.

Hint 88

Prima facie means at first sight, or on first appearance but subject to further evidence or information. Of the answers given, "primary evidence" is the best choice.

Front 89

In a lease whose duration is greater than one year, what is not required?

Back 89

A. WritingB. Signatures from both the lessor and the lesseeC. Termination date. D. Amount of rent and the method of payment

Hint 89

Only the lessor is legally required to sign a written lease.

Front 90

A new contract between the seller of real property and a licensee whereby the seller agrees to pay the licensee a commission if he produces a "ready, willing, and able" buyer and the licensee agrees to use due diligence in procuring a buyer, is called:

Back 90

A. unilateral executory contract.B. bilateral executory contract.C. unilateral executed contract. D. bilateral executed contract.

Hint 90

A bilateral contract is a contract between two parties with each promising to act (a promise for a promise). An executory contract is a contract yet to be performed. This type of contract is a bilateral executory contract. An executed contract is one that has been completed.

Front 91

The following terms are closely associated with real estate. Which does not belong with the others?

Back 91

A. OfferB. TitleC. OptionD. Rejection

Hint 91

Offer, option, and rejection are terms regarding contracts

Front 92

A husband and wife owned their home as joint tenants. The husband signed an exclusive authorization and right to sell listing agreement with a broker without disclosing the manner of title holding in the property and without his wife's signature on the listing. In the event of a commission dispute, the broker:

Back 92

A. may bring action to force the wife to sell her interest. B. may sue the husband separately in civil court for his commission. C. has no right to a commission because he failed to obtain the wife's signature on the listing. D. may bring court action against the community estate.

Hint 92

The husband binds the community as statutory manager when he fails to disclose the joint tenancy holding.

Front 93

Two people entered into a long term real estate contract. After one year had elapsed, they decided to write a new contract replacing the old one. This would be an example of:

Back 93

A. rescission. B. subrogation.C. novation.D. accession.

Hint 93

Definition: Novation is the substitution by agreement of a new obligation for an existing one.

Front 94

Which of the following contracts must be in writing to be enforceable?

Back 94

A. A lease for one year. B. A listing to lease for one yearC. An agreement by a buyer to assume an existing loan secured by a deed of trustD. An agreement between brokers to share a commission

Hint 94

An agreement to answer for the debt of another must be in writing.

Front 95

An owner gave an open listing to broker Smith and broker Brown, who have shown the property to Mr. White. Broker Smith gets an offer from Mr. White and signed acceptance. Which of the following is correct?

Back 95

A. The commission will be split between Smith and Brown.

B. The commission will be paid to Smith. C. No commission paid on an open listing. D. The commission will be paid to Brown

Hint 95

Under an open listing, the broker who presents the first offer which is accepted by the owner is entitled to the commission

Front 96

Title to real property would immediately pass to the purchaser under which of the following contracts?

Back 96

A. Land contract of sale B. Installment sales contract. C. Agreement of sale. D. None of the above

Hint 96

All of these contracts are conditional sales contracts whereby the seller retains title until the contract is paid off. At that time, a deed is given and title passes.

Front 97

A listing agreement may be recorded at the county recorder's office by the:

Back 97

A. broker. B. seller. C. escrow company.D. none of the above

Hint 97

Listing cannot be recorded whether notarized or not.

Front 98

For an option to be valid, the consideration:

Back 98

A. must be more than $10.00.B. can be less than $10.00 but must actually pass.C. no consideration needed. D. the promise of consideration is sufficient.

Hint 98

The amount is incidental, as long as it actually passes to the optionor

Front 99

A contract between the seller of real property and a licensee whereby the seller agrees to pay the licensee a commission if he produces a "ready, willing, and able" buyer and the licensee agrees to use due diligence in procuring a buyer, is called:

Back 99

A. unilateral executory contract.B. bilateral executory contract.C. unilateral executed contract. D. bilateral executed contract.

Hint 99

A bilateral contract is a contract between two parties with each promising to act (a promise for a promise). An executory contract is a contract yet to be performed. This type of contract is a bilateral executory contract. An executed contract is one that has been completed.

Front 100

After obtaining a listing from a corporation, all the officers were killed in an accident. The listing is:

Back 100

A. valid. B. void. C. voidable. D. invalid.

Hint 100

Death of the officers does not affect the listing contract made with the corporation.

Front 101

Lessee is to lease as:

Back 101

A. optionee is to optionor.B. vendee is to vendor.C. vendee is to land contract.D. lessee is to lessor.

Hint 101

Vendee (buyer) in a land contract only holds an equitable interest. He is not the owner until he has paid for the property.

Front 102

A buyer and seller initial the liquidated damages clause in a deposit receipt and then the buyer defaults. The deposit is:

Back 102

A. given to the seller when escrow opens.B. limited to 3% of the purchase price.C. divided equally between the seller and the listing agent.D. used to pay any costs incurred and then returned to the buyer.

Hint 102

The purchase agreement, or sales contract, usually contains a printed clause that says the seller may keep the deposit as liquidated damages if the buyer backs out without good reason. In the event the buyer defaults on the contract, the liquidated damages cannot exceed 3% of the purchase price if the property is a single-family residence. In order for this clause to be included as an obligation, it must be initialed by the buyer and seller.

Front 103

Which of the following is true of a counteroffer?

Back 103

A. It constitutes a valid contract. B. It is a valid contract once it is signed by the seller. C. It is not a valid contract until it is signed by the last party. D. None of the above are true.

Hint 103

A counteroffer is a rejection of an offer and a presentation of new terms and/or conditions. It is not valid until both parties have signed it.

Front 104

All of the following are contracts except:

Back 104

A. open listing. B. escrow instructions. C. mortgage. D. grant deed.

Hint 104

A grant deed is not a contract.

Front 105

All of the following statements concerning an option are correct except:

Back 105

A. unless prohibited in the contract, the option is assignable. B. the optionee has the first right to purchase the property.C. the optionee has the legal right to enter and use the property right after the option has been entered into. D. performance of the terms found in the lease option is sufficient consideration for the option agreement.

Hint 105

The question asks for the exception. The optionee does not have the legal right to use the property covered by the option until the option to purchase is exercised and the sale occurs.

Front 106

A contract has been executed when it has been:

Back 106

A. signed, notarized and recorded. entered into under the jurisdiction of the probate B. court. C. completely and fully performed. D. signed under threat of death.

Hint 106

A contract has been executed when it has been completely and fully performed.

Front 107

In which of the following instruments would you find a safety clause for the protection of the real estate broker?

Back 107

A. Deposit receiptB. LeaseC. Loan broker's statementD. Listing

Hint 107

This is part of the compensation clause.

Front 108

At the time a real estate contract is entered into by a married couple under the age of 18, it is considered to be:

Back 108

A. valid. B. voidable. C. enforceable. D. unenforceable.

Hint 108

A married person, even though under the age of 18 years of age, is considered by California Law to be an emancipated minor (treated for contract purposes as an adult).

Front 109

A prospective buyer obtained a three-month option on a parcel of real property by paying $300 to the owner. All of the following are true except

Back 109

A. the option is a unilateral contract.the optionor is totally restricted by having B.received "valuable" consideration with the option.C. the option imposes no obligation on the optionee to buy the property.D. the optionee has created a legal interest in the property.

Hint 109

An option does not create a legal interest in the property for the optionee.

Front 110

The right of the landlord to reclaim the property after the lease has expired is known as:

Back 110

A. reversionary right.B. remainder.C. right of appropriation.D. surrender.

Hint 110

The landlord continues to own the property and has only given the tenant the right to use the property. Appropriation refers to taking a public thing for private use. Surrender refers to the tenant giving the leased property back to the landlord before the expiration of the lease.

Front 111

Deposit money never belongs to:

Back 111

A. the buyer.B. the seller.C. the broker.D. none of the above

Hint 111

Deposit money never belongs to the broker.

Front 112

Title to real property would pass to the purchaser under which of the following contracts?

Back 112

A. Land Contract of Sale B. Installment Sales Contract C. Agreement of Sale D. None of the above

Hint 112

All of these contracts are conditional sales contracts whereby the seller retains title until the contract is paid off. At that time a deed is given and title passes

Front 113

Which of the following is not legally required of a lease?

Back 113

A. The legal expression "to let and demise" B. Signature of lessor C. Description of property D. Term of lease

Hint 113

"To let and demise" is a legal term but not legally required in a lease.

Front 114

voidable contract remains binding until it has been:

Back 114

A. invalidated. B. rescinded. C. discovered. D. qualified.

Hint 114

A voidable contract is valid until it is rescinded (voided).

Front 115

A solemn declaration by a person whose religious beliefs forbid the taking of an oath is:

Back 115

A. an affidavit.B. an acknowledgment.C. an affirmation.D. none of the above

Hint 115

An affirmation is a declaration as to the truth of a statement, and is used in lieu of an oath by a person who objects for personal or religious reasons.

Front 116

Which of the following statements of fact best matches the term sandwich?

Back 116

A. Contract of leasing B. Contract of conveyance C. Contract of money D. Contract of pledge

Hint 116

A sublease transfers possession of a leased property to a new person called the sublessee, who is liable only to the sublessor (original tenant), who is primarily liable for paying the rent to the owner. This type of lease is called a sandwich lease: sublessee - sublessor - owner.

Front 117

What is the statute of limitations on filing an action for encroachment?

Back 117

A. 2 yearsB. 3 yearsC. 4 yearsD. 5 years

Hint 117

If not filed within 3 years from date of knowledge, his right to sue outlaws.

Front 118

Seller Chris listed a vacant lot with a broker at $111,400. Prospective buyer Jordan submitted an offer of $111,000 that was to expire in three days. The next day, Chris made a counteroffer of $111,200. When Jordan did not respond within the three-day period, Chris signed an acceptance of Jordan's $111,000 original offer and instructed the broker to deliver it to Jordan. Jordan told the broker that he had decided not to purchase the property, but Chris insisted they had a deal. Based on these circumstances, there is:

Back 118

A. a valid contract. B. no contract. C. an invalid contract. D. an enforceable contract.

Hint 118

Chris' counteroffer terminated the buyer's original offer.

Front 119

A buyer asks an agent to hold a deposit check for 30 days. The agent should

Back 119

A. refuse. B. advise buyer check must be deposited by the next day. C. accept the check and advise the seller that the buyer requests the hold. D. accept and allow the seller to decide what to do.

Hint 119

It is up to the agent to advise the seller on all matters, but it is up to the seller to make the decision if a 30 day hold is acceptable.

Front 120

Suits for specific performance or damages and unilateral rescission are legal remedies for breach of contract. Of the following statements referring to these remedies, which is correct?

Back 120

A. In a breach of contract for the purchase of a residence, a suit for specific performance is the most practical procedure for the broker to follow B. In a breach of contract for the sale of land after the discovery of major oil resources, the most likely procedure to be followed by the purchaser would be a suit for damages C. In a breach of contract to purchase a residence, liquidated damages is a seldom used remedy D. None of the above

Hint 120

All are incorrect statements.

Front 121

A contract created under duress is:

Back 121

A. invalid. B. voidable. C. unenforceable. D. void.

Hint 121

Capable of being void or valid. However, only the innocent party has the right to use duress as a defense to the contract and have it voided.

Front 122

A person designated, in a written power-of-attorney, to legally act for another in his stead is typically called a(n):

Back 122

A. fiduciary. B. principal. C. attorney-in-fact. D. agent.

Hint 122

Any person may give another the authority to act on his or her behalf. The legal document that does this is called a power of attorney. The person holding the power of attorney is an attorney-in-fact.

Front 123

A counteroffer is:

Back 123

A. an immediate acceptance of an original purchase offer.B. the rejection of an original purchase offer. the acceptance of an original purchase offer and C. the submission of a new and different offer. the rejection of an original purchase offer and the D. submission of a new and different offer.

Hint 123

In a real estate transaction, a counteroffer is the rejection of an original purchase offer and the submission of a new and different offer.

Front 124

A licensee sells property to a young married couple and later learns they are both 17 years of age. This transaction could best be described as:

Back 124

A. void. B. voidable. C. illegal. D. valid.

Hint 124

Married persons under the age of eighteen are considered emancipated minors.

Front 125

The majority of leases end by:

Back 125

A. eviction. B. reliction. C. abandonment. D. expiration of term.

Hint 125

The majority of leases end by the expiration of the agreed-upon lease term or by mutual agreement between the landlord and tenant.

Front 126

An option to buy is enforceable if:

Back 126

A. the consideration is $10, but by mutual agreement, is not delivered. B. consideration is less than $10, but actually has passed to the optionor. C. the optionee withdraws his offer. D. there is mutuality of interest.

Hint 126

Actual consideration must pass to the optionor, regardless of how small.

Front 127

A licensed real estate broker is successful in securing a buyer for a property who is ready, willing, and able to buy. The offer is accepted and signed by both parties and escrow is opened. During the escrow period, the title company discovers that the seller is a single minor under the age of 18 and notifies the broker and the escrow holder. Under these circumstances the contract is:

Back 127

A. valid.B. unenforceable.C. voidable.D. outlawed

Hint 127

A contract made by a minor is considered voidable by the minor. A minor can only void a contract during his minority status and only for a reasonable time after he reaches the age of majority. After a reasonable period of time, the contract is deemed to be ratified and cannot be voided.

Front 128

Once an offer has been communicated to the offeree, it does not stay open forever. Which is NOT a way to terminate an offer?

Back 128

A. Destruction of the subject matter B. Capacity of either party C. Rejection by the offeree D. Revocation by the offeror

Hint 128

Once an offer has been communicated to the offeree, it does not stay open forever. An offer is terminated by lapse of time, death or incapacity of either party, destruction of the subject matter, revocation by the offeror, rejection by the offeree, and counteroffer by the offeree

Front 129

Which of the following is correct?

Back 129

A. Maximum lease on city property is 51 years B. Maximum lease on agriculture property is 99 years C. Maximum lease on non-agriculture is 51 years D. None of the above

Hint 129

Just the opposite: Agriculture-51, city and non-agriculture-99.

Front 130

Three of the following are quite similar. Which one which does not go with the others?

Back 130

A. OfferB. AcceptanceC. TitleD. Rescission

Hint 130

Offer, acceptance, and rescission pertain to contract, title does not.

Front 131

The term et ux means

Back 131

A. voidable.B. without husband.C. and wife.D. nothing and is not used.

Hint 131

The term et ux is the Latin abbreviation for et uxor, meaning and wife.

Front 132

A contract obtained by duress is:

Back 132

A. void.B. invalid.C. valid.D. voidable.

Hint 132

Definition: A contract entered into under duress is not enforceable against the forced party, and is voidable.

Front 133

An option is different from other contracts, such as conventional or conditional sales contracts. The difference is due to what characteristic of an option?

Back 133

A. IrrevocabilityB. Mutuality of obligations of the partiesC. Non-mutuality of obligations of the partiesD. Both (b) and (c) are correct

Hint 133

Mutuality of obligations would mean that both parties are obligated to perform, which is the case with most contracts. An option does not have mutuality of obligations in that only the optionor is obligated to perform, not the optionee.

Front 134

An existing contract is replaced by an entirely new contract. This is known as:

Back 134

A. subrogation.B. rescission.C. novation.D. assignment.

Hint 134

Definition: Novation is the substitution by agreement of a new obligation for an existing one.

Front 135

Which of the following is not necessary to create a contract?

Back 135

A. OfferB. AcceptanceC. PerformanceD. Consideration

Hint 135

Performance comes after you have a binding contract.

Front 136

If a lease is to be recorded, it must be acknowledged before a proper official by the:

Back 136

A. county recorder.B. notary public.C. lessee.D. lessor.

Hint 136

The lessor (landlord)owns the property and signs the lease to give possession and use to the lessee (tenant). Leases for longer than one year (1 year plus 1 day) must be in writing and must be signed by the lessor, but not necessarily by the lessee.

Front 137

A lessor and lessee agree to the terms and the lessor draws up a 5-year lease, signs it, and mails it to the lessee. Lessee does not sign it, but moves in and pays 2 months' rent. After 2 months, lessee decides to move out and informs lessor. Which of the following is true?

Back 137

A. There is an invalid lease as only the lessor has to sign B. There is a valid lease, as lessee had moved in and paid 2 months' rent C. The lease is invalid, as the Statute of Frauds states that a lease for more than one year must be in writing and signed by both the lessor and lessee D. The lease is invalid as there is no contract to enforce

Hint 137

Lessee does not have to sign the lease as long as he pays rent in advance or takes possession of the premises

Front 138

When a lease is assigned, the assignee becomes a(n):

Back 138

A. tenant.B. lessor.C. landlord.D. assignor.

Hint 138

When a lease is assigned, the primary liability shifts to the assignee and he becomes a tenant. When a leased property is sublet, the primary liability remains with the original lessee and the person to whom the property is sublet becomes the sublessee

Front 139

A person hiring property is similar to:

Back 139

A. a mortgagor executing a mortgage.B. a lessee signing a lease.C. a trustor signing a trust deed.D. a buyer executing a trust deed.

Hint 139

Payment for the temporary possession or use of a house or other property is usually referred to as "rent." The word "hire" is used to mean the same thing.

Front 140

For a real estate broker to be entitled to a commission if the property sells after the expiration of the listing, the broker should place into the listing agreement a

Back 140

A. liquidated damages clause.B. due diligence clause.C. safety clause.D. none of the above

Hint 140

A “carryover” clause (often referred to as a safety clause) may be contained in a listing. It provides that a broker is still entitled to a commission for a set period of time after the listing has expired if the property is sold to a prospect of the broker introduced to the property during the period of the listing.

Front 141

An attorney-in-fact:

Back 141

A. is a person authorized to legally act on behalf of another. B. must be appointed by the court. C. must be authorized by a notary. D. must have a law degree.

Hint 141

Definition: An attorney-in-fact is 1. The person holding the power of attorney; or 2. A competent and disinterested person who is authorized by another person to act in his or her place in legal matters.

Front 142

Listings are often confused with options. Which of the following is a correct statement concerning these contracts?

Back 142

A. A listing creates a fiduciary relationship, an option does notB. An option requires consideration to be a valid contract and the listing also requires considerationC. The owner may be sued for performance on an option but a suit for specific performance cannot be instituted on a listingD. All of the above are correct

Hint 142

Definitions of listings and of options clearly indicate the answers are all correct.

Front 143

Which of the following may a minor be able to undertake without court approval?

Back 143

A. Acquisition of real property through gift or inheritanceB. Give valid power of attorney to encumber propertyC. Sell real estate through a guardianD. All of the above

Hint 143

A minor may acquire real property by gift or inheritance without court approval.

Front 144

Four months ago a seller accepted an offer from a buyer to purchase her home. The contract was in writing. Later, the seller refused to complete the transaction. Under the statute of limitations, so his right to sue does not "outlaw," the buyer must file an action within:

Back 144

A. 90 days.B. 1 year.C. 2 years.D. 4 years.

Hint 144

Statute of Limitations on any written contract is 4 years.

Front 145

Rescission of contract would mean that the contract is:

Back 145

A. subrogated.B. terminated.

C. changed.D. all of the above

Hint 145

Definition answer for the word "rescission."

Front 146

Mr. "A" gave Mr. "B" an option to buy his ranch. This burdened the ranch with

Back 146

A. a fiduciary agreement.B. an involuntary lien.C. a contract to offer to sell.D. an offer to enter into a contract.

Hint 146

An option is a contract to offer to sell.

Front 147

Who is entitled to a commission when a property is not listed at the time of the offer and has been shown to a buyer by more than one broker?

Back 147

A. The broker who is the procuring cause B. Whoever listed the property prior to the sale C. No one D. All brokers who showed the property

Hint 147

The agent who writes an accepted offer is known as the procuring cause.

Front 148

A solemn declaration by a person whose religious beliefs forbid the taking of an oath is:

Back 148

A. an affidavit.B. an acknowledgment.C. an affirmation.

D. none of the above

Hint 148

An affirmation is a declaration as to the truth of a statement, and is used in lieu of an oath by a person who objects for personal or religious reasons.

Front 149

What transfers less than an entire leasehold, with the original lessee being primarily liable for the rental agreement?

Back 149

A. Sublease

B. Sandwich leaseC. Residential leaseD. Assignment

Hint 149

A sublease transfers possession of a leased property to a new person call the sublessee. The original tenant, who is now the sublessor, is still primarily liable for paying the rent to the owner.

Front 150

In order to have a binding contract between the buyer and seller, it must:

Back 150

A. have been offered and accepted.B. be recorded.C. contain acknowledgment.D. all of the above

Hint 150

All contracts must have been offered and accepted in order to be binding.

Front 151

If the deposit receipt and the escrow instructions fail to mention the date the buyer is to take possession of the property, which of the following would prevail?

Back 151

One day before the close of escrow On the close of escrow Within 5 days after close of escrow None of the above

Hint 151

Correct answer is (b). When no other date is mentioned, possession of the property is given on the close of escrow.

Front 152

Which of the following would identify a rider?

Back 152

People Amendment Encroachment Donee

Hint 152

Correct answer is (b). A rider is an addition or an amendment to an existing document.

Front 153

When an existing contract is replaced by an new contract, with the intent to replace the existing contract, it is called:

Back 153

Assignment

rescission.

novation.

rehabilitation.

Hint 153

Novation is when the parties mutually agree to replace an existing contract with a new contract

Front 154

What happens to an original offer if a counteroffer is made

Back 154

The original offer will stand until there is mutual consent.

The person making the original offer is no longer bound by it.

If the original offer is in writing, it must remain in effect.

None of the choices is correct.

Hint 154

A conditional acceptance creates a counteroffer, thus terminating the original offer.

Front 155

An agreement to sell community property, signed by the husband alone, is

Back 155

void.

voidable.

valid.

legal.

Hint 155

Both husband and wife must sign any transfer or encumbrance of community property. CC Section 1102(a)

Front 156

A broker received an earnest money check made out to "Best Escrow" from the buyer that was to be held uncashed until the offer was accepted. The broker was unable to present the buyer's offer because the seller was out of town for the day. What should the broker do with the check?

Back 156

Deposit the check in the broker's account

Open escrow and deposit the check

Hold the check uncashed and wait for the seller to return to present the offer

Return the check to the buyer

Hint 156

Since the seller has not accepted or rejected the buyer's offer, the broker should hold the check uncashed until he can present the offer to the seller

Front 157

The Statute of Frauds requires that all of the following contracts must be a record in writing to be enforceable except:

Back 157

an agreement allowing a broker to sell real estate for compensation.

a lease agreement of one year to commence one month after date of execution.

an agreement to sell land.

an agreement between two brokers to split a commission

Hint 157

An oral agreement to split a commission is enforceable at law

Front 158

Even when fully executed and performed, this contract is unenforceable. It is a(n):

Back 158

net listing where the broker did not disclose the amount of compensation to the principal.

oral listing for the sale of a business opportunity.

oral listing for the lease of a home for one year.

signed open listing that did not contain definite termination date

Hint 158

The broker must disclose the amount of his or her compensation on a net listing prior to or at the time the principal binds the broker to the agreement.

Front 159

If a lease is to be recorded, who must acknowledge it?

Back 159

The lessor

The lessee

The owner

None of the above

Hint 159

If a lease is for more than 1 year, it must be in writing and signed by the lessor (landlord). The lessee does not have to sign the lease

Front 160

"Laches" deals with which of the following?

Back 160

Mechanic's lien

Construction

Unnecessary delay

Tax evasion

Hint 160

Definition answer for the word "laches."

Front 161

Ms. Olden received an option from Mr. Green on a piece of property valued at $1,000,000. As consideration for this option, Ms. Olden gave Mr. Green $10.00 in cash. The option is:

Back 161

invalid.

valid.

voidable.

unenforceable

Hint 161

There is no specific amount of consideration required for an option. Whatever is agreeable among the parties is acceptable. If Mr. Green accepts the $10.00, then the option is valid and binding

Front 162

An executory contract is a:

Back 162

contract that has been completely performed by both parties.

contract between executives.

contract where something remains to be done

by one or both parties.

binding contract.

Hint 162

Completely performed is executed. Something remaining to be performed is executory

Front 163

If there are any ambiguities or discrepancies in a contract, a licensee should:

Back 163

ignore these issues.

resolve these issues prior to executing the contract.

resolve these issues after executing the contract.

make an amendment to the contract without consulting the principals.

Hint 163

If there is any ambiguity in the contract, a licensee should make sure to solve discrepancies prior to executing the contract

Front 164

A remedy in court compelling a vendor to execute a deed in pursuance of a valid written contract is known as:

Back 164

foreclosure.

specific performance.

execution.

equity of redemption.

Hint 164

Correct answer is (b). Compelling him to specifically perform as agreed to in the contract.

Front 165

Mr. Daniels made a written offer to purchase a home through Broker Starr. However, Daniels died in a car accident before Broker Starr could notify him of an unqualified, signed acceptance by the seller. Which of the following statements is most correct?

Back 165

The death of Daniels constituted a revocation of the offer

The acceptance does not have to be communicated to the buyer

Notification of acceptance to the executor would bind the Daniels estate

The contract would not be binding because the deed had not been delivered into escrow

Hint 165

Death of the offeror constitutes a revocation of the offer. Legally, if the acceptance had been communicated to buyer before the accident, the contract would have been binding on his estate.

Front 166

What listing requires an owner to pay a commission, even though she sells the property herself?

Back 166

Exclusive right to sell listing

Exclusive agency listing

Open listing

Net listing

Hint 166

The broker gets the commission no matter who sells the property, if it sells during the term of the exclusive right to sell listing.

Front 167

Consideration can be:

Back 167

money.services.covenants.all of the above

Hint 167

Covenants are promises and we know that consideration can be money, services, or promises. It can also be love and affection.

Front 168

Assume an offer has been accepted and the acceptance has been communicated to the buyer. The buyer then changed his mind and decided not to purchase the property. Which of the following is true?

Back 168

The broker could sue the buyer as for the commission

The broker could not sue the buyer for a commission but could bring suit to require performance of the contract

The seller could sue for liquidated damages, if the parties agreed to liquidated damages in the contract

None of the above are correct statements

Hint 168

If the buyer backs out of this purchase contract the seller is entitled to sue for liquidated damages.

Front 169

Which of the following must have a termination date?

Back 169

Estate at sufferance

Life estate

Estate for years

Periodic tenancy

Hint 169

An estate for years can be for days, weeks or years and must mention an end date to be valid.

Front 170

A buyer must bring a lawsuit for breach of written contract against a seller within:

Back 170

6 months.

1 year.

3 years.

4 years.

Hint 170

Correct answer is (d). The Statute of Limitations requires lawsuits for breach of a written contract to be filed within four years of the breach.

Front 171

A valid written lease must include

Back 171

agreement to let, agreement to take delivery, and acceptance.

term, consideration, and description of the premises.

a landlord and tenant with the legal capacity to enter a binding contract.

all of the above

Hint 171

Correct answer is (d). Each of the choices describes a necessary element of a valid lease.

Front 172

A listing:

Back 172

tends to set the fair market value of the property.

should be taken at a price much higher than fair market value if that price is what the owner insists upon.

usually reflects the highest price an owner believes he can obtain for his property.

is not of much importance in the success of a real estate broker's business as he earns commissions only on what the office actually sells.

Hint 172

Correct answer is (c). Fair market value is the most probable price that a property would bring if offered for sale for a reasonable period of time in a competitive market where both buyer and seller are fully informed and neither one is acting under duress. The broker works with the owner to set a listing price that is realistic, but it usually has more to do with what the owner BELIEVES he can obtain than with the actual fair market value of the property

Front 173

The Statute of Frauds requires that all of the following contracts must be a record in writing to be enforceable except a(n):

Back 173

A. agreement allowing a broker to sell real estate for compensation.B. lease agreement of one year to commence one month after date of execution.C. agreement to sell land.D. agreement between two brokers to split a commission.

Hint 173

Correct answer is (d). An oral agreement to split a commission is enforceable at law

Front 174

The word tender, as used in contract law, means:

Back 174

A. money only.

B. promissory note only.

C. an offer of money or performance.

D. none of the above

Hint 174

Correct answer is (c). A tender of performance is an offer by one of the parties to carry out his or her part of the contract.

Front 175

Licensees should:

Back 175

A. not read contract forms, because they contain confidential information.

B. not read contract forms, because their brokers will review the forms on their behalf.

C. charge clients a fee for reviewing contract forms.

D. read contract forms thoroughly to ensure no minute detail is overlooked.

Hint 175

Correct answer is (d). Licensees should read a contract thoroughly and ensure that no minute detail is left out.

Front 176

Of the many requirements of an option agreement, it must specifically state:

Back 176

A. that the offer will remain open for a specific time period.

B. that the agreement is irrevocable.

C. that the optionor can keep the price paid for the option if the optionee fails to purchase.

D. the time for the optionee to purchase.

Hint 176

Correct answer is (a). The option must state that the offer remains open for a certain period of time. In effect, when the buyer pays consideration to the seller for the option, the buyer is purchasing an agreed amount of time in which to accept or reject the offer to purchase the property

Front 177

In considering a bilateral contract, the offered promise bargains for receipt of a returned promise. If the return promise is given, it is considered:

Back 177

A. an option.

B. a consideration.

C. a unilateral agreement.

D. none of the above

Hint 177

Correct answer is (b). Consideration for a contract need not be money. It may be a promise.

Front 178

Which one of the following clauses is always in a deposit receipt?

Back 178

A. Alienation clause

B. Subordination clause

C. Subrogation clause

D. Executory clause

Hint 178

Correct answer is (d). The other clauses may be in a deposit receipt, but there is always an executory clause--which is a promise to be performed.

Front 179

When a broker accepts a deposit from a buyer making an offer to purchase real property, the authority for his action is contained in which of the following agreements?

Back 179

A. Deposit receipt

B. Earnest money agreement

C. Listing agreement

D. Escrow agreement

Hint 179

Correct answer is (c). The listing agreement establishes the agency relationship between owner and broker and contains the terms and authority of the agent.

Front 180

An 18-year-old wife bought property with her separate funds and instructed escrow to vest title in her 17-year- old husband and herself as community property. The purchase contract was:

Back 180

A. valid.

B. void.

C. voidable.

D. unenforceable.

Hint 180

Correct answer is (a). If the purchaser has legal capacity the sale is valid. In whom the title is vested does not affect the legality of the sale. The title could vest in a 3-year-old child.

Front 181

Fraud would be found if:

Back 181

A. the buyer purchases property based on deceit by the seller, and the buyer loses a large sum of money.

B. an intentional misrepresentation by the seller induces the buyer to purchase.

C. material facts are incorrectly stated causing the buyer serious financial loss.

D. all of the above

Hint 181

Correct answer is (d). All of the above.

Front 182

A negligent or intentional wrongful act arising from breach of duty created by law and not contract is a:

Back 182

A. tort.

B. judgment.

C. lien.

D. execution.

Hint 182

Correct answer is (a). A violation of a legal right, or a civil wrong such as negligence, libel, nuisance, trespass, slander of title, or false imprisonment is a tort.

Front 183

Valid consideration in a contract can be:

Back 183

A. money.

B. services.

C. promises.

D. any of the above

Hint 183

Correct answer is (d). Although the basic concept of consideration is the mutual exchange of promises, consideration may be the payment of money, the performance of an act or a promise (covenant).

Front 184

An option to buy is enforceable if:

Back 184

A. the consideration is $10.00 but by agreement is not delivered.

B. consideration is less than $10.00 but actually has passed.

C. the optionee withdraws his offer.

D. there is mutuality of interest.

Hint 184

Correct answer is (b). A valid option requires actual consideration to pass between the parties. This may be merely a nickel or $1.00 as long as it passes to the optionor

Front 185

A real estate broker included the following clause in her standard listing contract: "In consideration of execution of the foregoing, the undersigned broker agrees to use diligence in procuring purchaser." This is:

Back 185

A. superfluous and unnecessary in current contracts.

B. important to the creation of a bilateral contract.

C. important to the creation of a unilateral contract.

D. important according to the Statute of Limitations

Hint 185

Correct answer is (b). A bilateral contract requires a promise given in exchange for another promise. This clause is the broker's exchanged promise to the seller.

Front 186

After obtaining a listing from a corporation, all the officers were killed in an accident. The listing is:

Back 186

A. valid.

B. void.

C. voidable.

D. invalid.

Hint 186

Correct answer is (a). Death of the officers does not affect the listing contract made with the corporation

Front 187

Four months ago a seller accepted an offer from a buyer to purchase her home. The contract was in writing. Later, the seller refused to complete the transaction. Under the Statute of Limitations, so his right to sue does not "outlaw," the buyer must file an action within:

Back 187

A. 90 days.

B. 1 year.

C. 2 years.

D. 4 years

Hint 187

Correct answer is (d). Statute of Limitations on any written contract is 4 years

Front 188

Ms. Adams made a deposit on the purchase of a property. During the escrow, the seller learned of a highway rerouting which would greatly enhance the value of his property. He instructed the broker to return the deposit to the buyer. Ms. Adams refused to accept the deposit. Her most unlikely course of action would now be:

Back 188

A. to institute a civil action for specific performance against the seller.

B. to institute a civil action for dollar damages.

C. to accept a settlement.

D. a unilateral rescission.

Hint 188

Correct answer is (d). Choices (a), (b), or (c) could give Ms. Adams some degree of remedy. To rescind unilaterally (grudgingly give in) would gain her nothing

Front 189

Which of the following is most correctly the legal meaning of the word "waiver?"

Back 189

A. Unilateral act and its legal consequences

B. Detrimental reliance

C. The justifiable reliance by one party upon the intentional act or omission of another

D. Estoppel

Hint 189

Correct answer is (a). The other choices all refer to estoppel, which is the opposite of waiver

Front 190

A property owner rented out a home to a tenant for a short period, after which the tenant asked if the owner would be interested in selling the property. He consented and they verbally agreed to a purchase price. Before the offer could be drawn up, the owner visited the property while the tenant was away and realized that the tenant had been making significant improvements to the property without his knowledge. He called the tenant the next day and said he could only agree with the sale if the offer included an additional $50,000. Can the tenant sue for "specific performance" on a verbal contract?

Back 190

A. Yes, due to the parol evidence rule

B. No, verbal agreements are not admissible in the courts

C. Yes, this is a quasi contract and is binding

D. No, the Statute of Frauds requires transfers of property to be in writing

Hint 190

Correct answer is (d). Statute of Frauds requires transfers of property to be in writing, so specific performance cannot be a remedy for this contract.

Front 191

The transfer of the entire leasehold interest in a lease from the original lessee to another party is a(n):

Back 191

A. club sandwich lease.

B. sandwich lease.

C. sublease.

D. assignment.

Hint 191

Correct answer is (d). An assignment is the transfer of the entire leasehold estate to a new person, called an assignee.

Front 192

Buyer Baker presented an offer to Seller Sam for the purchase of a 10-year-old home in a quiet neighborhood. Seller Sam made a counteroffer to buyer Baker. Under these circumstances, buyer Baker:

Back 192

A .is required to accept seller Sam's offer.

B. does not have to accept the counteroffer, but is still obligated under his original offer.

C. has no obligation under his original offer.

D. is obligated to make a new offer to seller Sam, if the counteroffer is unacceptable.

Hint 192

Correct answer is (c). If a seller rejects the offer and submits a counteroffer, the original offer automatically terminates

Front 193

All of the following are necessary for a valid contract except:

Back 193

A. in writing.

B. for a legal purpose.

C. capacity to contract.

D. consideration.

Hint 193

The correct answer is (a). Some oral contracts are valid also. The others are all required

Front 194

The Statute of Frauds requires which of the following contracts to be in writing?

Back 194

A. An employment contract to represent the seller of a business opportunity

B. A contract selling a business opportunity

C. A contract which is not to be performed within one year of its making

D. A nine month lease

Hint 194

Correct answer is (c). A contract which is not to be performed within one year o

Front 195

The Statute of Frauds requires which of the following contracts to be in writing?

Back 195

A. An employment contract to represent the seller of a business opportunity

B. A contract selling a business opportunity

C. A contract which is not to be performed within one year of its making

D. A nine month lease

Hint 195

Correct answer is (c). A contract which is not to be performed within one year of its making must be in writing in order to be enforceable under the Statute of Frauds.

Front 196

Some printed contracts contain handwritten portions. Which of the following is most correct?

Back 196

A. The printed portion takes precedence over the handwritten portion

B. The handwritten portion takes precedence over the printed portion

C. Both the handwritten and printed portions are of equal importance

D. Oral agreements subsequent to signing the contract will prevail

Hint 196

Correct answer is (b). Generally, when using preprinted forms: . . . handwritten clauses and insertions take precedence over the typed and preprinted material

Front 197

A contract need not be in writing to be enforceable under the law. A verbal contract is called:

Back 197

A. void.

B. a parol contract.

C. a prescriptive contract.

D. none of the above.

Hint 197

Correct answer is (b). The word "parol" means verbal; therefore, a verbal contract is called a parol contract

Front 198

You agree to lease a property for 10 years for $12,000 total rent, at $100 per month. You pay the first and last months' rent of $200. Which of the following terms would be inappropriate in the lease?

Back 198

A. Condemnation conditions

B. Compliance with the federal laws

C. Third party liabilities

D. Escalator clause geared to the cost of living

Hint 198

Correct answer is (d). This would be a straight lease, which has no need for an escalator clause. The escalator clause would be found in a graduated lease.

Front 199

Which of the following would not terminate an offer to purchase real property?

Back 199

A. Notice of revocation by the buyer prior to notice of acceptance

B. Acceptance by seller after acceptance date

C. Conditional acceptance by the seller

D. Death or insanity of either party after acceptance

Hint 199

Correct answer is (d). An offer to purchase is terminated by death. However, after a valid acceptance an offer ripens into a contract to purchase. Real estate purchase contracts are not terminated by death or insanity.

Front 200

In which of the following would "privity" most likely exist?

Back 200

A. Legal disputes

B. Agency agreements

C. Contractual relationship

D. None of the above

Hint 200

Correct answer is (c). The definition of the word "privity" is a contractual relationship between two parties that may have the same rights to a piece of property. An example would be the relationship between lessor-lessee, in regards to possession rights of the property