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40 Cards in this Set
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The License Buyout Addendum to the Contract to Buy and Sell is required for which of the following situations? a listing associate offers to purchase a property immediately after the listing expires an associate in the listing brokerage company wishes to purchase a property listed by another associate an associate is offering a guaranteed buyout arrangement as an inducement to list with his or her company a broker wishes to acquire one of his own listings as his personal residence |
A: an associate is offering a guaranteed buyout arrangement as an inducement to list with his or her company The Commision Position on the use of the Licensee Buyout Addendum in Chap 3 of the real estate manual it says:"It is the Commission’s position that Rule F-7 requires use of the Buyout Addendum under the following circumstances: 1. When a licensee enters into a contract to purchase a property concurrent with the listing of such property. 2. When a licensee enters into a contract to purchase a property as an inducement or to facilitate the property owner’s purchase of another property, the purchase or sale of which will generate a commission or fee to the licensee. 3. When a licensee enters into a contract to purchase a property from an owner but continues to market that property on behalf of the owner under an existing listing contract. "Having said this, the commission position goes on to say:" If the listing licensee or broker desires to acquire a listed property solely for personal use or future resale and not as an inducement to the owner, the licensee or broker is advised to (1) clearly sever their agency or listing relationship in writing; (2) renounce the right to any commission, fee or compensation in conjunction withacquisition of the listed property; and, (3) advise the owner to seek other assistance, representation or legal advice. "In English, this second part says that although properties bought for true investment purposes do not require the use of the buyout addendum, we'd prefer if you adopted some of the provisions of it and put some distance between you and the seller, such as not making a commission and sever the listing contract. |
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When a seller decides to counter an offer presented to him, which is true? Seller should sign the original offer as well as the counter offer Seller should not sign either the original offer or the counter offer Seller should sign only the counter offer Seller should sign the original offer only |
A: Seller should sign only the counter offer To counter: the seller initials the original offer by the box he/she checked indicating it is countered. The seller does not sign the original offer (that would constitute acceptance). The seller's agent then indicates the counter offer on a Counter Proposal form. The sellers signs the Counter Proposal form. The original offer and Counter Proposal are returned to the buyer or buyer's agent. |
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Broker Betty at an open house meets a young couple looking to purchase their first home. The couple asked if the Broker thought they had enough income to qualify for a loan to purchase the property. Realizing this information is of a confidential nature Broker Betty makes the agency disclosure that her office policy and State statute require. The buyers are very skeptical about making a commitment and have been coached by family members not to sign anything. They refuse to sign the signature block on the Brokerage Disclosure to Buyer form. Betty should: refuse to answer unless they sign answer the question, then ask them to sign once again call their attorney and make the disclosure to him make a note of the date and time the disclosure was made and reference the fact that the buyers declined to sign the form - then have the discussion. |
A: make a note of the date and time the disclosure was made and reference the fact that the buyers declined to sign the form - then have the discussion. Brokers are required to make agency disclosure. Buyers are not required to sign the disclosure. It is acceptable to note the date and time the disclosure was made, and indicate that the buyers declined to sign the form. |
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Which of the following requires the use of the Licensee Buyout Addendum to the contract to Buy & Sell? A listing associates offer to purchase a listing immediately after it expires A broker is not offering a guarantee to sell the property, as an inducement to list with his company. An associate in the brokerage wishes to purchase another associates listing A licensee offers to purchase a property as an inducement to the Seller to purchase another |
A: A licensee offers to purchase a property as an inducement to the Seller to purchase another Rule F-11 specifies certain conditions for the use of the Licensee Buyout addendum. Rule F-11 only applies in one or more of the following instances:When a licensee enters into a contract to purchase a property: (1) concurrent with the listing of such property; (2) as an inducement or to facilitate the property owner's purchase of another property; or (3) continues to market that property on behalf of the owner under an existing listing contract . . . A is correct. A is the only verbiage listed NOT in the Licensee Buyout Addendum. |
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A counterproposal: is a rejection of a proposed contract to buy/sell amends the terms and conditions of a proposed contract to buy/sell use is mandatory to modify the terms and conditions of a contract to buy/sell is used to counter the purchase price only of a proposed contract to buy/sell |
A: amends the terms and conditions of a proposed contract to buy/sell The key here is "supersede and replace." This is not merely a rejection of an offer, it is amending the original offer, not rejecting it entirely. |
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The seller's property disclosure indicates the condition of all but which of the following? The appliances The title The heating and cooling system The electrical system |
A: The title The title to the property is addressed the the Exclusive Right to Buy Sell (Purchase Contract) |
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To change the price of a listed property, the broker must: Get the Seller's approval and confirm it on Brokerage Firm letterhead Change the listing contract using an Agreement to Amend/Extend form Change the listing contract with an Agreement to Amend/Extend With Broker form Inform the multiple listing service immediately |
A: Change the listing contract with an Agreement to Amend/Extend With Broker form The listing price is approved by the Seller in a listing contract. This contract must be amended when the listing price changes. The Agreement to Amend/Extend contract is used to change the conditions of a contract the broker IS NOT a party to such as the Contract to Buy & Sell. The Agreement to Amend/Extend With Broker is to be used for changes to contracts the broker IS A PARTY to such as the the Listing Contract or Buyer Agency Agreement. |
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Buyer Brown makes an offer on Seller Smith's house. Seller Smith counters buyer Brown's offer at a higher price.Buyer Brown rejects Seller Smith's counter offer. Seller Smith then agrees to accept Buyer Brown's original offer. Buyer Brown has no obligation whatsoever to Seller Smith Buyer Brown must proceed with the purchase, due to Seller Smith's acceptance Seller Smith can sue Buyer Brown if Brown does not proceed with the contract.Buyer Brown has three days to accept Seller Smith’s acceptance of the offer |
A: Buyer Brown has no obligation whatsoever to Seller Smith A counter offer is a formal rejection of the original offer, thus relieving the purchaser of all obligations to perform under the original offer. |
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When a seller makes a counter offer to a purchaser, the earnest money check is: held by the seller until the purchaser signs the counter offer held by the listing broker until the purchaser signs the counter offer deposited in the listing broker's trust account within one banking day returned to the purchaser with the counter offer form |
A: returned to the purchaser with the counter offer form Legally, the earnest money should be returned to the buyer as the counteroffer form has the effect of rejecting the original offer of which the earnest money was a part. Do not confuse "legal" with "practical". Legally - as stated, the earnest money should accompany the written counteroffer. Practically - many negotiations are performed electronically or by phone. In these cases, the earnest money check does not go back and forth. However, the State exam tests on the "legal" and not on the "practical." |
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If a Lead-Based Paint Disclosure form is not executed at the time of the sale of a dwelling built prior to 1978, the purchaser: may sue the seller for damages is not obligated under the terms of the contract is entitled to an inspection paid for by the seller may suffer damages as a result of caveat emptor |
A: is not obligated under the terms of the contract Penalties for failure to comply with Federal Lead-Based Paint Disclosure Laws include treble damages, attorney fees, costs and a penalty up to $10,000 for each violation. A buyer is not obligated under the terms of a contract until the lead-based disclosure has been executed. |
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Earnest money of a forfeited or defaulted contract: belongs to the seller belongs to the buyer should be released to the first person who requests it should be released only after buyer’s and seller's agree, as to its disbursement |
A: should be released only after buyer’s and seller's agree, as to its disbursement The buyer and seller must come to an agreement before the earnest money can be released and dispersed. |
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According to the Licensee Buyout Addendum to the Contract to Buy and Sell, when does responsibility extend beyond the broker to the brokerage firm? when the buyout date arrives when the buyout is for the personal use of the principal broker only if the listing associate is unable to perform the buyout if the managing or employing broker signs at the bottom of the addendum |
A: if the managing or employing broker signs at the bottom of the addendum If the managing or employing broker signs the Licensee Buyout Addendum, then the brokerage company is responsible. According to the form, this is the only specification for responsibility. |
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In which of the following instances would you use the Agreement to Amend/Extend Contract? To make changes in the purchase price of an offer that has not been accepted To change the loan application deadline in an accepted purchase contract To change the time allowed to accept an offer to purchase All of the above |
A: All of the above The Agreement to Amend/Extend Contract is used to changes the conditions in an accepted contract to purchase. It cannot be used to change the conditions of an offer as an offer has not been accepted. If you want to change the terms or conditions of an offer prior to acceptance, you need to rewrite the contract or use a counterproposal. |
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The approved Agreement to Amend/Extend contract form is used: To notify the Seller of any change in deadlines Add information to an offer that does not belong in "additional provisions" To notify the Buyer of a deadline they missed To get mutual agreement of the parties to any change in a deadline |
A: To get mutual agreement of the parties to any change in a deadline It is used to modify the Contract to Buy & sell |
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Which form should be used when the licensee wishes to extend one of his listings? Extension letter prepared by the attorney of the brokerage firm Agreement to Amend/Extend Contract Agreement to Amend/Extend Contract with Broker Alter the date on the original listing and have the seller initial the change. |
A: Agreement to Amend/Extend Contract with Broker This is the specific form to be used for this purpose and to make any other changes regarding the listing of the property. |
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Computer generated real estate contracts must: Be completed using a pen with black ink Exactly produce the standard language Be prepared only by the employing broker |
A: Exactly produce the standard language Through regulation F and Conway Bogues court decision, we use standardized forms which can be computer generated as long as they follow the standard language. |
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The Real Estate Commission requires the use of a Lead-Based Paint Disclosure form on all dwellings permitted prior to: 1976 1977 1978 1979 |
A: 1978 Homes built pre 1978 must use the Lead-Based Paint disclosure form. |
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When an initial contract for sale of property is different than the contract forms approved by the Colorado Real Estate Commission, the contract should be prepared by: broker representing the seller a real estate attorney broker representing the buyer an attorney representing one of the parties to the contract |
A: an attorney representing one of the parties to the contract An attorney of the buyer, the seller, or both, must prepare contract. |
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If an owner refuses to pay the broker an earned commission, the broker may properly seek relief by: filing a mechanics lien bringing a formal complaint with the division of real estate bringing court action bringing a quiet title action against the seller |
A: bringing court action The broker must sue the seller for his/her commission. The broker cannot file a mechanic's lien, the CREC doesn't adjudicate commission complaints period, and it's against the law to cloud the sellers title. |
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The Colorado Withholding Tax applies only to non-Colorado residents selling property in Colorado. The withholding is: 2% of the purchase price 2% of the loan amount 2% of the purchase price but may not exceed $5000 2% of the purchase price or the net proceeds of the sale whichever is less |
A: 2% of the purchase price or the net proceeds of the sale whichever is less The withholding tax which is for income tax purposes is 2% of the selling price or the seller's net proceeds whichever is less. |
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A Colorado licensee filling in the blanks in a standard commission approved form: Cannot do it because this would be practicing law without having passed the bar exam Is allowed if the agent only uses pre-approved standard clauses This is the practice of law, but permitted by Colorado law This is not the practice of law |
A: This is the practice of law, but permitted by Colorado law This was one of the outcomes of Conway-Bogue court case in 1957 that allowed the broker to fill in the blanks on standardized forms approved by the Colorado Real Estate Commission |
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If the purchase is not completed due to a default by the seller and the earnest money deposit is returned to the buyer, the seller's broker may seek compensation, if any, from: seller buyer seller and buyer no one--he is not entitled to compensation |
A: seller If any commission were to be paid, the seller would be responsible for payment. |
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When a seller decides to counter an offer presented to him, which is true? Seller should sign the original offer as well as the counter offer Seller should not sign either the original offer or the counter offer Seller should sign only the counter offer Seller should sign the original offer only |
A: Seller should sign only the counter offer
To counter: the seller initials the original offer by the box he/she checked indicating it is countered. The seller does not sign the original offer (that would constitute acceptance). The seller's agent then indicates the counter offer on a Counter Proposal form. The sellers signs the Counter Proposal form. The original offer and Counter Proposal are returned to the buyer or buyer's agent. |
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Licensee buyout addendums are to be used when a real estate broker is purchasing: his or her own listing a listing of any broker in the office a property listed by any broker all of the above |
A: his or her own listing The Licensee buyout addendum need only be used if the agent is purchasing their own listing. |
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Closing instructions are to be signed by all parties: at the time the purchase and sale contract is generated at the time the transaction is closed when the title commitment is reviewed when the closing time and place has been established |
A: at the time the purchase and sale contract is generated Closing instructions are to be generated by the listing broker when the property is listed, so that they are ready for the buyers signature as soon as a purchase contract is offered. Although not an absolute rule, the Real Estate Commission prefers the closing instructions are signed by both parties at the same time a purchase contract is signed by both parties. In this way, the closing instructions are signed prior to earnest money being turned over to the closing company. Note: closing instructions appoint the closing agent (title company) and give them authority to do their job. |
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The Definitions of Working Relationships form has the effect of: establishing an agency relationship disclosing the different types of relationships that are available complete disclosure of agency as required by Colorado statutedis closing only the types of relationships that the broker prefers to offer |
A: disclosing the different types of relationships that are available The definitions form does not establish a specific relationship with a buyer or seller- only discloses the type of relationships that are available. |
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In a transaction that is subject to a licensee buyout agreement, if the buyer defaults, the seller may: sue the buyer only if the specific performance box has been checked sue the buyer for specific performance only keep the buyer's earnest money as liquidated damages keep the buyer's earnest money as liquidated damages if the liquidated damages box has been checked |
A: sue the buyer for specific performance “Liquidated damages” (buyer lose earnest money) is deleted in a licensee buyout addendum to a contract to buy and sell real estate. The remedy should the buyer/broker get cold feet is "Specific Performance" meaning the seller can sue for damages and force the agent to buy. |
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Buyer Wilson and Seller Smith have a voided sales contract. They have both agreed to disperse the funds, against the suggestions from Broker Bob. Broker Bob should: call the attorney disperse the escrowed money, as directed by seller, and as agreed between buyer and seller sue for a commission none of the above |
A: disperse the escrowed money, as directed by seller, and as agreed between buyer and seller The broker must obey the parties so long as they have come to a lawful agreement between them. |
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The Agreeement to Amend\Extend is used to change the terms of: an offer being negotiated an exclusive right-to-sell listing contract an accepted purchase and sale contract an exclusive right-to-buy contract |
A: The Agreement to Amend/Extend Contract is used only to amend the terms and conditions of a sales contract while it is in process. You cannot amend a contract once it is complete (AKA "executed"), or terminated, or expired. More info: First make sure you understand the difference between the Agreement to Amend and Extend and the Agreement to Amend and Extend With Broker. Both agreements are used to alter the terms and conditions of a contract. The Agreement to Amend and Extend is used to alter the terms of the sales agreement between the buyer and seller. The Agreement to Amend and Extend With Broker is used to amend the terms of an agreement with the client and their broker such as a listing agreement or buyer agency agreement. As to why would you extend a contract before it is executed, understand the difference between the terms “executory” and “executed”. When a contract is signed by all parties it is in “executory” status. This means it is in process but not complete. When it is “executed” this means it is complete i.e. fully performed. Real Estate Commission rules say that you cannot amend the terms of an agreement after it has been expired, executed or otherwise terminated. When a closing occurs, the deal is done, the associated listing and sales contracts are fully executed, can't-be-changed, done, dead, history, ex-contracts, ended, finished, achieved, accomplished, done-with, taken-to-the-bank and all-over-including-the-shouting. |
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If the purchase is not completed due to a default by the seller and the earnest money deposit is returned to the buyer, the seller's broker may seek compensation, if any, from: seller buyer seller and buyer no one--he is not entitled to compensation |
A: seller If any commission were to be paid, the seller would be responsible for payment. |
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The Licensee Buy-Out Addendum to a Contract To Buy and Sell Real Estate becomes a binding contract with the listing company when: the listing company supervising broker signs the seller & the licensee sign the seller signs the buyer, and the broker sign |
A: the listing company supervising broker signs It is PERSONALLY binding on the seller and the agent (buyer) when they sign the contract. Although there is a place at the bottom for the supervising broker's signature, that signature is not mandatory. If the supervising broker does not sign, this agreement is NOT BINDING on the listing company. In the addendum it says "NOTICE TO SELLER: THIS CONTRACT IS BINDING ONLY UPON THE BUYER (LICENSEE) WHO PERSONALLY SIGNS ABOVE, UNLESS THE SUPERVISING BROKER OF THE BROKERAGE FIRM WORKING WITH SELLER SIGNS HERE:" |
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The Colorado approved Agreement to Amend/Extend form should be signed Before the listing expires After the purchase contract has expired. After the purchase contract has been accepted. After the offer has been made |
A: After the purchase contract has been accepted. The Amend and Extend is used with contracts between the buyer and seller - the most important one being the Contract to Buy and Sell Real Estate (Purchase Contract). The Amend and Extend With Broker contract is used for contracts between the client and their broker - principally the listing contract or the buyer agency agreement. They are often confused. For either to be used you must have an executory contract i.e. a contract that is signed but not completed - it is in the process of being executed. Once a contract is complete - neither of these Amend/Extend agreements can be used. |
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If a buyer and seller cannot agree on what to do with the earnest money deposit, the broker may: Hold the earnest money until receiving written instructions from buyer and seller He may interplead in court He may interplead in court and recover attorney and court costs All of the above |
A: All of the above Instructions from seller and buyer must match before broker will release money. In case of a suit, the broker may “interplead”, or turn over, the money to the court and release any future rights to all or a portion of the earnest money. The broker may also recover costs associated with involvement in the suit. |
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Some brokerage companies have standardized addendums they require agents to attach to all purchase or sale contracts. These addendums add to or redefine the terms and conditions of the contract to which they are attached. They: may be prepared by any licensee of the brokerage firm are not legal may be prepared by the legal counsel of the employing broker |
A: may be prepared by the legal counsel of the employing broker Real Estate Commission Rule F-3. Addenda (a) If a broker originates or initiates the use of a preprinted or prepared addendum that modifies or adds to the terms of a Commission-approved contract form which does not result from the negotiations of the parties (editor note: generally the Contract to Buy and Sell Real Estate), such addendum must be prepared by: (1) an attorney representing the broker or brokerage firm; or (2) a principal party to the transaction; or (3) an attorney representing a principal party. (b) An addendum permitted by this Rule F- 3 (a), shall not be included within the body of, or in the “Additional Provisions” section of, a Commission-approved form. (c) A broker who is not a principal party to the contract may not insert personal provisions, personal disclaimers or exculpatory language in favor of the broker in an addendum. (d) If an addendum is prepared by a broker’s attorney, the following disclosure must appear on the first page of the addendum in the same sized type as the size of type used in the addendum: “This addendum has not been approved by the Colorado Real Estate Commission. It was prepared by (insert licensed name of broker or brokerage firm’s)legal counsel.” (e) If an addendum to a listing, tenant or right to buy contract (editor note: these are contracts the brokerage firm IS a party to), is prepared by a broker or brokerage firm, the following disclosure must appear on the first page of the addendum in the same sized type as the size of type used in the addendum:“This addendum has not been approved by the Colorado Real Estate Commission. It was prepared by (insert licensed name of broker or brokerage firm). |
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When a Seller decides to submit a Counterproposal in response to a Contract to Buy and Sell, the Seller: Checks the Countered box, signs both the original Contract and the Counterproposal Checks the Rejected box, initials the original Contract and signs the Counterproposal Checks the Countered box, initials the original Contract and signs the Counterproposal Carefully signs and submits only the Counterproposal |
A: Checks the Countered box, initials the original Contract and signs the Counterproposal To counter: the Seller would check the Countered box, initialing directly underneath in the space provided indicating the Seller is the one countering, The next step is to complete and sign the Counterproposal. The last step is to return the original offer and the counterproposal to the Buyer. The Seller does not sign the original offer as that would indicate acceptance. |
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"Liquidated damages" refers to which of the following? The seller's sole remedy in case of default by purchaser is to keep earnest funds received from purchaser The seller's sole remedy in case of default by purchaser is to force him to continue with the sale The seller’s remedy if the buyer defaults, and the seller can also sue the buyer for damages The seller’s remedy if the buyer defaults and the seller can sue for specific performance |
A: The seller's sole remedy in case of default by purchaser is to keep earnest funds received from purchaser “Liquidated Damages” means that the seller’s sole remedy is to only keep all things of value received, i.e. the earnest money usually. |
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The Colorado Real Estate Commission has approved all but which of the following forms? Closing Instruction and Earnest Money receipt Earnest Money Promissory Note Agency/Subagency Disclosure Intent to Pay off Loan |
A: Intent to Pay off Loan Intent to pay off loan is not a Colorado Real Estate Commission approved form. |
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Attachments to the approved forms: can be ignored as they are not part of the contract should be signed and dated by all parties can never be incorporated into the contract by reference may not exceed three pages |
A: should be signed and dated by all parties Any addendum should be signed and dated by the parties to the contract. They may be attached or not to the contract by filling in the appropriate blanks in para .#26 of the Buy/Sell contract. |
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Which statement is true? There is no obligation for a licensee to prepare any legal documents A licensee is not responsible for any documents prepared by their broker The broker is not responsible to provide accurate closing statements A licensee is responsible for fees charged for the preparation of legal documents when an attorney representing the purchaser or seller prepares them |
A: There is no obligation for a licensee to prepare any legal documents Commission approved forms must be used by the broker. |
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Associate Broker Jane Holmes is a party to which executory contract? Contract to Buy and Sell Real Estate Counterproposal Agreement to Amend/Extend None of the above |
A: None of the above The broker would be a party to a right to buy or listing contract, but not to a purchase and sale contract. All of the contracts listed in the answers are purchase contracts or related to a purchase contract, and the broker is never a party to a purchase contract, only the buyer and seller are. The broker IS a party to any service contract, which is the listing agreement - either to buy or sell. |
