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chapter 8 real estate sales contract
Terms in this set (43)
1) a real estate sales contract is entered into between a buyer and seller in order to give the buyer time to do all the following except?
A. ascertain the seller holds marketable title to the property.
B. arrange for financing.
C. reach a firm decision to buy the property.
D. have the title examined
the buyer should have reached a firm decision to buy the property before signing a contract, but the contract gives him time to arrange financing, have the title examiner, and determine the marketability of the title.
2) a properly prepared sales contract?
A. commits each party to his terms.
B. is not enforceable in a court of law.
C. insures the quality of title.
D. guarantees loan approval.
a valid sales contract commits each of its parties to its terms and it's enforceable in a court of law.
3) a form of real estate sales contract, prepared at the outset by an agent using prepared forms, may be identified as any of the following except?
A. A purchase contract.
B. an option contract.
C. an offer and acceptance.
D. A purchase offer.
a formal real estate sales contract may be identified as a purchase contract, an offer to purchase, or a purchase offer, but not as an option contract
4) normally found provisions of a real estate sales contract includes all of the following except?
A. a buyer's offer to purchase.
B. A provision for an earnest money deposit
C. a seller's acceptance.
D. The buyers plan for renovation.
provision for the purchasers offer, an earnest money deposit, and the seller's acceptance are typically found in a real estate sales contract.
5) M purchased real estate from s under an agreement which called for him to pay for property in installments, and to received a deed upon payment of the entire purchase price. This agreement could probably be identified as each of the following except?
A. A land contract.
B. A contract for deed.
C. An option to buy.
D. An installment contract.
this agreement may be referred to as a land contract, contract for deed, or installment contract.
6) in normal real estate brokerage practice, the amount of earnest money deposit pay by the purchaser is?
A. determined by negotiation.
B. Set by state law.
C. Equal to the agent's Commission.
D. The minimum requirement to make the contract valid
the amount of earnest money deposit is determined by negotiation
7) once the buyer and seller have executed a sales contract, paperwork and details of the title transfer may be handled by any of the following except? A. an escrow agent.
B. The real estate broker.
C. An attorney.
D. The recorder of Deeds.
an escrow agent, the real estate broker, or an attorney may handle the paperwork and details of title transfer. Recorder of deeds would not be involved at this time
8) property taxes, Insurance, loan interest, Etc, may be divided between the buyer and seller by the process of? A. allocation.
the process of appropriating taxes, interest, Insurance, Etc, is called proration.
9) an owner owns a house which has been rented to a tenant, and is currently in the middle of a one year lease. The owner wants to sell the house to J. As a part of his offer to purchase, J can ask the owner to?
A. terminate the tenant's lease.
B. Let the tenant continue to lease.
C. Give a 30 day notice to vacate to the tenant.
D. Raise the rent if the tenant chooses to remain in the property.
the buyer and the seller must allow the tenant to continue to lease since he has a one year lease with time remaining. The seller cannot terminate the lease on one month notice, give 30 day notice, or change the terms
10) the inclusion of a termite and dry Rock clause in a contract for the sale of real estate is?
A. Optional and negotiable.
B. Often required by state law.
C. essential to an enforceable contract.
D. Required by all mortgage lenders
the inclusion of a termite and dry rot causes in a sale contract is optional and negotiable
11) typically, physical possession of the property is given to the buyer?
A. Upon a signing of the sales contract.
B. Before close of escrow (settlement/closing)
C. The day of close of escrow (settlement/closing).
D. 30 days following close of escrow (settlement/closing)
the buyer is typically given physical possession of the property on the day of close of escrow or settlement.
12) a contract of sale called for the expensive of settlement to be paid entirely by the seller. Was this an enforceable provision of the contract? A. Yes, because the seller is required to pay all expenses for settlement.
B. Yes, because the allocations of expenses is negotiable.
C. No, because these expenses should be paid by the contractor.
D. No, because these expenses should be prorated between buyer and seller
the allocations of settlement expenses is negotiable between buyer and seller.
13) a buyer signed a contract to purchase real property from the owner, subject to the buyer's ability to secure a loan for a part of the purchase price within 30 days. after diligent effort, the buyer was unable to secure the loan within the specified time. at the end of the 30 days, this contract was?
A. void on its face.
B. voidable by the buyer.
C. voidable by the owner.
the contract was voidable by the purchaser because it was subject to his ability to secure necessary financing. The seller does not have this option.
14) if they sell it fails to carry out his obligations under a typical residential contract of sale, the buyer may take any of the following actions except?
A. Sue for specific performance.
B. rescind the contract.
C. sue for monetary damages.
D. demand liquidated damages.
the buyer May sue for specific performance, rescind the contract, or sue for monetary damages, but cannot demand liquidated damages unless the contract provides for them
15) a buyer made an offer to purchase property contingency on the seller's acceptance within 7 days. Prior to the seller's acceptance, the buyer found another property which he like better, and decided to withdraw his offer. He could?
A. Not withdraw his offer until the seller had decided to accept or reject the offer.
B. Not withdraw his offer until the expiration of the seven days prior in his offer.
C. withdraw at any time prior to acceptance of the offer by the seller.
D. Withdraw at anytime within 7 days.
an offer may be withdrawn at any time before it is accepted
16) the phrase time is of the essence and a sales contract means that?
A. time limit specified in the contract must be Faithfully observe or the contract is voidable.
B. parties are prohibited from giving each other an extension.
C. contract should be executed within a reasonable time.
D. contract is not legally binding, being considered too vague.
if the term time is of the essence is included in a contract, the time limit set by the contract must be Faithfully observe or the contract is voidable.
17) when an offer to buy is May through an agent, such as a real estate broker?
A. There is never any need to consult an attorney for counsel.
B. An attorney should be consulted if the buyer has any doubts or questions regarding the legal effects or the offer.
C. the State Bar Association requires that an attorney be consulted.
D. State law requires that an attorney be consulted.
an attorney should be consulted if the buyer has any doubts or questions as to the legal effects of the offer.
18) if a buyer makes an offer, and the seller accepts part but not all of this conditions?
A. this constitutes partial acceptance and is binding upon the buyer as if it were fully accepted by the seller.
B. Those conditions accepted by the seller are binding on the buyer.
C. This does not constitute a rejection of the entire offer.
D. The entire offer is considered rejected.
the entire offer is considered to be rejected if the seller accepts part but not all of this conditions
19) the purchase agreement use for most real estate sales is prepared?
A. In its entirety by the agent.
B. In advance by the seller and attached to the listing.
C. by attorney especially for the transaction.
D. By the agent by filling in blank spaces on a form prepared by an attorney.
most real estate sales contracts are prepared by having the agent fill in blank spaces on a form which was prepared by an attorney
20) Mr. and Mrs. S entered into a real estate contract with no contingencies with Mr. And Mrs. G. If mr. G. Dies before settlement takes place, all of the following options to pursue except?
A. Mr. and Mrs. S are obligated to carry out of the contract.
B. Mrs. G is obligated to carry out the contract.
C. Mr. G's estate is obligated to carry out the contract.
D. the contract is declared void at the moment of Mr. G's death
should a party to a sales contract die after its execution bit before performance is completed, the contract remains binding on the other party and upon the estate of The decedent
21) a short form contract used by real estate agents in some states to hold a deal together until a more formal contract can be prepared by an attorney is known as a?
A. A rider.
B. a binder.
C. An Addendum.
D. An attachment.
in some states real estate agents use a binder to hold a deal together until a more formal contract can be prepared by an attorney.
22) a letter of intent is?
A. One which creates no liability.
B. an agreement to enter into a contract.
C. Binding on the seller, at the option of the buyer.
D. Binding on both the buyer and the seller.
a letter of intent is not an agreement to enter into a contract and is not binding on either party.
23) who should be represented by an attorney at the meeting for purpose of preparing a formal contract as provided for in a binder?
A. Seller and buyer.
B. Buyer and his agent.
C. Agent and his broker.
D. Seller and his agent.
both the seller and the buyer should be represented by an attorney, but there is generally no need for the agent to have legal representation.
24) when property is sold by means of an installment contract, the?
A. Seller delivers a deed at closing.
B. Buyer is given the right to occupy the property until the contract terms have been fulfilled.
C. buyer may not occupy the property until additional terms are met.
D. Buyer may decide not to buy the property and receive any Ernest monies already
an installment calls for a deed to be delivered upon fulfillment of the contract terms, but gives the purchaser the right of occupancy during the contract period.
25) traditionally, the language of instrument contracts use for the purchase of real estate has favored the?
traditionally, the language of installment contracts for the purchase of real estate has tend to favor the vendor the seller
26) the increasing use of installment contracts for the sale of real estate has fled to Lawns and some states designed to protect the interest of the?
the increasing use of installment contracts in real estate sales has led to some state laws designed to protect the buyer's interest.
27) the purchaser under an installment contract may protect his interest by requiring that?
A. The seller place a deed in escrow at settlement.
B. the contract not be recorded in the land records.
C. The buyer be allowed to intermediately occupy the property.
D. The seller advertise notice of the cell for 3 weeks.
the purchasers interest may be predicted by requiring the seller to place a deed in escrow and having the contract recorded in the land records
28) a well-written installment contract will clue language which specifies all the following except?
A. who is responsible for maintenance of property.
B. How taxes and insurance will be paid. C. Who is responsible for casualties losses to property.
D. No restrictions can be placed on the use of the property.
detail spelling out responsibilities for maintenance, payment of taxes and insurance, and for casualty loss are all parts of a well written installment contract
29) a purchaser's right to acquire legal title to real property under the terms of a valid purchase agreement is known as?
A. naked title.
B. Equitable Title.
C. Specific performance.
D. contract title.
Equitable Title is a purchaser's right to acquire legal title to real property under the terms of a valid purchase agreement.
30) Equitable Title?
A. can be transferred by sale.
B. Maybe willed or inherited
C. can avoid inheritance taxes.
D. cannot be transferred by deed
equitable title can be transferred by sale, inherited, mortgaged, or transferred by deed.
31) a buyer and seller entered into a purchase contract for the sale of the seller's residence. From the moment the contract was signed by both parties, the?
A. Legal title to the property was vested in the purchaser.
B. equitable Title to the property was held by the seller.
C. Buyer now retained an equitable interest in the property.
D. seller retained the right to rescind the contract
the seller retains legal title, but the buyer now holds an equitable interest in the property. the seller may not void the contract.
32) W holds Equitable Title to real property under an installment contract. W wants to sell the property to X. Can she do so?
A. no, and installment contract does not permit any sales.
B. no, since W does not hold legal title.
C. yes, by assignment of the contract from W to X
D. yes, by delivering a warranty deed to X
Equitable titles can be transferred by an assignment of a purchase contract or by novation's with the sellers agreement
33) under the terms of a lease with option to buy, the tenant is given the right to purchase the property?
A. At a price to be negotiated as a time of purchase.
B. At any time during the option period.
C. after expiration of the least.
D. At the preset price.
a lease with option to buy gives the tenant the right to purchase the property at any time during the option period at a preset price, not after the option period.
34) on balance, a lease option tends to favor the?
a lease option tends to favor the optionee because the option may or may not be exercised by the optionee and the optionor has no choice but to accept the optionees decision
35) the purchase contract with a company's a lease option should be negotiated?
A. At the same time as the lease.
B. When the option is exercised
C. during the option period.
D. After the option expires.
the lease option and purchase contract should be negotiated at the same time to avoid future disagreement.
36) evidence that a tenant has an option to buy a property should be recorded So as to establish that the?
A. tenant has no rights except temporary occupancy.
B. Tenants rights date back to the date of recordation.
C. Tenant is obligated to buy the property.
D. Owner is under no obligation to sell.
evidence of the tenants option to buy should be recorded to establish the tenants rights and the fact that these rights date back to the date of recordation
37) an option to buy is an example of?
A. an excluded contract.
B. A bilateral contract.
C. A unilateral contract.
D. Voidable contract.
an option to buy is an executory contract because it is unfulfilled, and a unilateral contract because it is based on a promise and exchange for an act.
38) landlord L and tenant T entered into an agreement in writing which gave tea the right to match any valid offer which L might receive for the purchase of the property. Did this agreement constitute a lease option on the property?
B. Yes, because it gave the tenant the right to purchase the property.
B. Yes, because the agreement wasn't writing.
C. no, because there was no consideration.
D. No, because the element of an option to buy was not present.
the agreement was not a lease option because it did not contain the elements of an option to buy.
39) exchanging of real properties is popular among sophisticated investors because?
A. Large amount of cash facilities trades.
B. Income taxes maybe deferred on profits from the first property in the transaction.
C. it is easier to trade properties than to finance individual purchase.
D. Traders keep the IRS out of the transaction.
property exchanges are popular among investors because of low cash requirements and possible deferral of income taxes on otherwise taxable gain from the first property.
40) when an owner occupied dwelling sales for a profit, and a new residence of equal or greater value is purchased within 24 months, taxes on the gain are? A. due upon the sale of the original residence.
B. Deferred until the second home is sold
C. due in the year of purchase of new residents.
D. waived under the residence replacement rule
taxes on the game from the sale of an owner occupied dwelling are deferred if a new residence of equal or greater value is purchased within 24 months
41) requirements for Real Estate exchanges include that?
A. All properties must be equal value.
B. Only two properties may be involved.
C. No cash is involved.
D. Any number of properties of unequal value may be involved.
properties that are being exchanged need not be of equal value, and more than two properties may be exchanged. cash, also known as boot, maybe involved in the transaction.
42) under the 1984 tax reform act, in order to qualify for a delay exchange, the?
A. Designated property to be exchanged must be identified within 30 days of the original closing.
B. Title to the designated property must be acquired within 90 days of the original closing.
C. Property must be received before the designating party's tax return is due
D. property must be designated and closed within 6 months.
the 1984 tax reform act requires that the designated property to be exchanged be identified within 45 days of the original closing, that title be acquire within 180 days of closing, and that the property be received before the designating parties tax returns is due
43) W wants to trade up to a large property and at the same time defer that capital gain in his present property. he wants T's property and would like to trade directly with T. However, T wants cash, not W's property. J has cash and wants W's property. which of the following would accomplish these goals?
A. W trades with T who, in turn, sells to J
B. J buys W's property, and with the money W buys T's property.
C. J buys T's properties and trades with W
D. either option A or c
the trade can be successfully done by using either approach a or answer C. It won't work for w if he accepts the money offer by J in response B
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