Real Estate Contracts
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A legally enforceable agreement under which two parties promise to do something for each other is known as a(n):
a.) escrow agreement
b.) legal pledge
c.) bilateral contract
d.) option agreement
A person approaches an owner and says, "I'd like to buy your house." The owner says, "Sure," and they agree on a price. What kind of contract if this?
d.) No contract
A contract is said to be bilateral if:
a.) one of the parties is a minor
b.) the contract has yet to be fully performed
c.) only one party to the agreement is bound to act.
d.) all parties to the contract exchange binding promises.
During the period of time after a real estate sales contract is signed, but before title actually passes, the status of the contract is:
A contract for the sale of real estate that does NOT state the consideration and is NOT signed by the parties is considered to be:
A buyer and a seller sign a contact to purchase. The seller backs out, and the buyer sues for specific performance. What is the buyer seeking in this lawsuit?
a.) Money damages
b.) New contract
c.) Deficiency judgment
d.) Transfer of the property
In a standard sales contract, several words were crossed out or inserted by the parties. To eliminate future controversy as to whether the changes were made before or after the contact was signed, the usual procedure is to:
a.) write a letter to each party listing the changes.
b.) have each party write a letter to the other approving the changes.
c.) redraw the entire contract.
d.) have both parties initial or sign in the margin near each change.
A buyer makes an offer on a seller's house and the seller accepts. Both parties sign the sales contract. At this point, the buyer has what type of title to the property?
The sales contract says the buyer will purchase only if an attorney approves the sale by the following Saturday. The attorney's approval is a:
A broker uses earnest money placed in the company trust account to pay for the rent owned on the broker's office. Using escrow funds for this purpose is:
a.) commingling of funds and is illegal.
b.) legal if the trust account is reimbursed by the end of the calendar month.
c.) legal if the seller gives consent in writing.
d.) conversion of funds and is illegal.
An option to purchase binds which of the following parties?
a.) Buyer only
b.) Seller only
c.) Neither buyer nor seller
d.) Both buyer and seller
A buyer and a seller enter into a real estate sale contract. Under the contact's terms, the buyer will pay the seller $500 a month for ten years. The seller will continue to hold legal title, while the buyer will live in the home and pay all real estate taxes, insurance premiums, and regular upkeep costs. What kind of contract do the buyer and seller have?
a.) Option contract
b.) Contract for mortgage
c.) Unilateral contract
d.) Land or installment contract
The purchaser of real estate under an installment contract:
a.) generally pays no interest charge.
b.) receives title immediately.
c.) is not required to pay property taxes for the duration of the contract.
d.) has only an equitable interest in the property's title.
Under the statute of frauds, all contracts for the sale of real estate must be:
a.) originated by a real estate broker.
b.) on preprinted forms.
c.) in writing to be enforceable.
d.) accompanied by earnest money deposits.
If, upon the receipt of an offer to purchase a property subject to certain conditions, the seller makes a counteroffer, the prospective buyer is:
a.) bound by the original offer.
b.) bound to accept the counteroffer.
c.) bound by whichever offer is lower.
d.) relieved of the original offer.
A buyer makes an offer to purchase certain property listed with a license and leaves an escrow deposit with the licensee to show good faith. The broker should:
a.) immediately apply the deposit to the listing expenses.
b.) put the deposit in an account, as provided by state law.
c.) give the deposit to the seller when the offer is presented.
d.) put the deposit in the broker's personal checking account.
While suffering from a mental illness that caused delusions, hallucinations, and loss of memory, a person signed a contract to purchase real estate. Which statement regarding the contract to purchase is TRUE?
a.) The contract is voidable
b.) The contract is void.
c.) The contract lacks consent.
d.) The contact is fully valid and enforceable.
A license has found a buyer for a seller's home. The buyer has indicated in writing a willingness to buy the property for $1,000 less than the asking price and has deposited $5,000 in earnest money with the licensee. The seller is out of town for the weekend, and the licensee has town for the weekend, and the licensee has been unable to inform the seller of the signed document. At this point, the buyer has signed a(n):
a.) voidable contract
c.) executory agreement
d.) implied contract
A buyer and a seller agree to the purchase of a house for $200,000. The contract contains a clause stating that time is of the essence. Which state is TRUE?
a.) The closing must take place within a reasonable period before the stated date.
b.) A "time is of the essence" clause is not binding on either party.
c.) The closing date must be stated as a particular calendar date, and not simply as formula, such as "two weeks after loan approval."
d.) If the closing date passes and not closing takes place, the contact may be rescinded by the party who was ready to settle on the scheduled date.
A buyer signs a contract under which he is given the right to purchase a property for $30,000 any time in the next three months. The buyer pays the current owner $500 at the time that contract is signed. Which of the following BEST describes this agreement?
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