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Champions School of Real Estate-Law of Contracts Exam 1 Latest Update - Actual Exam 165 Questions with 100% Verified Correct Answers Guaranteed A+ Verified by Professor
Abstract of Title - CORRECT ANSWER: An investigation of all the documents that have been recorded about a property.
Acceptance - CORRECT ANSWER: Means that the accepting party does so with no
change to the contract whatsoever. Any change, no matter how trivial, turns the offer into a counteroffer.
Addendum - CORRECT ANSWER: An attachment to a contract that adds or further
describes the rights and duties of the parties.
Common forms:
- Financing addendum
- Lead-based paint
- Seller Financing
- Flood Hazards
- Mineral Reservations
- Property owners association information
Adjustable Rate Mortgage - CORRECT ANSWER: a mortgage whose rate of interest is
adjusted periodically to reflect market conditions.
Air rights - CORRECT ANSWER: Extend above the surface without limitations. 1 / 3
Ammendments - CORRECT ANSWER: As a transaction progresses, amendments to
the original contract may be needed. Common amendments include:
- Changes to the closing date
- Changes to the sales price, down payment and/or amount financed.
- Repairs that the seller agrees to perform.
- Removal or waiver of contingencies
An Offer can be Communicated by: - CORRECT ANSWER: - Phone
- Fax
- Letter
- Hand Delivery
Annual Premium - CORRECT ANSWER: The annual premium is based on the loan-to-
value ratio (LTV), and is utilized for 30-year loans with an LTV greater than 95%. The premium is 1.35% of the base loan amount. The annual premium is paid monthly and is added to the borrower's monthly payment.
Assignment of a Contract - CORRECT ANSWER: Transfers all of the rights related to the contract to another party known as an assignee. The Assignee assumes primary liability for performance under the contracts, and the assignor, unless released, remains secondary liable.
Attorney's Opinion of Title - CORRECT ANSWER: An opinion regarding the state of the title and its ability to be transferred.
Balloon Loans - CORRECT ANSWER: Are beneficial to some borrowers, especially
those who do not plan to stay in their homes for an extended period. A balloon loan is a partially amortized loan with a final payment substantially larger than the others. The 2 / 3
benefit of this type of loan is a lower interest rate. The main disadvantage is the high cost of refinancing
Bargain and Sale Deed - CORRECT ANSWER: A deed that carries no guarantees or
warranties. It is a very basic deed and does nothing to protect the grantee. The grantor implies ownership or the right to transfer title but does not provide a warranty of title.
Beneficiary - CORRECT ANSWER: One who receives property through a will.
Bequest - CORRECT ANSWER: Personal property that is inherited through a will.
Bilateral Contracts - CORRECT ANSWER: Contracts in which both parties are obligated to perform.
- Ex: A contract of sale between a buyer and seller because both parties have duties to
perform. The seller's primary duty is to show up at closing and sign a deed conveying ownership to the buyer. The buyer's primary duty is to show up at closing and pay the agreed consideration (sales price).
Blanket Mortgage - CORRECT ANSWER: Covers more than one piece of property. A
builder may buy more than one lot in a new subdivision; he will do so with one loan.This type of loan is likely to contain a release clause, allowing the borrower to obtain partial releases of specific lots by making required lump sum payments.
Budget Mortgage - CORRECT ANSWER: In a budget mortgage, the monthly house
payment includes principal, interest, taxes, and insurance (known as PITI). The tax and insurance portion of the payment is held in a special account called an escrow account.It is also called an impound, trust, or reserve account.
Buyer Default - CORRECT ANSWER: In the event of default by the buyer, the seller
may have several options which include:
-Liquidated Damages -Monetary Damages
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