California Real Estate CONTRACTS Flashcards Flashcards

California Real Estate CONTRACTS Flashcards Flashcards Which of the following is required to create a legal and valid contract?a. An offer and acceptanceb. Consideration that is unknown or not specificc. Illegal used. Recording and acknowledgement

• An offer and acceptance* The only proper choice to

comply with a valid contract is offer and acceptance.When a money award for damages does not satisfy the damages on a defaulted contract, a lawsuit for specific performance can be brought by all of the following

except:a. the person buying the single family homeb. the

seller who is selling 1000 acres of apple orchard farm landc. someone possessing power of attorney for a principal who lives in another stated. a broker who has a current license acting on behalf of their principal

• a broker who has a current license acting on behalf of

their principal*To sue for a specific performance, the individual must be the principal on the contract. In this example the broker is not.Of the following, which cannot create an agency relationship?a. The agent offering to work for the principalb.Oral contractc. Written contractd. Implied contract

• The agent offering to work for the principal* For agency

to be created, an agreement must be reached between the parties. An agent cannot offer to work for a potential principal and expect to have an agency relationship created without the principal's acceptance.During an "exclusive right to sell" listing contract, the principal no longer wishes the broker to work for them. the

principal may:a. be forced to stay with the brokerb. revoke

the listing, however the seller may be held liable for damagesc. cancel the listing and cannot be held liable for damagesd. do nothing. the principal understands that an exclusive right to sell listing contract cannot be broken

• revoke the listing, however the seller may be held liable

for damages* An exclusive right to sell listing agreement is an employment contract and like all contracts can be broken. However the broker could sue for the monetary value of his time, advertising, and expertise.A broker who looks for buyers and accepts a deposit from a buyer to purchase a piece of real property without the express written authorization and acknowledgment from

the owner to sell the property is:a. acting correctly because

the real property is a property listingb. guilty of not having an enforceable bilateral contract with the sellerc. guilty of having an implied contract with the sellerd. acting as an agent for the buyer, not the seller.

• acting as an agent for the buyer, not the seller.* The

agent is working for a buyer. When a broker is employed by a buyer the broker has a fiduciary duty to the buyer.Of the following, none of the individuals may enter into a

valid real estate contract to purchase property, except:a.

emancipated minorsb. minorsc. a state prisonerd. a mentally incompetent person

• emancipated minors* Emancipated minors have the

same rights as adults when it comes to purchasing real property When a false transfer disclosure statement is given to a buyer that omits facts about the property , how long does the buyer have to bring a lawsuit against the seller and the

broker?:a. 1 yearb. 1.5 yearsc. 2 yearsd. 6 months

• 2 years

If a broker misrepresents his principal's property, what could possibly happen to the principal?a. Damages may be awarded to the buyerb. Any of thesec. Cancellation of the sale by the prospective buyerd. The seller may owe damages to the buyer for broker misrepresenting facts

• Any of these* The principal is ultimately responsible for

their agent's actions regarding the owner's property.For a contract of real property to be enforceable, the consideration must be relative and of sufficient value in

order to enforce a suit for:a. specific performanceb.

damagesc. lawful objectived. exchange

• specific performance*The value of the real property must

be equal to the amount of money being offered before a court will order someone to specifically perform the terms of a contract.Of the following, which would create a dual agency situation?a. An agent is representing both the buyer and seller in the same transaction and all parties are aware and agreeb. A listing agent working peacefully with the selling agentc. The listing agent has five open escrows simultaneouslyd. Two brokers have a listing for the same property

• An agent is representing both the buyer and seller in the

same transaction and all parties are aware and agree* Dual agency occurs when the same agent represents both parties, buyer and seller, in the same transaction.Broker Robert is showing buyer Sarah property that he has under contract. Broker Robert is aware of a major defect in

the plumbing. Broker Robert should:a. inform buyer Sarah

of this issue, because it is a material fact about the property.b. disclose to buyer Sarah only if she inquiresc.say nothing regarding the issue and get the property soldd.keep quiet. the property is sold "as is" and nothing has to be disclosed.

• inform buyer Sarah of this issue, because it is a material

fact about the property.* A real estate licensee must disclose all known material facts. A material fact would have influence over a principal's decision. A major plumbing defect would definitely affect the decision of a reasonable person.A licensee who is working with their client to sell their real property to a third party is said to be operating under the

law of:a. escrowb. trustorc. agencyd. partnership

• agency

Of the following, which is not needed to create an agency relationship?a. a written agreement to pay considerationb.principal to be competentc. an agreement between all parties in placed. fiduciary duty

• a written agreement to pay consideration* An agent can

represent either a buyer or seller without receiving compensation. An example would be if a buyer asks the agent to help them get pre-approved for a mortgage loan.The agent would not receive compensation for doing so.They would, however, be able to be the agent for the buyer on the purchase of their home.The law of agency states that an agent has imputed authority of their principal when dealing with third parties.What does that imputed power allow?a. It has an included power of attorneyb. The agent has a fiduciary duty to the principalc. It usually binds the principal as long as the authority is granted to the agentd. It always binds the principal to terms that are negotiated on their behalf

• It usually binds the principal as long as the authority is

granted to the agent.* Imputed authority implies the agent's apparent authority. If the third party has reasonable expectation that the agent is acting within their authority, the agent's principal would be bound by the actions of the agent.Broker Steve has been employed by Seller Mike. Broker Steve has been showing the property to many interested home buyers and has been telling everyone that the roof was in great shape and did not have any issues or leaks,

when in fact Seller Mike specifically told Broker Steve that the roof was old and had several leaks and would need to be replaced. Buyer Brian soon discovered that after the first rainstorm the roof was in terrible disrepair and leaked badly. Who would Buyer Brian have recourse against?a.The seller and the broker for fraud and damages associated with the roofb. No one since real property in the state of California is sold as isc. The broker alone for fraud and not telling the truthd. The seller alone. They should've fixed the roof before selling the house.

• The seller and the broker for fraud and damages

associated with the roof*The buyer would have the grounds to bring a lawsuit against the seller and the broker. When you enter into an agency relationship, the principal is

responsible for the agent. However, the seller would also be able to sue the broker for breaching his fiduciary duty and committing fraud.A licensee receives an offer for a property they have listed.It's in writing, however it's below the asking price and they know the seller will never accept it. Of the following, which

would not be acceptable for the licensee to do?:a. present

the offer and all other offers receivedb. advise the principal that they can always write a counter offer and submit it to the buyersc. meet with the principal, write up a counter offer, have the seller sign it, and submit it back to the buyerd. change the terms to what the licensee thinks the seller would accept

• change the terms to what the licensee thinks the seller

would accept* You can never change the terms of what the buyer wrote on the purchase agreement.Seller Johnson listed his home for sale with agent Mike.The listing stated "cash only offers to be considered and possibly accepted". Agent Mike brought a buyer who was qualified with a VA loan. Seller Johnson rejected the offer from agent Mike. What is agent Mike entitled to in regards to commission?a. none of the commissionb. 3/4 of the commissionc. all of the commissiond. half of the commission

• none of the commission* Since the offer was not the

exact terms in the listing contract, the agent is not entitled to a commission.In order for a contract to be legal, which of the following would be considered consideration?a. A promise to clean someone's pool once a week for 10 yearsb. a promissory note that has a set amount of interestc. a promise to apply clay roofing tiles on a building that has yet to be builtd. all of these

• all of these*A promise is sufficient consideration for a

contract.Otis bought the Browns' house through the Browns' listing agent Jacob. In October there was a heavy rainstorm and the roof leaked in several different spots. Otis took everyone involved in the real estate sale to court. During the trial it was announced that the seller Browns told their agent, Jacob, about the leaky roof and that its' condition was in disrepair. Agent Jacob withheld this information from buyer Otis because Otis "did not ask about the roof". What is the most likely outcome of the trial?a. Buyer Otis recovered damages from seller Brown who then recovered damages from agent Jacobb. Buyer Otis recovered