CHAPTER 11: Real Estate Contracts Flashcards

CHAPTER 11: Real Estate Contracts Flashcards

A seller wishes to net $140,000 from the sale of a property.Closing costs are estimated to be $3,600, and the broker will receive a 7% commission. What sales price will pay the expenses and meet the seller's net requirement?

$154,409

Which of the following statements is correct regarding the Statute of Frauds?It requires certain contracts to be in written form to be enforceable in court..The Statute of Frauds was enacted to provide protection against fraud in the sale of real property.It requires a contract for the transfer of a right or interest in land to be in writing to be enforceable. It does not make an oral real estate sales contract illegal or invalid. Real estate sales contracts, leases for more than 1 year, deeds, mortgages, and option contracts are covered by the Statute of Frauds. Any document that purports to convey a right or interest in land must be in writing to be enforceable.Which of the following is an example of a unilateral contract?Open listing contract*In a unilateral contract, only one party expressly agrees to perform an act. Only the one who agrees to perform the act is bound by the terms of the contract. One party gives a promise of performance based on performance by the other party. A promise is given in

exchange for an act.Example: John Homeowner promises

to pay a commission to Bob Broker only if Bob finds a purchaser for John's home.An open listing contract is a unilateral contract. The property owner promises to pay a commission if the broker finds a buyer willing to purchase the property at a price and at terms that are acceptable to the property owner. * What is the term used to describe the consideration given by a buyer to indicate serious intent to buy a property?An earnest money deposit A real estate licensee is legally allowed to prepare all of the

following types of documents, EXCEPT:

Leases Which of the following is correct regarding the "as is" provision in a sales contract?The seller is still required to disclose all known defects that may materially affect the value of the property.An option contract is a unilateral contract that is binding upon which party?Optionor What are the required elements of all valid contracts?Legal subject, agreement, consideration, and two or more competent parties Which of the following is an essential element of a valid and enforceable real estate sales contract?Offer and acceptance must be communicated by each party to the other.A buyer negotiates a contract to purchase property, takes possession and pays the property purchase price in installments, but does not receive the legal title until the full

purchase price has been paid. What is this agreement called?An installment contract, contract for deed, or land contract Offers may be terminated by all of the following, EXCEPT:Breach*An offer is terminated by: Withdrawal, Insanity, Lapse of time, Death of either party, Counteroffer,

Acceptance, Rejection, or Destruction of the

property.Memory aid: WILD CARD. *

A buyer and seller entered into a Purchase and Sale Agreement. The buyer chose not to close and defaulted on the agreement. The seller claimed the escrow deposit.What type of damages can be sought?Liquidated damages to the seller*There are two types of

damages: liquidated and unliquidated.Liquidated damages

are those agreed upon and specified in the contract. The parties have agreed to the penalty to be imposed in the event of a breach by either party. This usually involves the seller retaining the deposit in the event of a buyer default.Unliquidated damages are those that are not specified in the contract, but are determined by a court. A suit for damages involves unliquidated damages. * What is the term used to describe the party who receives an offer?Offeree*The party who makes an offer is called the offeror; the party who receives the offer is the offeree.If the offeree changes any of the terms or conditions of the original offer, it becomes what is known as a counteroffer. A counteroffer has the effect of rejecting the original offer and replacing it with an entirely new offer. The original offeror becomes the offeree and the original offeree becomes the offeror. The original offer no longer exists. * Which of the following statements is correct regarding an option contract?It gives a buyer the right to purchase for a specified time at a specified price.What is the legal term that is used to designate the transfer of rights in a contract from one party to another?Assignment If an owner revokes an exclusive right of sale listing and sells the property during the remaining time the listing would have been in effect, what is the broker entitled to?A full commission Which term refers to a type of contract where all terms and conditions are NOT fully expressed?Implied Which of the following list of actions contain valid ways that a contract could be terminated?Breach, Performance, or Lapse of time Which of the following best describes a contract? Legally binding In which circumstance is a broker's commission subject to forfeiture?The broker violates a fiduciary duty.Which of the following establishes the time period for enforcement of a contract?Statute of Limitations To which of the following does the phrase "meeting of the minds" refer?Offer and acceptance Which of the following terms best describes a contract in which all of the terms and conditions have been fully performed?Executed*When all parties have fully performed, the

contract has been executed.Example: On the date

specified in the contract, the parties meet at the attorney's office. All contingencies have been satisfied. Both parties acknowledge performance by the other. The buyer pays the money due, and the seller delivers a valid deed. Both parties have fully performed; the contract has been executed. * All of the following may terminate an offer, EXCEPT:A failure to obtain a binder depositAn offer is terminated by: acceptance, withdrawal, rejection or counteroffer, lapse of