Contract Prep Agent Flashcards

Contract Prep Agent Flashcards

A safety clause is found in a:A. Deposit receiptB. Listing

agreementC. Loan broker's statementD. Lease

• Listing agreementA Protection Period Clause (safety

clause) in a listing will allow a broker to collect a commission for a specified period of time after the term of the Listing has expired. It is a designated period of time to close deals with prospects that the licensee has been working with during the term of the listing. This is not a time to find a new prospect. They must put the name of the prospects in writing at the end of the listing period in order to earn a commission during the protection period clause.Next Question A prospect for the lease of a commercial property feels the need for adversarial representation and hires a broker to negotiate the lease on his behalf. What is the name of the contract entered into between the prospect and the broker?A. An authorization to negotiate.B. A buyer broker agreement.C. A cooperative brokerage agreement.D. A property management agreement.

• A buyer broker agreement.A contract wherein the broker

represents a buyer or tenant is called a buyer broker agreement or an exclusive right to represent agreement. In some states an attorney can represent somebody in this type of transaction, in the case they may use a different type of agreement.Save for ReviewPrevious Question Which of the following is NOT true about an option?A. The optionor can revoke the offer to sell during the designated period of time.B. The option rights are assignable unless otherwise noted.C. The optionor retains the money paid for the option even if unexercised.D. The optionee has no interest or estate in the property until the option is exercised.

• The optionor can revoke the offer to sell during the

designated period of time.The optionor CANNOT revoke the offer to sell during the designated period of time. The optionor is bound to perform if the optionee decides to exercise his/her option, it is a unilateral contract.According to the Statute of Frauds, a contract which must be in writing in order to maintain a court action for

enforcement is:A. The employment of a broker to exchange

leases on a property zoned for retail.B. the employment of a business opportunity to sell stock.C. any real estate agreement which is not to be performed within one year. D.a bill of sale on real property.

• any real estate agreement which is not to be performed

within one year.The Statute of Frauds mandates what contracts are required to be in writing in order to be enforceable. Any real estate contract that is not to be performed within one year must be in writing.Janice Riceland is shown a home by her agent, Richard.She makes an offer and gives Richard a check. At what point does her offer become an enforceable contract to buy?A. When the deposit check clearsB. As soon as the seller receives the offer and the checkC. As soon as Richard receives her offer and her checkD. When Janice is notified the seller accepts the offer

• When Janice is notified the seller accepts the offerAn

enforceable contract requires at least 4 elements: Capable

Parties, Legal Object, Offer and Acceptance, and Consideration. The "offer and acceptance" portion of those requirements actually has 3 steps- Offer, Acceptance, and Notification of Acceptance. Once Janice is notified that the seller has accepted her offer, the contract becomes legally enforceable.Save for ReviewProvide Feedback The Statute of Frauds outlines which contracts must be in writing to be enforceable through court action. Which of the

following contracts would be enforceable?A. A verbal lease for one year or lessB. A verbal agreement to secure a loan of $1,500C. An oral agreement to pay a broker a commission for the negotiation of an exchange of two businessesD. An exclusive listing taken orally by a broker to sell a single-family residence

• A verbal lease for one year or lessThe Statute of Frauds

is state law that requires certain contracts to be in writing

and signed by the party to be charged (or held) to the agreement in order to be legally enforceable. The Statute of Frauds generally requires that all contracts for the sale of land or any real property interest be in writing. It also states that leases for more than one year need to be in writing as well.Save for ReviewPrevious Question Which of the following is TRUE concerning promissory notes?A. They are the evidence of the debtB. They are used as security for trust deedsC. They are always used when real estate is soldD. They are recorded at the county recorder's office

• They are the evidence of the debtThe promissory note is

the evidence of the debt. The trust deed is the security of the debt.Save for ReviewProvide Feedback In accordance to the Statute of Frauds, which of the following must be in writing?A. A 9-month lease on a condominium unitB. A bill of sale for appliances sold separately from the propertyC. A lease on a fruit or nut bearing tree for the time the fruit is in season, so it can be pickedD. The purchase contract for a single-family residence offered for sale by owner

• The purchase contract for a single-family residence

offered for sale by owner Which of the following is NOT required for a contract to be legally binding?A. A lawful objectB. Legal capacityC.Mutual consentD. Writing

• WritingNot all contracts need to be in writing to be legal

and enforceable. However, certain types of contracts- including those for real estate transactions- do need to be in writing. In part because of the amounts typically involved, but more importantly to maintain a clear, documented title history.Save for ReviewPrevious Question

An agent must submit all new offers to the owner until:A.

the close of escrow.B. escrow opens on a potential sale.C.the agent decides the seller isn't interested.D. the broker decides there have been enough offers.

• the close of escrow.Offers must be presented even after

the seller has accepted an offer. It is a violation of an agent's fiduciary duties to willfully fail to present any written purchase offer prior to the closing of the sale, unless the agent is expressly instructed by the owner not to present any more offers (or an offer is patently frivolous).Depending on the terms of the agreement a seller may not be able to accept the offer during the escrow period.Save for ReviewPrevious Question One of the main benefits of a sale-leaseback transaction

would be:A. the ability of the seller to deduct all of his future

rent payments as business expenditures.B. you can get the deposit back with no objection.C. you have the option to lease the property back after the termination of the lease.D.the ability to maintain the book value by the new buyer.

• the ability of the seller to deduct all of his future rent

payments as business expenditures.In a Sale Leaseback, the seller leases the recently-sold property back from the buyer. The seller is now a tenant, allowing the seller to deduct all future rent payments as business expenditures.Which of the following statements about promissory notes is true?A. A grant deed secures a promissory note.B. A deed of trust secures a promissory note.C. A promissory note secures a deed of trust.D. A promissory note is not part of a deed of trust.

• A deed of trust secures a promissory note.A deed of

trust secures a promissory note and the property which collateralizes a home loan in some states. If payment is not made according to the terms of the note and deed of trust, the beneficiary may instruct a third-party holding the title, called "the trustee", to foreclose on the property per the

terms of the deed of trust. Be careful of the wording as swapping the two terms can create a very different meaning.