Unit 24: Contract Forms for Real Estate Practice in Georgia

Unit 24: Contract Forms for Real Estate Practice in Georgia

Flashcards A contingency that provides the buyers with a general right to terminate a contract for purchase is BEST illustrated by which of the following?A)A condition in the agreement that the property the buyer is purchasing must appraise for at least the contract priceB)A condition in the agreement that the buyers must have the ability to obtain a loan with terms specifically identified in the contract within a defined time frameC)A condition in the agreement that gives the buyer the right to terminate the contract for any circumstance defined in the agreement between the partiesD)A condition in the agreement that the buyers may, for any reason, change their mind about purchasing the property within a period defined in the contract

• A condition in the agreement that the buyers may, for

any reason, change their mind about purchasing the property within a period defined in the contractNo reason for this decision has to be identified in the contract.Conditions attached to loan contingencies and those attached to a property's estimated value are appraisal contingencies.A contingency that would protect the buyer from purchasing a property if it does not meet the value required by the lender isA)an appraisal contingency.B)a general right to terminate.C)a survival clause.D)a financing contingency.

• an appraisal contingency.An appraisal contingency

would require a certified appraiser to show that the property value is equal to or greater than the contract price. An appraised value below the contract price could allow the buyer to void the contract or renegotiate the purchase price.A Georgia real estate broker engages in a property management agreement with a landlord to manage the landlord's rental properties. The broker collects rent and security deposits. The security depositsA)are not determined or regulated by Georgia law.B)may be deposited in a general operating account if the broker manages fewer than 10 units for the landlord.C)must be deposited in interest-bearing accounts with interest paid to the landlord.D)must be deposited in a trust account registered with the Commission.

• must be deposited in a trust account registered with the

Commission.The license law requires trust accounts collected by Georgia real estate brokers to be deposited in trust accounts registered with the Commission. The accounts may be interest-bearing accounts if permitted in the terms of the rental agreement, but this arrangement is not required by law.A broker can assist a seller in determining the asking price for a property by preparing a(n)A)comparative market analysis.B)price proposal.C)listing agreement.D)appraisal.

• comparative market analysis.The comparative market

analysis (CMA) is prepared by the listing broker or the broker's agent to display for the seller the selling prices of other properties in the area that are comparable to the seller's property. The CMA is not an appraisal, which may only be conducted by someone classified by the Georgia Real Estate Appraisers Board. The listing agreement is the broker engagement contract between the seller and the broker.A buyer enters into a buyer brokerage agreement with broker A. The agreement has a protection clause for 60

days from the date the agreement expires. The agreement with A expires without the buyer having purchased a property, and 10 days later the buyer signs a new buyer brokerage agreement with broker B. Twenty-one days after the agreement with broker A expired, but during the agreement period with broker B, the buyer purchases a property she had been shown by broker A. Which of the following is TRUE?A)Broker B is not entitled to any compensation.B)Broker A is entitled to compensation because the 60-day protection clause was in effect.C)Broker A is not entitled to any compensation.D)Neither broker A nor broker C is entitled to compensation because of the protection clause.

• Broker A is entitled to compensation because the 60-day

protection clause was in effect.A is entitled to

compensation when the buyer purchases a property shown by A during the 60-day period stipulated in the protection clause. B may also be entitled to compensation under his separate buyer brokerage engagement with the buyer, depending on the terms of that agreement.Which of the following would be a violation of a broker's duties to a client?A)Giving a customer buyer prospect a copy of a county zoning map that includes the listed property of the broker's seller clientB)Showing property in which a buyer client has interest to other perspective buyersC)Not informing a seller client that a prospective buyer-customer is a straw buyer for the true purchaserD)Disclosing to a seller customer that a buyer client does not plan to occupy the seller's property for which an offer has been submitted

• Not informing a seller client that a prospective

buyer-customer is a straw buyer for the true purchaserThis is a material fact for the broker's client. Giving a copy of a zoning map is just a ministerial service for a customer that does not violate a duty to the client. Showing property in which a client has an interest to other buyers is not a breach of duty to the broker's own buyer client. Even though the seller is a customer, the broker would need to disclose the material fact for that seller that the broker's buyer client does not plan to occupy the property purchased.Under Georgia law, an enforceable real estate contract for purchase and sale must includeA)a seller's property condition disclosure.B)an earnest money deposit.C)at minimum a method to calculate a definite purchase price.D)a contingency for a right to terminate the contract.

• at minimum a method to calculate a definite purchase

priceEarnest money, a seller's property condition disclosure, and a contingency for the right to terminate are not requirements for an enforceable contract.A buyer is under contract with a seller. The buyer wishes to terminate the contract because of failure to obtain financing. In order to terminate the contract, the buyer must provide proof that the financing could not be obtained.Such proof should include a letter from theA)lender with details of why the loan was denied.B)lender.C)buyer requesting termination.D)buyer agent requesting contract termination.

• lender with details of why the loan was denied.In order

to terminate the contract because of the buyer's failure to obtain financing, a letter from the lender should be provided with the request for termination. This letter should provide the details explaining why the loan was denied.Broker John sells a property to buyer Alice. After moving in, Alice discovers a structural defect in the house. Alice holds John liable for the defect. This defect is MOST likely aA)latent defect.B)condition subsequent.C)normal wear and tear.D)defect easily observable by the buyer.

• latent defect.A latent defect is a defect that purchasers

could not normally discover by their own observation.Normal wear and tear is usually observable and discoverable.When an inspection report provides that a seller make repairs to his property in a "good and workmanlike manner," it is important for the buyer toA)allow the seller to

do the work himself.B)only have repairs to those items not indicated as defects.C)provide a detailed list of what specifically is to be addressed, including materials.D)request that the work be performed only by a licensed contractor.

• provide a detailed list of what specifically is to be

addressed, including materials.Good and workmanlike manner has a wide range of interpretations. It is best to