Unit 6 Flashcards - seller only.C)the buyer only.D)both buyer and s...

Unit 6 Flashcards An option to purchase bindsA)neither buyer nor seller.B)the seller only.C)the buyer only.D)both buyer and seller.The answer is the seller only. An option is a unilateral contract in which the optionor agrees that the optionee (usually the buyer) has the right to purchase the property at an agreed-upon price within an agreed-upon period. While the optionee is not obligated to purchase the property, the optionor is obligated to sell if the optionee exercises this right.Which of the following BEST describes a land contract or installment contract?A)A means of conveying title immediately whereby the purchaser pays for the property in installmentsB)A method of selling real estate whereby the purchaser pays in regular installments while the seller retains titleC)A contract to buy land onlyD)A mortgage on land The answer is a method of selling real estate whereby the purchaser pays in regular installments while the seller retains title. An installment contract combines elements of both a sale and a finance document into one legal instrument. The seller (vendor) retains legal title, while the purchaser (vendee) takes possession, acquires equitable title, and agrees to make principal and interest payments to the seller for a stated period of time, after which point, the seller will transfer legal title.When a prospective buyer makes a written purchase offer that the seller accepts, then theA)seller grants the buyer ownership rights.B)buyer receives legal title to the property.C)buyer receives equitable title to the property.D)buyer may take possession of the real estate.The answer is buyer receives equitable title to the property.After both buyer and seller have executed a sales contract, the buyer acquires an interest in the land, known as equitable title. Legal title passes only upon delivery and acceptance of the deed.At the time that the installment contract is signed, who has legal title to the property?A)Held jointly by the vendor and vendeeB)The vendee/buyerC)The trustee because the title is in limbo until all payments are receivedD)The vendor/seller The answer is the vendor/seller. The seller is not obligated to execute and deliver a deed until all the terms of the contract have been satisfied.After the buyer and the seller entered into contract, they negotiated the sale of the side lot at the same time as the transfer of the home. What is this second document called?A)An optionB)A contingencyC)An amendmentD)An addendum The answer is an addendum. An addendum is any provision added to an existing contract without altering the content of the original agreement. In this case, the sale of the side lot is connected with the original contract, but does not alter the original contract.Under Pennsylvania law, which of the following, if any, must be disclosed?A)None of these need to be disclosed.B)A registered sex offender lives nearby.C)Neighbors think the house is haunted.D)The former owner committed suicide in the home.The answer is none of these need to be disclosed.Stigmatized properties are those that society has found undesirable because of events that occurred there or because a known sex offender lives in the area. Neither federal law nor state law mandate active notification.After a buyer makes an offer to purchase, the broker cannot locate the seller to present the offer. In the meantime, the broker receives an offer for a higher price from another buyer. How should the broker proceed?A)Decide which offer is best to present to the

sellerB)Inform the first buyer that the broker cannot present the offer because it is too lowC)Present the offer for the higher priceD)Present both offers to the seller The answer is present both offers to the seller. Licensees are required to present all offers in a timely manner. In the case of multiple offers, the broker should present all offers to the sellers for their consideration.

The buyer and the seller entered into a contract contingent on a satisfactory home inspection. The inspection turned up a serious roof problem, which will cost about $5,000 to repair. What type of document should the two parties execute when they agree to split the cost of the repair?A)An amendmentB)An addendumC)An optionD)A contingency The answer is an amendment. An amendment changes a provision in the original agreement; in this situation, the parties are changing the financial terms they had previously agreed upon.The sellers told the broker about the unstable foundation on the side of the basement. They agreed that they would disclose this fact if the buyers raised a question, but the buyer never did. The broker's silence is an example ofA)fraud.B)puffing.C)misrepresentation.D)deception.The answer is fraud. Fraud is the intentional misrepresentation of a material fact in such a way as to harm or take advantage of another person. This includes making false statements about a property and intentionally concealing or failing to disclose important facts.Misrepresentation is an unintentional misstatement or omission. In Pennsylvania, a licensee may not knowingly be a party to a material false or inaccurate representation.Who is BEST suited to assist a buyer and a seller to enter into an installment contract?A)A real estate salespersonB)The broker of recordC)An accountantD)An attorney The answer is an attorney. A seller and a buyer contemplating an installment sale should first consult an attorney to ensure that the agreement meets all legal requirements and addresses the individual concerns of the parties.A buyer offers in writing to purchase a house for $220,000, including its draperies, with the offer to expire on Saturday at noon. The sellers reply in writing on Thursday, accepting the $220,000 offer but excluding the draperies. On Friday, while the buyer considers this counteroffer, the sellers decide to accept the original offer, draperies included, and state that in writing. At this point, the buyerA)is not bound to buy.B)must buy the house but is not entitled to the draperies.C)must buy the house and have the right to insist on the draperies.D)must buy the house and can deduct the value of the draperies from the $220,000.The answer is is not bound to buy. Any change a seller makes to the terms proposed by a buyer in an offer constitutes a rejection of the buyer's offer and the buyer has no obligation to purchase the property. Those changes, known as a counteroffer, now constitute a new offer being made by the seller to the buyer. The buyer can accept or reject that offer, or make another counteroffer.A buyer wants to make an offer to purchase a house that she suspects has a wet basement. The buyer is afraid that the house may be sold to someone else before she has a chance to get information about the structure. How should she proceed?A)Make an offer to purchase that is contingent on a structural inspection.B)Hire a contractor to give an estimate for repair before making an offer.C)Ask the seller to repair the basement before she makes an offer.D)Ask the real estate salesperson to guarantee that the basement is dry.The answer is make an offer to purchase that is contingent on a structural inspection. A buyer can make an offer that is subject to a structural inspection to address concerns such as a wet basement. The contract would then be subject to an inspection contingency.An optionA)makes the seller liable for a commission.B)keeps the offer open for a specified time.C)requires the optionee to complete the purchase.D)gives the optionee an easement on the

property.The answer is keeps the offer open for a specified time. An option is a unilateral contract by which an optionor (generally an owner) gives an optionee (a prospective purchaser or lessee) the right to buy or lease the owner's