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PRACTICE EXAM 1- REAL ESTATE CONTRACTS Flashcards A contract is signed for the purchase of a house, but before the sale is closed the seller dies. The heirs do not wish to sell. The buyer can sue for specific performance.Another term for earnest money isLIQUIDATED DAMAGES A contract between a minor and an adult would be an
example of a/an:
VOIDABLE CONTRACT
If any change is made by the person receiving an offer (offeree), this constitutes a rejection of the original offer and
is known as a/an:
COUNTEROFFER
In the Common Law states, a contract is not considered valid unless each party has pledged to exchange
something of value with the other party. This is called:
CONSIDERATION
If the buyer should default in an earnest money contract,
the seller may retain the earnest money deposit as:
LIQUIDATED DAMAGES
In the Common Law states a contract must be
accompanied by:
CONSIDERATION
The substitution of one party to the contract for another party, or the replacement of a new obligation for an old one is called
NOVATION
A listing contract may be terminated ifBOTH PARTIES AGREE A type of fraud that is committed with no intent to harm,
mislead or misrepresent is:
CONSTRUCTIVE FRAUD
Conditions that must be met before a sales contract is fully enforceable are called?contingencies In what type of listing does the seller hire one broker but retains the right to sell the property himself without paying a commission to the broker?
EXCLUSIVE EGENCY LISTING
The seller received an offer on his home and sent a counter offer to the buyer. While the buyer was considering the counter offer, the seller received a higher offer with
better terms. The seller's agent advise him to:
Withdraw the counter offer before it is accepted and then accept the second offer.Procuring cause would not be required in order for a broker to receive a commission in a
ECLUSIVE RIGHT TO SELL LISTING
Which of the following statements is true of an option?IT IS NOT MUTUALLY BINDING A contract is signed between buyer and seller. The contract would become impossible to perform if
THE HOUSE BURNS DOWN
A contract which has been signed but all the terms of the contract have not yet been met is said to be a/an executory contract.What document should be the basis for the closing statement?
PURCHASE AGREEMENT
A buyer becomes obligated whenthe agent presents him with the accepted contract A contract which is communicated in words, whether
spoken or written is a/an:
EXPRESS CONTRACT
The term that means that the contract must be performed
within the time limit specified is:
Time is of the essence.Ordering a meal in a restaurant and being expected to pay for it would be an example of what type of contract?
EXPRESS CONTRACT
In which type of listing contract does the seller retain the right to employ as many brokers as he wants to try to sell his property, but is only obligated to pay a commission to the one who actually finds a buyer?
OPEN LISTING
This clause insures that the broker will receive a commission if his client buys the house within a certain time period after the listing agreement has expired.
PROTECTION CLAUSE
A broker and a seller have signed an open listing contract.This would be an example of
BILATERAL CONTRACT
If a contract is not legal and is not binding on either party it is said to be VOID What type of title does the buyer hold when he has signed a purchase agreement but the sale has not closed?
EQUITABLE TITLE
When one party has substantially performed to the terms of the contract but has not completed every detail exactly as
the contract, this is known as:
substantial performance.A purchase agreement is signed for the purchase of a $400,000 house. A deposit of $10,000 is given to the broker and put in his escrow account. A month later, the buyer and seller agree not to go through with the sale.Which of the following should the agent do?The broker must return the deposit to the buyer.
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