Deck 11: Real Estate Contracts

Question 1

Contracts for the sale of real estate may by oral or in writing.

Answer 1

False

Question 2

Option contracts may have a term or may be opened ended.

Answer 2

False

Question 3

Which of the following terms describes the situation in which a party to a contract fails to honor its contractual responsibilities?

A) Specific performance
B) Breach of contract
C) Punitive damages
D) Assignment

Answer 3

Breach of contract

Question 4

A valid contract requires competent parties. This means that at the time of making the contract, the parties:

A) must be of legal age.
B) must have competent mental capacity.
C) must not be under the influence of alcohol or other drugs.
D) all of the above.

Question 5

A change made to an offer:

A) is a counteroffer and extinguishes the original offer.
B) has no effect on the original offer.
C) extends the time that the original offer may be considered.
D) is an acceptance of the original offer.

Question 6

A bilateral contract is one in which:

A) a promise is given in exchange for an act.
B) a promise is given for a promise.
C) performance requires one party to act before the other party has to do anything.
D) one of the parties is a minor.

Question 7

A contract entered into with a minor is:

A) void.
B) voidable by either party.
C) voidable by the minor only.
D) voidable by the party that is not a minor.

Question 8

In the event of a default by one party in a contract, the earnest money may be used as:

A) liquidated damages.
B) a measure of the actual damages.
C) a measure of the punitive damages.
D) a measure of the actual, punitive, and liquidated damages.

Question 9

What is the legal term for when a judge orders a party to a contract to do what it said it was going to do?

A) Punitive damages
B) Specific performance
C) Liquidated damages
D) Breach of contract

Question 10

Time limits in offers are:

A) of a certain stated duration or for a reasonable amount of time.
B) set by local custom.
C) set by the licensing acts.
D) not important.

Question 11

If an offer is in writing, the acceptance:

A) may be in writing or oral.
B) does not have to be communicated to the offeree.
C) may be assigned.
D) must be in writing.

Question 12

A listing agreement is:

A) not considered an offer.
B) the employment contract between the seller and the broker.
C) usually in writing.
D) all of the above.

Question 13

The type of deed that is usually given by the seller to the buyer is:

A) a special warranty deed.
B) a bargain and sale deed.
C) a general warranty deed.
D) a quitclaim deed.

Question 14

The name for a condition stipulated in a contract that must be satisfied in order for the contractual obligation to be fulfilled is:

A) an option.
B) a contingency.
C) the consideration.
D) mutual assent.

Question 15

At closing, the property taxes for the current year are:

A) paid for the entire year by the seller.
B) paid for the entire year by the buyer.
C) prorated (divided between seller and buyer based on their ownership).
D) paid by the title company.

Question 16

Define "executed contract" and "executory contract."

Question 17

What is a marketable title?

Question 18

What is the difference between "reasonable time" and "time is of the essence"?

Question 19

In an installment land contract or contract for deed, the buyer gains immediate possession and typically starts paying insurance and repairs. Who has legal title in this case?

Question 20

You meet someone in the local tavern and strike up a conversation about real estate. It turns out that you have a piece of property that you would like to sell and he is interested in buying it. Over several alcoholic drinks, the two of you work out the details and jot them down on cocktail napkins. In the cold light of day, you realize that the sales price is far below market. Is there anything that you can do? Is there anything the buyer can do to enforce the agreement? (In your discussion, list the five basic elements of a valid contract.)

Question 21

Discuss at least three reasons why parties might choose to enter into an option contract.