Deck 7: Real Estate Sales Contracts

Question 1

In a brokered real estate transaction, the amount of earnest money is determined by the

A) buyer.
B) seller.
C) by agreement between the buyer and seller.
D) by agreement between the buyer and broker.

Answer 1

C
The amount of earnest money is determined by agreement between the buyer and seller.

Question 2

The phrase "time is of the essence" means

A) that the broker must present the offer quickly.
B) that the transaction must close as soon as possible.
C) that punctual performance of the time limits set by the contract is essential.
D) little, since the phrase has no specific meaning.

Answer 2

C
The phrase "time is of the essence" means that punctual performance of the time limits set by the contract is essential.

Question 3

The process of dividing ongoing expenses and income items as of the closing date is called

A) prorating.
B) "as is" basis.
C) closing.
D) arbitrating.

Answer 3

A
The process of dividing ongoing expenses and income items as of the closing date is called

Question 4

The seller decided that he didn't want to sell his house a few days before closing. He can

A) simply not show up to sign the deed.
B) return the earnest money deposit and declare the contract void.
C) be sued by the buyer for specific performance and damages.
D) can refuse to pay the broker a commission.

Question 5

When a seller wishes to convey title by means of a statutory deed form, the salesperson

A) can advise the seller which deed form to use.
B) can advise seller to obtain the services of a lawyer.
C) can advise the buyer which tenancy to use.
D) can fill it out for the buyer.

Question 6

When property is purchased using a land sales contract, the instrument used to convey legal title would be

A) an executory deed.
B) a bargain and sale deed.
C) a warranty deed.
D) non-existent since legal title is not transferred until the contract is paid off.

Question 7

A broker is preparing an original real estate sales contract for a buyer and seller. Whom may he lawfully charge for this service?

A) Buyer
B) Seller
C) Buyer and seller
D) No one

Question 8

A real estate licensee may advise sellers or buyers regarding which of the following?

A) Which deed form to use
B) How to take title
C) Tax implications on the sale or purchase
D) Choices of financing for the transaction

Question 9

An earnest money agreement signed by all parties is

A) binding on the seller.
B) a binding contract on the seller only if it is full price and the terms of the listing agreement are met.
C) revocable by the buyer for 72 hours.
D) only binding on the buyer.

Question 10

What should a salesperson do if he receives a second bona fide offer after one offer has already been submitted to the seller but not yet accepted or rejected?

A) Allow the first purchaser to meet the second offer before submitting it
B) Hold the second offer until a decision is made on the first offer
C) Submit the second offer immediately
D) Submit the second offer only if it is better than the first

Question 11

The amount of earnest money necessary for a given transaction is NOT determined by

A) the buyer.
B) the seller.
C) the buyer and seller.
D) the broker.

Question 12

The phrase "as is" when used in real estate contracts means the buyer is accepting the property without

A) a survey.
B) a title report.
C) new financing.
D) warranty as to physical condition.

Question 13

If title to real property remains in the seller's name after it is sold on an installment payment plan, the buyer would have purchased it under

A) an FHA mortgage.
B) a conventional mortgage.
C) a contract for deed.
D) a VA loan.

Question 14

From the following, select the parties to a land sales contract.

A) Lessor-Lessee
B) Mortgagor-Mortgagee
C) Grantor-Grantee
D) Vendor-Vendee

Question 15

The printed portions of a standard residential sales contract refer to all the following EXCEPT

A) title insurance.
B) liens.
C) discount rates.
D) closing date.

Question 16

A valid enforceable sales agreement must

A) contain the grantor and grantee's signatures.
B) be accompanied by an earnest money deposit.
C) be written and delivered.
D) be written and mailed.

Question 17

When buying property under a land sales contract, which of the following does the buyer receive immediately?

A) Possession
B) Title
C) Encumbrances
D) Estate in fee simple

Question 18

If a contract of sale is subject to the buyer's ability to secure a loan, and after diligent effort the buyer is unable to do so by the stated deadline, the

A) contract would become void.
B) contract would be voidable by the seller only.
C) buyer must be allowed additional time to meet the condition.
D) contract would be voidable by the buyer.

Question 19

A purchase agreement for the purchase of real property is

A) not necessary in a cash sale when the amount of earnest money paid equals the purchase price.
B) a legally enforceable contract which is binding on the seller as soon as it is signed by the buyer if the price and terms of the listing agreement are met exactly.
C) legally enforceable and binding on the buyer as soon as it is signed by him.
D) enforceable when the seller signs it and the buyer is notified of the seller's acceptance.

Question 20

A real estate purchase agreement contract used by a multiple listing member may be all of the following EXCEPT

A) receipt for earnest money.
B) contract up to the date of closing.
C) commission agreement between the seller and broker.
D) statement of the buyer's costs.

Question 21

Walter has reserved the right, for a specific period of time, to buy Helen's house. Walter gave Helen a $500 deposit for this right. This transaction most likely involves an option.

Question 22

If the vendee is in default, the vendor

A) cannot pursue the right of foreclosure.
B) is in title.
C) no longer has equitable title.
D) retains color of title.

Question 23

When a property is optioned, the optionor is the

A) buyer.
B) vendor.
C) owner.
D) lessee.

Question 24

The vendor holds legal title to real property when a land sales contract has been entered into between the seller of the property and a buyer.

Question 25

Earnest money is required to make a sales contract enforceable.

Question 26

The legal grace period in an option to purchase real estate is how long?

A) 72 hours
B) 5 days
C) 30 days
D) There is no grace period

Question 27

Howard signed an option with Paula giving Paula the "right to purchase" in 90 days. Paula decided she did not want the property and did not exercise her option. Howard can

A) sue for specific performance.
B) sue for damages.
C) sue for specific performance and damages.
D) do nothing.

Question 28

Under a conditional land sales contract,

A) legal title is held by the vendee.
B) equitable title is held by the vendee.
C) legal title is held by a trustee.
D) equitable title is held by a trustee.

Question 29

A land sales contract passes

A) the right to destroy the property.
B) equitable title.
C) legal title.
D) no interest whatsoever.

Question 30

In most residential purchase agreements, the purchaser has the right to withdraw from the purchase without forfeiture of the earnest money if he cannot obtain necessary financing.

Question 31

At the time the expiration of an option to purchase, the optionee

A) can request his deposit back.
B) can renew the option or the same time period and terms.
C) can repossess the property.
D) forfeits his option money if he doesn't buy the property.

Question 32

Money paid upon signing of a contract of sale by the offeror is called earnest money.

Question 33

On a land sales contract, the seller must have marketable title for the property when the contract is recorded.

Question 34

Which of the following is true of a land sales contract?

A) Beneficiary holds naked legal title
B) Purchaser holds equitable title
C) Vendee holds full legal title
D) Mortgagor holds title

Question 35

An option is given wherein consideration is stated as $10.00. The option is

A) valid.
B) invalid for lack of sufficient consideration.
C) void.
D) unenforceable.

Question 36

After the seller has accepted an offer, the sales agent should deliver a copy of the agreement first of all to the lender.

Question 37

If a person has the right to rent a house and the guaranteed opportunity to buy it at a fixed price at a later date, he would have what is known as a lease with option to buy.

Question 38

The most time consuming item in carrying out the terms of the purchase contract is the termite inspection.

Question 39

An option to purchase real property is NOT

A) a contract.
B) covered by the statute of frauds.
C) covered by real property laws.
D) cancelable by the optionor.

Question 40

If the buyer needs possession prior to closing a separate rental agreement should be used.

Question 41

The most important feature of a(n)____________________ contract is that the seller does not deliver a deed to the buyer at closing.

Question 42

When two properties are exchange rather than each being sold independently, it is likely structured as a(n)_________________________ exchange.

Question 43

The process of dividing ongoing expenses and income items at closing is known as ____________________.

Question 44

If the buyer is unable to obtain financing on the terms outlined in the sales agreement, the seller will have to return the buyer's deposit.

Question 45

Any item of personal property to be sold with the real estate must be handled with a bill of sale.

Question 46

Under an installment sale, the seller is known as the ____________________ and the buyer is known as the ____________________.

Question 47

"Time is of the essence" means that the time limits set by the contract must be faithfully observed or the contract is voidable by the defaulting party.

Question 48

A lease-option allows a tenant to buy a property at a preset price and terms during the option period.

Question 49

The rejection of even the smallest portion of an offer is a rejection of the entire offer.

Question 50

A rider is any addition annexed to a document and made a part of the document by reference is also known as a(n)____________________ or a(n)____________________.

Question 51

____________________ is of the ____________________ is a phrase that means that the time limits of a contract must be faithfully observed or the contract is voidable.

Question 52

In the event of default by the buyer the seller may sue for specific performance but not for money damages.

Question 53

After the buyer signs the sales contract, he retains one copy and the rest are delivered to the seller for his decision.

Question 54

During the period beginning with the buyer and seller signing the contract and the seller delivering the deed, the buyer is said to hold "equitable title" to the property.

Question 55

Under a(n)____________________ contract, the buyer has a right to purchase the property but with no obligation to do so.

Question 56

The right to demand that title be conveyed upon payment of the purchase price is known as ____________________ title.

Question 57

A _________________________ allows the tenant to buy the property at a preset price for a given period of time.

Question 58

A rider is any addition annexed to a document and made part of the document by reference.

Question 59

If two or more parties want to express their mutual intention to buy, sell, lease, develop, or invest, and wish to do so without creating any firm, legal obligation, they may use a ______________________________.

Question 60

The federal government has authorized electronic signatures and documents.

Question 61

Choose the one most appropriate answer for each.
a."as is"
k.letter of intent
b.bill of sale
l.loan commitment
c.binder
m.optionee
d.closing date
n.option fee
e.delayed exchange
o.prorating
f.dry rot
p.purchase contract
g.earnest money deposit
q.qualified intermediary
h.equitable title
r.right of first refusal
i.installment contract
s."time is of the essence"
j.lease-option
t.vendee
written evidence of the sale of personal property

Question 62

Choose the one most appropriate answer for each.
a."as is"
k.letter of intent
b.bill of sale
l.loan commitment
c.binder
m.optionee
d.closing date
n.option fee
e.delayed exchange
o.prorating
f.dry rot
p.purchase contract
g.earnest money deposit
q.qualified intermediary
h.equitable title
r.right of first refusal
i.installment contract
s."time is of the essence"
j.lease-option
t.vendee
expresses a mutual intention to buy, sell, lease, develop, or invest without creating any firm obligation

Question 63

Choose the one most appropriate answer for each.
a."as is"
k.letter of intent
b.bill of sale
l.loan commitment
c.binder
m.optionee
d.closing date
n.option fee
e.delayed exchange
o.prorating
f.dry rot
p.purchase contract
g.earnest money deposit
q.qualified intermediary
h.equitable title
r.right of first refusal
i.installment contract
s."time is of the essence"
j.lease-option
t.vendee
the process of dividing ongoing expenses and income items

Question 64

Choose the one most appropriate answer for each.
a."as is"
k.letter of intent
b.bill of sale
l.loan commitment
c.binder
m.optionee
d.closing date
n.option fee
e.delayed exchange
o.prorating
f.dry rot
p.purchase contract
g.earnest money deposit
q.qualified intermediary
h.equitable title
r.right of first refusal
i.installment contract
s."time is of the essence"
j.lease-option
t.vendee
a phrase meaning that all parties to a contract are expected to perform on time as a condition of the contract

Question 65

Choose the one most appropriate answer for each.
a."as is"
k.letter of intent
b.bill of sale
l.loan commitment
c.binder
m.optionee
d.closing date
n.option fee
e.delayed exchange
o.prorating
f.dry rot
p.purchase contract
g.earnest money deposit
q.qualified intermediary
h.equitable title
r.right of first refusal
i.installment contract
s."time is of the essence"
j.lease-option
t.vendee
an agreement by a lender to make a loan

Question 66

Choose the one most appropriate answer for each.
a."as is"
k.letter of intent
b.bill of sale
l.loan commitment
c.binder
m.optionee
d.closing date
n.option fee
e.delayed exchange
o.prorating
f.dry rot
p.purchase contract
g.earnest money deposit
q.qualified intermediary
h.equitable title
r.right of first refusal
i.installment contract
s."time is of the essence"
j.lease-option
t.vendee
allows the tenant to buy the property at a preset price for a given period of time

Question 67

Choose the one most appropriate answer for each.
a."as is"
k.letter of intent
b.bill of sale
l.loan commitment
c.binder
m.optionee
d.closing date
n.option fee
e.delayed exchange
o.prorating
f.dry rot
p.purchase contract
g.earnest money deposit
q.qualified intermediary
h.equitable title
r.right of first refusal
i.installment contract
s."time is of the essence"
j.lease-option
t.vendee
a third-party escrow agent used in tax-deferred exchanges

Question 68

Choose the one most appropriate answer for each.
a."as is"
k.letter of intent
b.bill of sale
l.loan commitment
c.binder
m.optionee
d.closing date
n.option fee
e.delayed exchange
o.prorating
f.dry rot
p.purchase contract
g.earnest money deposit
q.qualified intermediary
h.equitable title
r.right of first refusal
i.installment contract
s."time is of the essence"
j.lease-option
t.vendee
property offered for sale in its present condition with no guarantee or warrant of quality provided by the seller

Question 69

Choose the one most appropriate answer for each.
a."as is"
k.letter of intent
b.bill of sale
l.loan commitment
c.binder
m.optionee
d.closing date
n.option fee
e.delayed exchange
o.prorating
f.dry rot
p.purchase contract
g.earnest money deposit
q.qualified intermediary
h.equitable title
r.right of first refusal
i.installment contract
s."time is of the essence"
j.lease-option
t.vendee
a non-simultaneous real estate trade

Question 70

Choose the one most appropriate answer for each.
a."as is"
k.letter of intent
b.bill of sale
l.loan commitment
c.binder
m.optionee
d.closing date
n.option fee
e.delayed exchange
o.prorating
f.dry rot
p.purchase contract
g.earnest money deposit
q.qualified intermediary
h.equitable title
r.right of first refusal
i.installment contract
s."time is of the essence"
j.lease-option
t.vendee
the buyer under a contract for deed

Question 71

Choose the one most appropriate answer for each.
a."as is"
k.letter of intent
b.bill of sale
l.loan commitment
c.binder
m.optionee
d.closing date
n.option fee
e.delayed exchange
o.prorating
f.dry rot
p.purchase contract
g.earnest money deposit
q.qualified intermediary
h.equitable title
r.right of first refusal
i.installment contract
s."time is of the essence"
j.lease-option
t.vendee
also known as a conditional sales contract, land contract, contract for deed, or agreement of sale

Question 72

Choose the one most appropriate answer for each.
a."as is"
k.letter of intent
b.bill of sale
l.loan commitment
c.binder
m.optionee
d.closing date
n.option fee
e.delayed exchange
o.prorating
f.dry rot
p.purchase contract
g.earnest money deposit
q.qualified intermediary
h.equitable title
r.right of first refusal
i.installment contract
s."time is of the essence"
j.lease-option
t.vendee
the right to match or better an offer before the property is sold to someone else

Question 73

Choose the one most appropriate answer for each.
a."as is"
k.letter of intent
b.bill of sale
l.loan commitment
c.binder
m.optionee
d.closing date
n.option fee
e.delayed exchange
o.prorating
f.dry rot
p.purchase contract
g.earnest money deposit
q.qualified intermediary
h.equitable title
r.right of first refusal
i.installment contract
s."time is of the essence"
j.lease-option
t.vendee
money paid for the privilege of having an option

Question 74

Choose the one most appropriate answer for each.
a."as is"
k.letter of intent
b.bill of sale
l.loan commitment
c.binder
m.optionee
d.closing date
n.option fee
e.delayed exchange
o.prorating
f.dry rot
p.purchase contract
g.earnest money deposit
q.qualified intermediary
h.equitable title
r.right of first refusal
i.installment contract
s."time is of the essence"
j.lease-option
t.vendee
the party receiving an option

Question 75

Choose the one most appropriate answer for each.
a."as is"
k.letter of intent
b.bill of sale
l.loan commitment
c.binder
m.optionee
d.closing date
n.option fee
e.delayed exchange
o.prorating
f.dry rot
p.purchase contract
g.earnest money deposit
q.qualified intermediary
h.equitable title
r.right of first refusal
i.installment contract
s."time is of the essence"
j.lease-option
t.vendee
rotted wood;usually the result of alternate soaking and drying over a long period of time

Question 76

Choose the one most appropriate answer for each.
a."as is"
k.letter of intent
b.bill of sale
l.loan commitment
c.binder
m.optionee
d.closing date
n.option fee
e.delayed exchange
o.prorating
f.dry rot
p.purchase contract
g.earnest money deposit
q.qualified intermediary
h.equitable title
r.right of first refusal
i.installment contract
s."time is of the essence"
j.lease-option
t.vendee
money that accompanies an offer to purchase as evidence of good faith

Question 77

Choose the one most appropriate answer for each.
a."as is"
k.letter of intent
b.bill of sale
l.loan commitment
c.binder
m.optionee
d.closing date
n.option fee
e.delayed exchange
o.prorating
f.dry rot
p.purchase contract
g.earnest money deposit
q.qualified intermediary
h.equitable title
r.right of first refusal
i.installment contract
s."time is of the essence"
j.lease-option
t.vendee
a written and signed agreement specifying the terms at which a buyer will purchase and an owner will sell

Question 78

Choose the one most appropriate answer for each.
a."as is"
k.letter of intent
b.bill of sale
l.loan commitment
c.binder
m.optionee
d.closing date
n.option fee
e.delayed exchange
o.prorating
f.dry rot
p.purchase contract
g.earnest money deposit
q.qualified intermediary
h.equitable title
r.right of first refusal
i.installment contract
s."time is of the essence"
j.lease-option
t.vendee
the day on which the buyer pays his money and the seller delivers title

Question 79

Choose the one most appropriate answer for each.
a."as is"
k.letter of intent
b.bill of sale
l.loan commitment
c.binder
m.optionee
d.closing date
n.option fee
e.delayed exchange
o.prorating
f.dry rot
p.purchase contract
g.earnest money deposit
q.qualified intermediary
h.equitable title
r.right of first refusal
i.installment contract
s."time is of the essence"
j.lease-option
t.vendee
the right to demand that the title be conveyed upon payment of the purchase price

Question 80

Choose the one most appropriate answer for each.
a."as is"
k.letter of intent
b.bill of sale
l.loan commitment
c.binder
m.optionee
d.closing date
n.option fee
e.delayed exchange
o.prorating
f.dry rot
p.purchase contract
g.earnest money deposit
q.qualified intermediary
h.equitable title
r.right of first refusal
i.installment contract
s."time is of the essence"
j.lease-option
t.vendee
a short-form purchase contract to hold a real estate transaction together until a more formal contract can be prepared an designed