Question 1

The laws of some states require that real estate brokers provide buyers and sellers with a list of estimated closing costs before signing a contract for sale.At the closing,it is typically which of the following party's responsibilities to pay the full premium for an owner's title insurance policy?
A)Buyer
B)Seller
C)Lender
D)Broker

Accepted Answer

B

Question 2

While the principal parties to a transaction must be legally competent for a contract to be valid,it is possible for a party acting on behalf of a principal to obtain this legal right.In order for personal representatives and trustees to be authorized to act on behalf of a principal,a legal instrument commonly referred to as ____________ must be in place.
A)assignment
B)power of attorney
C)mutual assent
D)consideration

Accepted Answer

A power of attorney is a legal instrument that allows a person (the agent) to act on behalf of another person (the principal). This legal document must be in place for personal representatives and trustees to obtain the legal right to act on behalf of a principal. Therefore, the best choice is B - power of attorney.

Question 3

Recording documents in the public records informs anyone who may have a potential interest in a property of both the owner and lender.In so doing,it provides what is commonly
Referred to as ____________ of an interest in real property.
A)mutual assent
B)constructive notice
C)consideration
D)simultaneous issue

Accepted Answer

Constructive notice is the legal concept that recording a document in the public records provides notice to the world of the information contained in the document. In the context of real property, recording a deed or mortgage in the public records gives constructive notice to anyone who might have an interest in that property, such as potential buyers, creditors, or other lenders. This means that anyone who wants to deal with the property must take into account the information provided by the public record, such as the identity of the owner and any liens or mortgages on the property.

Question 4

The distinction between legal title and equitable title is an important concept in the contract for sale of real estate.When the buyer obtains equitable title,the seller can no longer sell the property to someone else,even though the legal title has not officially passed on.In the contract for sale process,the creation of equitable title occurs when:
A)The contract for sale is written.
B)The contract for sale is signed.
C)The contract terms are orally agreed upon.
D)Each party is deemed legally competent.

Accepted Answer

Equitable title is created when the contract for sale is signed. At this point, the buyer gains an interest in the property even though legal title has not yet been transferred. Therefore, the correct answer is B.

Question 5

Contracts for sale may contain sections that cause implementation of the contract to depend on the successful completion of some prior action such as the buyer's ability to obtain financing on specified terms.This type of contract is commonly referred to as a(n):
A)contract assignment
B)equitable title
C)contract with contingencies
D)uniform settlement statement

Accepted Answer

A contract with contingencies is a contract that includes conditions that must be met before the contract can be fully executed. It is also referred to as a conditional contract or a contingency contract. This type of contract is commonly used in real estate transactions where the buyer's ability to obtain financing, the outcome of inspections or appraisals, or the seller's ability to clear any title issues are all contingencies that must be met before the contract can be fully executed.

Question 6

The successful conveyance of real estate depends on a well-formed contract for sale since the contract dictates the rights and type of deed involved,as well as choreographs the entire transaction.Which of the following features of the contract for sale refers to the arrangements agreed to by the parties,such as price and date of closing?
A)Contract terms
B)Contract conditions
C)Equitable title
D)Contingency clause

Accepted Answer

Contract terms are the agreed-upon arrangements between the parties, including the price and date of closing. Contract conditions refer to any provisions that must be met for the contract to be binding, and equitable title refers to an interest in the property that has not yet been transferred by deed. A contingency clause is a provision that makes the contract contingent upon a certain event or condition, such as the buyer obtaining financing.

Question 7

When a buyer signs an offer to purchase a property,the broker receives a monetary amount from the purchaser of 5 or 10 percent of the purchase price.This deposit is commonly referred to as the:
A)commission
B)earnest money
C)closing cost
D)title insurance premium

Accepted Answer

The deposit received by the broker from the purchaser upon signing the offer to purchase is commonly referred to as the earnest money. It is typically 5 or 10 percent of the purchase price and shows the buyer's serious intent to purchase the property. It is held in an escrow account and applied to the purchase price at closing. Commission is the fee paid to the broker for their services, closing costs are expenses incurred during the transfer of ownership, and title insurance premium is the cost of insuring the title to the property.

Question 8

Since the seller often has utilized the property for a portion of the year in which the transaction is being made,certain costs associated with the property will be prorated at the closing.All of the following items are subject to being prorated EXCEPT:
A)Broker commission
B)Prepaid rent
C)Property tax
D)Mortgage interest

Accepted Answer

Broker commission is not a cost associated with the property and therefore cannot be prorated at closing. Prepaid rent, property tax, and mortgage interest are all costs associated with the property and can be prorated at closing.

Question 9

In accordance with RESPA,whenever a buyer obtains a new first mortgage loan from a chartered or insured lender,when the loan is insured by the FHA or guaranteed by the VA,or when the loan will be sold to one of the federally related secondary mortgage market agencies,a good-faith estimate of the settlement costs must be provided by the lender within:
A)3 business days
B)5 business days
C)30 calendar days
D)90 calendar days

Accepted Answer

RESPA requires lenders to provide a good-faith estimate of settlement costs to borrowers within 3 business days when a new first mortgage loan is obtained from a chartered or insured lender, when the loan is insured by the FHA or guaranteed by the VA, or when the loan will be sold to one of the federally related secondary mortgage market agencies. This ensures transparency in the loan process and allows borrowers to compare offers from different lenders.

Question 10

When a party in a contract fails to perform (e.g.breach of contract,nonperformance,or default)the other party has a variety of remedies.All of the following are remedies that an aggrieved seller may pursue EXCEPT:
A)Sue for damages.
B)Retain the earnest money deposit as liquidated damages.
C)Agree to rescission of the contract.
D)Sue for specific performance.

Accepted Answer

Suing for specific performance is a remedy typically available to buyers, not sellers. Sellers usually seek damages or retain deposits, while specific performance compels the buyer to complete the purchase.

Question 11

In general,most contracts - including a real estate contract - can be assigned.All of the following statements regarding assignment are true EXCEPT:
A)Any type of personal performance contracted by one party cannot be assigned without that party's permission.
B)Land contracts are not assignable without the owner's permission
C)If buyers of real estate assign the contract,the new buyers may pay the agreed upon price and obtain title to the property.
D)When buyers assign their rights to someone else,they escape liability under the original contract.

Accepted Answer

When buyers assign their rights to someone else, they do not escape liability under the original contract. They remain liable for any breaches or obligations under the original contract.

Question 12

Since the issues in many transactions are similar,brokers often use standard preprinted contract forms.Generally,the best standard form contracts are those prepared and approved by which of the following parties?
A)Office supply firm
B)Seller
C)Local Board of Realtors
D)Web source of generic legal forms

Accepted Answer

Local Board of Realtors typically prepares and approves standard form contracts after consulting with attorneys and experienced brokers to ensure that the contract includes all necessary and appropriate terms and conditions for a real estate transaction. Using a standard form contract approved by the local board may provide greater protection for both the buyer and seller compared to other generic forms.

Question 13

The final step in a real estate transaction is the closing.In most closings,which party is responsible for seeing that the closing is completed successfully?
A)Escrow agent
B)Lender
C)Selling Broker
D)Listing broker

Accepted Answer

The answer of The final step in a real estate...

Question 14

The Real Estate Settlement Procedures Act (RESPA)is a federal law that requires federally chartered or insured lenders to provide buyers and sellers with information on all settlement costs.According to RESPA,loan closing information must be prepared on a special form known as the:
A)Uniform Settlement Statement or HUD-1 form
B)Good-faith estimate of settlement costs
C)Settlement Costs and You booklet
D)Certificate of occupancy

Accepted Answer

RESPA requires the loan closing information to be prepared on a special form known as the Uniform Settlement Statement or HUD-1 form. This form itemizes all the costs associated with the loan closing, including the fees charged by the lender, title company, and other third parties involved in the transaction. The form is designed to help buyers and sellers compare the settlement costs to the good-faith estimate of settlement costs provided by the lender at the beginning of the loan application process.

Question 15

At the closing,the buyer will be credited for a number of costs that have been paid up-front (or will be paid after closing)as well as a number of prorated expenses that account for the period of time during which the seller occupied the house.All of the following items detailed in the closing costs involve credits that are commonly passed on to the buyer EXCEPT:
A)Earnest money
B)Hazard insurance premiums
C)Property taxes
D)Mortgage interest

Accepted Answer

The answer of At the closing,the buyer will be credited...

Question 16

While fee splitting between cooperating real estate brokers is permitted,RESPA explicitly prohibits such actions as rebating part of the title insurance premium to the lender who recommended or required the title insurance.These unearned fees are commonly referred to as:
A)commissions
B)kickbacks
C)damages
D)specific performance dues

Accepted Answer

Rebating part of a fee to a party for recommending or requiring a service is considered a kickback, which is prohibited by RESPA. The other choices (commissions, damages, specific performance dues) do not accurately describe this type of situation.

Question 17

Any contract,whether it is for the sale of real estate or some other entity,must contain five basic elements.However,any contract for the sale of real estate must adhere to two additional requirements.Which of the following contract elements is an additional requirement that must be satisfied in a contract for sale of real estate that isn't necessarily a part of other contracts?
A)No defects to mutual assent
B)Consideration
C)Offer and acceptance
D)Written form

Accepted Answer

The written form is a specific additional requirement for contracts for the sale of real estate. While the other elements listed (no defects to mutual assent, consideration, offer and acceptance) are necessary components of all contracts, the written form is not necessarily a requirement for all types of contracts.

Question 18

If property owners fail to pay their taxes in a timely fashion,this can create a first lien on the mortgaged property.In order to protect against this,lenders often require that borrowers add what fraction of their estimated tax bill to their required monthly mortgage payments?
A)1/12
B)1/6
C)1/4
D)1/2

Accepted Answer

Lenders often require that borrowers add 1/12 of their estimated tax bill to their required monthly mortgage payments. This is because property taxes are typically due annually and are usually a significant expense for homeowners. By requiring borrowers to include a fraction of their tax bill in their monthly payments, lenders can ensure that the taxes are paid on time and prevent a first lien on the property. This also helps borrowers by spreading out the cost of their annual taxes over the course of the year, rather than having to come up with a large lump sum payment once a year.

Question 19

Both parties to a valid and enforceable contract must provide consideration.In a contract for the sale and purchase of real estate,which of the following depicts the seller's
Consideration?
A)A meeting of the minds with the buyer.
B)The option to present a counteroffer.
C)The property to be given up.
D)The money or goods that constitute the purchase price.

Accepted Answer

The seller's consideration in a real estate contract is the property they are giving up in exchange for the buyer's consideration, which is typically the purchase price.

Question 20

In certain circumstances,mutual assent between the contracting parties may be broken,thus invalidating the contract.Which of the following defects to mutual assent involves compelling a person to act by the use of force?
A)One of the parties is under duress.
B)One of the parties is under undue influence.
C)One of the parties is under menace.
D)One of the parties is committing frauD.

Accepted Answer

Duress involves compelling a person to act against their will by the use of force or threat, thus invalidating mutual assent in a contract.

Quiz 13: Contracts for Sale and Closing

The laws of some states require that real estate brokers provide buyers and sellers with a list of estimated closing costs before signing a contract for sale.At the closing,it is typically which of the following party's responsibilities to pay the full premium for an owner's title insurance policy?

Recording documents in the public records informs anyone who may have a potential interest in a property of both the owner and lender.In so doing,it provides what is commonly Referred to as ____________ of an interest in real property.

Contracts for sale may contain sections that cause implementation of the contract to depend on the successful completion of some prior action such as the buyer's ability to obtain financing on specified terms.This type of contract is commonly referred to as a(n) :

When a buyer signs an offer to purchase a property,the broker receives a monetary amount from the purchaser of 5 or 10 percent of the purchase price.This deposit is commonly referred to as the:

Since the seller often has utilized the property for a portion of the year in which the transaction is being made,certain costs associated with the property will be prorated at the closing.All of the following items are subject to being prorated EXCEPT:

When a party in a contract fails to perform (e.g.breach of contract,nonperformance,or default) the other party has a variety of remedies.All of the following are remedies that an aggrieved seller may pursue EXCEPT:

In general,most contracts - including a real estate contract - can be assigned.All of the following statements regarding assignment are true EXCEPT:

Since the issues in many transactions are similar,brokers often use standard preprinted contract forms.Generally,the best standard form contracts are those prepared and approved by which of the following parties?

The final step in a real estate transaction is the closing.In most closings,which party is responsible for seeing that the closing is completed successfully?

The Real Estate Settlement Procedures Act (RESPA) is a federal law that requires federally chartered or insured lenders to provide buyers and sellers with information on all settlement costs.According to RESPA,loan closing information must be prepared on a special form known as the:

While fee splitting between cooperating real estate brokers is permitted,RESPA explicitly prohibits such actions as rebating part of the title insurance premium to the lender who recommended or required the title insurance.These unearned fees are commonly referred to as:

If property owners fail to pay their taxes in a timely fashion,this can create a first lien on the mortgaged property.In order to protect against this,lenders often require that borrowers add what fraction of their estimated tax bill to their required monthly mortgage payments?

Both parties to a valid and enforceable contract must provide consideration.In a contract for the sale and purchase of real estate,which of the following depicts the seller's Consideration?

In certain circumstances,mutual assent between the contracting parties may be broken,thus invalidating the contract.Which of the following defects to mutual assent involves compelling a person to act by the use of force?