Question 1

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 transaction is the property they agree to transfer to the buyer. This is what the seller gives up in exchange for the purchase price, making it the consideration provided by the seller.

Question 2

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)Buyer
B)Seller
C)Local Board of Realtors
D)Broker

Accepted Answer

The best standard form contracts are those prepared and approved by the Local Board of Realtors. These forms are usually reviewed and revised regularly by attorneys and industry professionals to ensure that they are legally sound and up-to-date with current regulations and practices. Choosing a standard form contract approved by a reputable organization can help ensure a smoother and more legally sound transaction for both the buyer and seller.

Question 3

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 itself and therefore would not be subject to proration. Prepaid rent, property tax, and mortgage interest are all costs that are directly related to the property and would be subject to proration at closing.

Question 4

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)Competent parties
B)Consideration
C)Offer and acceptance
D)Written form

Accepted Answer

The additional requirement for a contract for the sale of real estate is that it must be in writing. This is not necessarily a requirement for other types of contracts, which can be formed orally. The other four elements (competent parties, consideration, offer and acceptance) are basic requirements for all types of contracts.

Question 5

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 6

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 that the buyer gives to the broker upon signing an offer to purchase a property is known as the earnest money. This deposit is typically 5 or 10 percent of the purchase price and shows the seller that the buyer is committed to buying the property. The broker holds the earnest money in an escrow account until the closing of the transaction, when it is either applied towards the purchase price or refunded to the buyer if the transaction falls through.

Question 7

In general,most contracts - including 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 buyer's 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. The original buyer is still responsible for any breaches of the contract by the assignee.

Question 8

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

The answer of In certain circumstances,mutual assent between the contracting...

Question 9

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

The answer of The laws of some states require that...

Question 10

At the closing,the buyer will be credited for a number of costs that have been paid up front 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

Hazard insurance premiums are typically paid by the buyer in advance and are not credited to the buyer at closing.

Question 11

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)Contract with contingencies

Accepted Answer

Contract terms refer to the specific arrangements agreed to by the parties, such as the price of the property and the date of closing. These terms are essential in guiding the transaction and determining the rights and obligations of each party involved.

Question 12

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 13

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 provides a legal presumption that documents recorded in the public records have given notice to anyone who may have a potential interest in a property, such as a subsequent purchaser or lender. This means that the recorded documents are deemed to be available knowledge to anyone who would reasonably be expected to discover them, even if they have not actually seen the records themselves. This helps to ensure that all parties involved in a real estate transaction are aware of any potential claims or liens against the property. Mutual assent refers to the meeting of the minds between parties to a contract, consideration is the exchange of something of value between parties to a contract, and simultaneous issue refers to the issuance of a title insurance policy at the same time as a loan policy.

Question 14

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 borrowers to add 1/12 of their estimated tax bill to their monthly mortgage payment in order to ensure that the taxes are paid on time and to prevent any first lien on the mortgaged property. This allows the lender to pay the taxes on behalf of the borrower and avoid any potential legal issues.

Question 15

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)assignment
B)equitable title
C)contract with contingencies
D)uniform settlement statement

Accepted Answer

Contracts with contingencies are those that have conditions or requirements that must be met before the contract can be successfully executed. These conditions may include obtaining financing, completing inspections, or obtaining necessary permits. Until these conditions are met, the contract is not legally binding.

Question 16

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 know as the:
A)Uniform Settlement Statement or HUD-1 form
B)Good-faith estimate
C)Settlement Costs and You booklet
D)Certificate of occupancy

Accepted Answer

RESPA requires that loan closing information be prepared on a special form known as the Uniform Settlement Statement or HUD-1 form. This form itemizes all charges and fees imposed on buyers and sellers, as well as the terms of the loan or mortgage. The HUD-1 form must be provided to the buyer at least 24 hours before closing, giving them an opportunity to review and understand the details of the transaction.

Question 17

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 the title insurance premium to the lender who recommended or required the title insurance is considered a kickback, which is explicitly prohibited by RESPA.

Question 18

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 agreed upon.
D)each party is deemed legally competent.

Accepted Answer

Equitable title is created when the contract for sale is signed by both parties, indicating their mutual agreement to transfer ownership at a later date. While the other factors (writing the contract, agreeing on terms, and legal competency) are important, they do not specifically create equitable title.

Question 19

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 authorizes a person, such as a personal representative or trustee, to act on behalf of a principal. This document grants legal authority to the agent to make decisions and take actions on behalf of the principal, including entering into contracts. Therefore, B is the correct answer. A is incorrect because an assignment refers to the transfer of rights or duties, while C and D are not relevant to the question.

Question 20

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

According to RESPA, the lender must provide a good-faith estimate of settlement costs within 3 business days 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. Therefore, the best choice is A: 3 business days.

Quiz 13: Contracts for Sale and Closing

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?

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?

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:

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?

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:

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

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?

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?

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:

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.

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?

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) :

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 know 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: