Question 1

A broker's commission is most likely earned when the broker:

Accepted Answer

The answer of A broker's commission is most likely earned...

Question 2

When a buyer backs out of a home sale, the most common outcome is:

Accepted Answer

When a buyer backs out of a home sale, the most common outcome is that the buyer gets back the deposit and the seller hopes to find another buyer. This is because the deposit is intended to be used as a form of security for the seller in case the buyer backs out. While the seller may be able to sue for damages or specific performance, it is generally easier and less costly to simply find another buyer. The broker may still expect the seller to pay the commission, but this would be outlined in the listing agreement.

Question 3

An oral contract is made between an agent and a seller for the sale of real property. The seller refuses to pay the commission after the sale of the property. This contract between the seller and the agent is:

Accepted Answer

The Statute of Frauds requires certain contracts, including those for the sale of real property or contracts that cannot be performed within one year, to be in writing to be enforceable. Since the contract between the agent and the seller for the sale of real property and the agreement for compensation was oral, it is considered unenforceable under the Statute of Frauds.

Question 4

A buyer makes an offer on a lot for $150,000 and the seller counter offers for $158,000. The buyer is:

Accepted Answer

The buyer is relieved from any further liability because the seller's counteroffer effectively rejects the original offer and presents a new offer, freeing the buyer from their original proposal.

Question 5

Under an option agreement, the grantor/owner of the property is the:

Accepted Answer

The grantor/owner of the property is the optionor in an option agreement. The optionor grants the option to the optionee (or option holder) to purchase the property at a specified price within a specified time frame.

Question 6

The disclosure requirement that is concerned with special flood areas, dam failure, high fire severity, wild and forest fire, earthquake fault zone, and seismic hazard zones, is the:

Accepted Answer

The disclosure requirement for special flood areas, dam failure, high fire severity, wild and forest fire, earthquake fault zone, and seismic hazard zones is covered by the Natural Hazard Disclosure Statement. This statement is required by law in California and other states and is intended to inform buyers about potential hazards associated with the property they are considering purchasing.

Question 7

At what minimum age is a civilian single person, who has not had any court or guardianship intervention, legally capable of entering into an enforceable real estate contract?

Accepted Answer

In most states, the legal age of majority is 18. Therefore, a civilian single person who is at least 18 years old and has not had any court or guardianship intervention is legally capable of entering into an enforceable real estate contract.

Question 8

Six separate co-buyers of a parcel of land signed a deposit receipt contract at different times and places. A copy must be:

Accepted Answer

Each co-buyer should receive a copy of the deposit receipt contract at the time they sign to ensure they have a record of the agreement.

Question 9

There are some basic provisions that should be included in a contract. Which one of the following is one of those provisions?

Accepted Answer

Consideration is a basic provision that should be included in a contract. It refers to what is being exchanged between the parties involved, such as money, goods, or services. The names of the parties involved and their financial information do not necessarily need to be included in the contract.

Question 10

An owner lists a home for sale with XYZ Realty, with instructions to submit the listing to the multiple listing service and invite other brokers to help find a buyer. This is an example of a:

Accepted Answer

The scenario describes a cooperating agency relationship, where the listing agent (XYZ Realty) invites other brokers to bring buyers and share in the commission. This is a common practice in real estate and does not constitute a dual agency (where one firm represents both the buyer and seller in the same transaction) or a buyer's agency (where the agent works exclusively for the buyer). Implied agency is a concept where an agency relationship may be formed unintentionally through the actions of the parties involved, but it is not relevant to this scenario.

Question 11

When a buyer is purchasing a condominium or PUD, said buyer must be given which of the following regarding the CC&Rs, homeowner dues, and financial and legal status of the homeowner's association?

Accepted Answer

The Common Interest Development General Information (CID) is required to be given by the seller to the buyer when purchasing a condominium or PUD. This document includes information on the CC&Rs, homeowner dues, and financial and legal status of the homeowner's association. The other documents mentioned (Seller Financing Addendum and Disclosure Statement, Natural Hazard Disclosure Statement, and Real Estate Transfer Disclosure Statement) are required in other situations, but not specifically for the purchase of a condominium or PUD.

Question 12

The listing agreement stated that the existing loan was to be assumed. The broker received an offer per the exact terms of the listing except that the buyer wanted to put on a new loan. The seller refused the offer. The broker would be:

Accepted Answer

The offer did not conform to the terms of the listing agreement, which specifically stated that the existing loan was to be assumed. Therefore, the broker cannot be entitled to any commission.

Question 13

Which of the following indicates the greatest progress toward completion of a sale?

Accepted Answer

The broker notifying the buyer of the seller's acceptance of the buyer's offer indicates that all parties have agreed to the terms of the sale and closing is pending. It is the most conclusive step towards completion of a sale. The other options indicate some level of negotiation or agreement, but not necessarily finality.

Question 14

What is a contract called whereby the seller agrees to pay a commission and the broker agrees to use diligence in finding a buyer?

Accepted Answer

This type of contract involves mutual promises, with both the seller and the broker agreeing to certain obligations. It is also considered executory because both parties have yet to fulfill their promises until a buyer is found and the transaction is completed. Additionally, the contract involves a commission payment from the seller to the broker, in exchange for the broker's diligent efforts to locate a suitable buyer.

Question 15

An exclusive right to sell listing is given to Broker Pardo, a sole owner, but Pardo dies prior to finding a buyer; the listing:

Accepted Answer

The listing agreement is a personal contract between the seller and the broker. If the broker dies, as in this case, the contract (listing) terminates because the personal services for which the contract was made are no longer possible.

Question 16

According to the exclusive right to sell CAR Residential Listing Agreement, a real estate broker is entitled to the commission if the property is:

Accepted Answer

According to the exclusive right to sell CAR Residential Listing Agreement, the real estate broker is entitled to a commission if the property is sold during the listing period. The other options (A, C, and D) do not involve a sale of the property and therefore do not trigger the commission entitlement for the broker.

Question 17

When would a broker be legally required to reveal the amount of commission under a net listing?

Accepted Answer

A broker is legally required to reveal the amount of commission under a net listing before the seller accepts the buyer's offer. This is because net listings are illegal in some states, and even in states where they are legal, brokers must disclose the commission amount to avoid conflicts of interest and ensure fair dealing with the seller.

Question 18

Sales price for a mobile home is $145,000; excluding the commission, the seller closing costs are $2,000. Seller's existing loan balance $80,000. Per the terms of the listing, the seller is guaranteed a net of $58,000. What is the broker's commission?

Accepted Answer

The seller needs to net $58,000 after paying off the loan balance of $80,000 and closing costs of $2,000. Therefore, the total amount needed is $58,000 + $80,000 + $2,000 = $140,000. The sales price is $145,000, so the broker's commission is $145,000 - $140,000 = $5,000.

Question 19

A real estate agent may legally refuse to show property available for sale to a person of a minority race if the:

Accepted Answer

The only legal reason among the options provided for a real estate agent to refuse showing a property is if the owners were out of town and had left instructions that the home was not to be shown to anyone during their absence. This reason is not discriminatory and applies to all potential buyers, regardless of race or minority status. Refusing to show property based on race or perceived suitability based on race (options A, C, and D) is illegal and violates fair housing laws.

Question 20

The sellers have accepted an offer in which they agreed to carry a second trust deed. What contract should be provided to the seller to be sure all the required information is available to them to enter into this type of agreement?

Accepted Answer

The Seller Financing Addendum and Disclosure Statement is the appropriate contract to provide to the seller when they have agreed to carry a second trust deed. This statement outlines the terms of the financing agreement, including the interest rate, payment schedule, and other important details. It also includes a disclosure of the risks involved with this type of financing for both the seller and the buyer.

Quiz 5: Real Estate Contracts and Mandated Disclosures