risks
A buyer purchases a property based on financial statements provided by the seller showing strong rental income. After closing, the buyer learns that the previous owner fabricated some of the income records. This situation is most closely associated with: A. Future risk; B. Present risk; C. Past/historical risk; D. Transfer risk
C: past/historical risk involve uncertainty about past info used in making decisions
Seller signs an exclusive agency listing agreement with Broker. Later, Seller independently finds a buyer without the broker’s help and sells the property. Which statement is correct? A. Broker is entitled to the commission; B. Broker is not entitled to the commission; C. Broker receives half the commission; D. Broker may only recover marketing expenses
B: under exclusive agency the broker is the only agent but seller may sell personally w/o paying commission
Seller and Buyer enter into a purchase contract. Before closing, a fire destroys the property without fault of either party.Under the majority rule (equitable conversion), the risk of loss typically falls on: A. seller; B. Buyer; C. Lender; D. Broker
B. buyer
Buyer and Seller orally agree to sell property for $500,000. Buyer takes possession of the property and begins constructing improvements.
Under the part performance exception, the contract may be enforceable because: A. The statute of frauds never applies to land sales; B. Buyer partially performed the agreement; C. Oral contracts for land are always enforceable; D. Possession automatically transfers legal title
B
Buyer purchases a home for $600,000. Buyer pays $120,000 at closing and borrows the remainder from a bank.
The $120,000 is best characterized as:
A. Debt financing
B. Equity investment
C. Earnest money
D. Loan commitment
b. the down payment represents the buyers equity in the prop
A developer purchases land believing the property is zoned for commercial development. Later, the developer learns the property is actually restricted to residential use due to a misinterpretation of zoning regulations. This is best categorized as: A. Present risk; B. Past risk; C. Marketplace risk; D. Investor risk
A: present risk includes mistakes regarding current conditions such as zoning or regulations
Broker signs a listing agreement with Seller and lists the property on the Multiple Listing Service (MLS). Broker B later shows the property to a buyer who ultimately purchases the property. Broker B is most accurately described as: A. Dual agent; B. Listing broker; C. Selling or cooperating broker; D. Transaction broker
C:
Seller promises in the purchase agreement to repair the roof before closing. The deed delivered at closing does not mention the roof repairs. Seller fails to repair the roof. Under the doctrine of merger, the buyer’s claim: A. Automatically survives closing; B. Is extinguished unless the promise is collateral to title; C. Is converted into a warranty deed covenant; D. Automatically becomes a lien
B. contract promises merge into the deed unless collateral
Under the minority rule, the risk of loss during the executory period falls on:
A. The seller regardless of possession
B. The buyer once the contract is signed
C. The party in possession of the property
D. The lender financing the purchase
C
Buyer borrows $400,000 from a lender. Buyer signs two documents: one promising to repay the loan and another granting the lender a lien on the property.
The document granting the lien is:
A. Promissory note
B. Mortgage
C. Loan commitment
D. Escrow agreement
B mortgage grants the lender a lien
Two parties complete a real estate transaction, but the deed incorrectly describes the property boundaries due to a drafting error. This problem most directly relates to: A. Marketplace risk; B. Transfer risk; C. Past risk; D. Credit risk
B: transfer risks involve problems with the mechanics of transferring prop
Under an exclusive right-to-sell agreement, the broker receives a commission only if the broker personally finds the buyer. T/F
False: broker gets commission no matter who finds the buyer
During the executory contract stage, legal title has already transferred to the buyer. T/F
False; transfers at closing
Under the Uniform Vendor and Purchaser Risk Act (UVPRA), the risk of casualty loss shifts to the buyer when:
A. The contract is signed
B. The deed is recorded
C. The earlier of buyer possession or delivery of the deed
D. Financing is obtained
C
Buyer obtains a valid loan commitment, but at closing the lender refuses to fund the loan despite Buyer satisfying all conditions.
Under the rule in your outline, Buyer is considered:
A. Not in default because the lender breached
B. In default under the purchase agreement
C. Automatically entitled to specific performance
D. Automatically entitled to rescission
B
Sunk costs are generally irrelevant to future decision-making because they cannot be recovered. T/F
T
Under the majority rule, a broker earns a commission when a ready, willing, and able buyer is produced, even if the sale never closes. T/F
True
1. Buyer and Seller negotiate price, inspect property, and discuss possible financing options. 2. Buyer and Seller sign a purchase agreement, but ownership has not yet transferred. 3. Buyer pays the purchase price, seller delivers the deed, and title transfers. 4.Buyer sues seller for fraud after discovering concealed structural defects months after closing. 5.Buyer obtains a loan commitment and completes inspections required under the purchase agreement.6. Buyer and seller prorate property taxes and utilities. 7. Buyer and seller exchange offers and counteroffers but no agreement has yet been signed. 8. Seller pays off the existing mortgage using proceeds from the sale. 9. Buyer records the deed after the sale is completed. 10. The buyer holds equitable title while waiting for closing.
what stage is each
1. pre contract
2. executory
3. closing
4 post closing
5 executory
6. closing
7 pre contract
8 closing
9 post closing
10 executory
Seller fails to complete a minor repair required under the contract before closing.
Under contract principles, this failure most likely:
A. Excuses the buyer’s performance entirely
B. Allows the buyer to cancel automatically
C. Creates a claim for damages but does not excuse performance
D. Transfers title to the buyer
C partial breach
Buyer deposits $20,000 earnest money into escrow. The contract states that if Buyer defaults, the seller may keep the earnest money as liquidated damages.
This provision is enforceable only if:
A. The amount equals the purchase price
B. The amount is reasonable
C. The buyer agrees after closing
D. The seller requests court approval
b
Opportunity cost refers to expenses that cannot be recovered after a project is abandoned.T/F
F. that describes sunk costs
Broker signs a net listing agreement with Seller. Seller agrees that the property must sell for at least $500,000, and the broker may keep any amount above that price. Broker sells the property for $560,000. Broker’s compensation is: A. $30,000; B. $60,000; C. $500,000; D. $560,000
B 60k
1. pre contract
2 executory
3 executory
4 closing
5 closing
6 executory
7 closing
8 post closing
9 post closing
10 executory
11 pre contract
12 closing
Option contracts give the option holder equitable title to the property. T/F
F
A loan commitment is the actual loan agreement between the borrower and lender.
false