Contracts Practice Exam PDF

12/8/24, 6:36 PM Print Practice Exam Practice Exam: Contracts 1. One of the main benefits of a sale-leaseback transaction would be: A. the ability to maintain the book value by the new buyer. B. the ab...

12/8/24, 6:36 PM Print Practice Exam Practice Exam: Contracts 1. One of the main benefits of a sale-leaseback transaction would be: A. the ability to maintain the book value by the new buyer. B. the ability of the seller to deduct all of his future rent payments as business expenditures. C. the purchaser has the option to lease the property back after the termination of the lease. D. the purchaser can get the deposit back with no objection. 2. When a counteroffer is made: A. the original offer becomes a unilateral offer. B. the original offeror cannot amend his terms. C. it is considered a partial acceptance of the original offer. D. the offeree becomes the offeror. 3. None of the following automatically terminates an offer to buy real property except: A. rejection of the offer by the offeror. B. rejection of the offer by the offeree. C. revocation of the offer by the offeree. D. an inquiry by the offeree as to whether the offeror will accept different terms. 4. In a listing, which clause will allow a broker to collect a commission for a specified period of time after the listing term has expired? A. Acceleration Clause. B. Delay Pay Clause. C. Protection Period Clause. D. Release Clause. 5. Broker A took an exclusive listing, then made an oral agreement with broker B to share the commission on the property if broker B found a buyer. Broker B procured an offer resulting in the sale of the property. If broker A refused to share his commission on the sale: A. He does not need to share the commission because it was an open listing. B. Broker B would stand a good chance of winning a court suit against broker A for his share of the commission. C. Broker B could petition the real estate commission for his share of the commission. D. He does not need to share the commission due to the Statute of Frauds. 6. The duration of a listing agreement is: https://www.prepagent.com/members/printexam/8544982 1/46 12/8/24, 6:36 PM Print Practice Exam A. whatever is negotiated between the broker and seller. B. 6 months. C. whatever is negotiated between the seller and the buyer. D. 90 days. 7. Which of the following is created when possession and title do not occur at the same time? A. Writ of execution B. Estate at Sufferance C. Subordination clause D. Interim Occupancy Agreement 8. Which of the following statements about options is false? A. The option binds the optionee to the performance B. Consideration must be given by the optionee to the optionor C. The optionee does not have any rights in the land D. A lease option is a unilateral contract 9. An Option: A. Requires the optionee to complete the purchase B. Gives the buyer a lien on the property C. Keeps an offer open for a specified period of time D. Results in a commission to the broker if the optionee does not exercise the option 10. A safety clause is found in a: A. Listing agreement B. Deposit receipt C. Loan broker's statement D. Lease 11. According to the Statute of Frauds, a contract which must be in writing in order to maintain a court action for enforcement is: A. a bill of sale on real property. B. the employment of a business opportunity to sell stock. C. the employment of a broker to exchange leases on a property zoned for retail. D. any real estate agreement which is not to be performed within one year. 12. If a person obtains a contract through duress, that contract is: A. Valid B. Void C. Voidable D. Unenforceable https://www.prepagent.com/members/printexam/8544982 2/46 12/8/24, 6:36 PM Print Practice Exam 13. All of the following are essentials of each and every contract, except: A. Capable parties B. Proper writing C. Mutual consent D. Lawful object 14. The law that requires real estate contracts to be in writing to be enforceable is the: A. statute of limitations. B. statute of frauds. C. parole evidence rule. D. law of descent and distribution. 15. To "assign" a contract for the sale of real estate means to: A. allow the seller and the buyer to exchange positions. B. record the contract with the county recorder's office. C. transfer one's rights under the contract. D. permit another broker to act as agent for the principal. 16. A property owner lists his property for sale with a broker. During the negotiations, the owner told the broker they wanted $138,000 for the property, and anything above that amount the broker could keep as his commission. The listing with this type of provision is known as the: A. open listing. B. non exclusive listing. C. gross listing. D. net listing. 17. Undue influence or duress applied to one party to a contract makes the contract: A. void. B. unenforceable. C. voidable. D. invalid. 18. A voidable contract is one which: A. is binding on neither party and not subject to ratification, but is still enforceable by a court of law. B. is subject to disciplinary action. C. has no force or effect. D. is valid now but can be voided by one party to a contract for due cause. https://www.prepagent.com/members/printexam/8544982 3/46 12/8/24, 6:36 PM Print Practice Exam 19. In accordance to the Statute of Frauds, which of the following must be in writing? A. A 9-month lease on a condominium unit B. The purchase contract for a single-family residence offered for sale by owner C. A bill of sale for appliances sold separately from the property D. A lease on a fruit or nut bearing tree for the time the fruit is in season, so it can be picked 20. The buyer of a home was not informed that the house was on a septic tank system, and she didn't discover this fact until the system backed up a few days before she took possession. The buyer typically has the right to: A. sue the title company for failure to discover the problem. B. rescind the contract. C. sue the broker for his license. D. remain silent. 21. In which of the following contracts does one of the parties agree not to revoke an offer for a certain period of time? A. A listing contract B. An option C. Estate for years D. A ratification 22. Any advance fee contract used in connection with a real estate or business opportunity listing must include all of the following except: A. The total amount of the advance fee to be charged; B. A detailed description of the services to be performed; C. The date the fee is to be paid. D. A guarantee that the sale, lease or exchange will be completed; 23. A listing agreement is essentially a/an: A. Option to sell B. Purchase contract C. A unilateral contract D. Employment contract 24. What listing requires an owner to pay a commission, even though the owner sells the property herself? A. Exclusive agency listing. B. Open listing. C. Net Listing. D. Exclusive right to sell listing. https://www.prepagent.com/members/printexam/8544982 4/46 12/8/24, 6:36 PM Print Practice Exam 25. The prospective purchaser may withdraw the offer at any time before the seller's acceptance of an offer: A. unless the offer states that is irrevocable. B. provided the offer is not supported by a deposit. C. for any reason. D. provided the offeree has breached the offer. 26. An optionor and an optionee make a contract for an option on a commercial piece of property. If the optionee decides to exercise his option, when must he perform? A. He must exercise his option when the optionor demands it B. He can exercise his option whenever he wants C. He must exercise his option under the terms of the option contract D. He must exercise his option within 6 months under state law 27. When agent Andy took a listing, he promised the seller that he would advertise the property in a magazine until it was sold. Andy did not do the advertising that he promised, and never intended to. Andy is guilty of: A. constructive fraud. B. objective fraud. C. comprehensive fraud. D. actual fraud. 28. Which of the following is NOT true about an option? A. The optionor retains the money paid for the option even if unexercised. B. The optionee has no interest or estate in the property until the option is exercised. C. The optionor can revoke the offer to sell during the designated period of time. D. The option rights are assignable unless otherwise noted. 29. When would a broker have a right to a commission based on negotiations that were started during the term of the listing agreement but completed after the listing agreement had expired? A. The listing agreement has a liquidated damages clause. B. The broker brings a court suit against their principal. C. The completion was during the protection period clause. D. The listing involves the exchange of properties. 30. What does the term "quiet enjoyment and possession" mean? A. Nuisance created by adjacent landowners B. Free from all encumbrances C. Possession without disturbance from owner of paramount title D. The right to tell your neighbors to be quiet https://www.prepagent.com/members/printexam/8544982 5/46 12/8/24, 6:36 PM Print Practice Exam 31. A contract in which all parties have fulfilled their promises is a(n): A. expired contract. B. contingent contract. C. executory contract. D. executed contract. 32. The primary purpose of a listing agreement is to: A. give the broker permission to sell all of his principal's properties. B. list all improvements and amenities of the property. C. serve as a guide for a sales contract. D. serve as a contract of employment between the owner and the broker. 33. Which of the following would not make a contract voidable? A. Illegal purpose B. Duress C. Undue influence D. Fraud 34. All of the following are essential elements of every valid contract, except: A. capable parties. B. a meeting of the minds. C. a legal act. D. the payment of money. 35. The document that defines the relationship between the broker and the seller is the: A. purchase contract. B. disclosure statement. C. listing agreement. D. exclusive agency contract. 36. Which of the following is NOT a type of listing contract? A. MLS contract B. exclusive right to sell C. open listing D. exclusive agency 37. An offeree has the right to: A. rescind an offer. B. reject an offer. C. release an offer. D. revoke an offer. https://www.prepagent.com/members/printexam/8544982 6/46 12/8/24, 6:36 PM Print Practice Exam 38. Which of the following is NOT required for a contract to be legally binding? A. Writing B. Mutual consent C. A lawful object D. Legal capacity 39. Janice Riceland is shown a home by her agent, Richard. She makes an offer and gives Richard a check. At what point does her offer become an enforceable contract to buy? A. As soon as Richard receives her offer and her check B. When Janice is notified the seller accepted the offer C. When the deposit check clears D. As soon as the seller receives the offer and the check 40. Which of the following prevents a person from adopting a position that conflicts with a previous position or a previous action? A. Lis pendens B. Doctrine of estoppels C. Doctrine of good faith D. Fiduciary duty 41. Monies, labor, supplies or other consideration given by a landlord to a tenant to construct the premises for occupancy would be called: A. Earnest money B. Security deposit C. Tenant improvement allowance D. Interim occupancy agreement 42. Tenant Albert agrees to perform certain property repairs for owner Bob. Despite repeated promises, Albert fails to perform the repairs. Bob then writes up a contract, and compels Albert to sign it by threatening to evict him if he doesn't. Such a contract would be: A. void. B. illegal. C. enforceable. D. voidable. 43. Broker Dave has an exclusive agency listing to sell a $200,000 home for owner Jones. Before the listing expires, the home was sold through Jones' own efforts to a friend, and Dave was refused payment of any commission. Dave is legally entitled to receive from Jones: https://www.prepagent.com/members/printexam/8544982 7/46 12/8/24, 6:36 PM Print Practice Exam A. a full commission. B. no commission. C. one-half of a commission. D. all expenses that he incurred when advertising the property. 44. Under which of the following listing must an owner pay a commission, even if he sells entirely through his own efforts? A. Exclusive agency listing B. Exclusive right to sell listing C. Non-exclusive listing D. Restricted listing 45. By signing an exclusive right to sell listing, the seller is creating a contract between himself and the: A. The MLS B. Buyer C. Sales Agent D. Broker 46. When a buyer withdraws his offer to purchase real property prior to acceptance by the seller, the: A. seller may sue the buyer for specific performance, and will probably win the suit. B. buyer is entitled to a refund of the earnest money deposit. C. seller is entitled to one-half of the earnest money deposit. D. broker may sue the buyer for specific performance. 47. Henry made an offer to purchase real property. However, he died of a heart attack before the listing broker could notify him of the signed acceptance by the seller. Based on these facts, which of the following is true? A. The death of Henry constituted a revocation of the offer. B. All of the other options are correct. C. The offer and acceptance constitute an enforceable contract. D. Notification to the administrator or executor would bind the estate. 48. An executed contract is a contract: A. Completed and fully performed by both parties B. Signed, notarized, and recorded C. That requires a novation D. Under the jurisdiction of the probate court 49. A voidable contract remains binding upon the parties until the contract is: https://www.prepagent.com/members/printexam/8544982 8/46 12/8/24, 6:36 PM Print Practice Exam A. qualified. B. rescinded. C. discovered. D. invalidated. 50. Joe gave Stephen an option for the purchase of his property. In law, such an option is regarded as: A. an involuntary lien on the real property. B. an agreement identical with the vendee/vendor relationship under a land contract. C. an offer to revoke a contract. D. a contract to keep the offer open. 51. Which is true concerning an option contract? A. The optionee has no interest or estate in the land B. Title acquired by exercising an option usually dates back to the time of the option and cuts off intervening rights acquired with knowledge of the existence of the option C. All of the other answers are correct D. Only the optionor is bound to a sale 52. Which of the following is not a necessary element in the formation of a contract? A. Performance B. Consideration C. Acceptance D. Offer 53. A contract between the seller of real property and a licensee, in which the seller agrees to pay the licensee a commission for producing a ready, willing, and able buyer and the licensee agrees to use due diligence in procuring the buyer, is called: A. A bilateral executed contract. B. A bilateral executory contract. C. A unilateral executory contract. D. A unilateral executed contract. 54. A contract that authorizes a real estate agent to sell a property during a specified time and allows that licensee to collect a commission if the sale is made by anyone, including the owner, is: A. an exclusive agency listing. B. an open listing. C. an exclusive right to sell. D. a net listing. 55. Which of the following is necessary for a real property conditional installment sales contract to be valid? https://www.prepagent.com/members/printexam/8544982 9/46 12/8/24, 6:36 PM Print Practice Exam A. Consideration, offer and acceptance, lawful object, competent parties, legally sufficient writing. B. Consideration, offer and acceptance, mutuality, competent parties, legally sufficient writing. C. Consideration, offer and acceptance, expressed time element, price. D. Lawful object, competent parties, offer and acceptance, legally sufficient writing. 56. A written agreement in which an owner allows an individual to use a property in exchange for rent, and also gives that individual the right to buy the property for a specified price within a specified period. This contract would most likely be a: A. Listing contract B. Estate at sufferance C. Estate for years D. Lease option 57. Which of the following would terminate an original offer? A. A counter offer B. Performance C. A forfeiture clause D. All of the other options are correct 58. A voidable contract is a contract that: A. Contains all of the legal essentials that are required for its existence; B. Is valid and enforceable on its face, but it may be rejected by one of the parties. C. Has no legal effect because it really is not a contract; D. Was valid at the time that it was signed, but for some reason cannot be proved or sued upon by either or both parties; 59. When one party is substituted for another party in a contract, the process is appropriately called a: A. waiver. B. novation. C. rescission. D. redaction. 60. A buyer enters into a verbal contract to purchase a house and immediately gives the broker an earnest money check for $500. Prior to performance under this contract, the verbal contract is considered legally: A. executed. B. enforceable. C. unenforceable. D. void. https://www.prepagent.com/members/printexam/8544982 10/46 12/8/24, 6:36 PM Print Practice Exam 61. Under a lease for a commercial property, a tenant agrees to pay $4,000 per month plus 3% of the gross monthly sales. This type of lease is called a: A. net lease. B. percentage lease. C. triple net lease. D. ground lease. 62. A salesperson who prepares a written listing agreement with a seller is helping to create a contractual relationship between the: A. salesperson and the buyer. B. salesperson's broker and the seller. C. salesperson and the listing broker. D. salesperson and the seller. 63. One of the required elements of a valid real estate sales contract is that it MUST: A. provide for method of payments. B. be signed by the seller. C. be signed by the buyer. D. provide for possession of the property by the buyer. 64. Under a sales contract, the legal remedy that may be used to force the seller to consummate the sale is called: A. an unlawful detainer. B. specific performance. C. a writ of execution. D. foreclosure. 65. If a lessee pays a fixed amount of rent plus all expenses such as taxes and insurance, the lease is known as a: A. graduated lease B. gross lease C. net lease D. percentage lease 66. A lease that provides for periodic increases of rent at regular intervals is called a: A. graduated lease B. long-term lease C. percentage lease D. yearly lease 67. When a contract states that "time is of the essence," the contract MUST be delivered and presented: https://www.prepagent.com/members/printexam/8544982 11/46 12/8/24, 6:36 PM Print Practice Exam A. within twenty-four hours B. as soon as possible C. within forty-eight hours D. within two business days 68. If the owners of a shopping center want a major department store's lease to provide rental payments that reflect the store's sales, they are MOST likely to use which of the following types of leases? A. Flat fee B. Percentage C. Gross D. Net 69. With the exception of court-ordered sales, the amount of earnest money to be deposited by a prospective buyer is determined by the: A. listing broker B. local real estate association C. agreement between the seller and the buyer D. state real property law 70. In the event that a buyer fails to perform on an agreement to purchase, the seller may be allowed to keep the earnest money deposit as: A. liquidated damages. B. an escrow bonus. C. due compensation. D. compensatory losses. 71. A written purchase agreement has been signed by both a buyer and a seller. The Uniform Vendor and Purchaser Risk Act states that until the buyer has either possession of or title to a property, responsibility for the physical condition of the property: A. is delegated to the buyer, who upon signing has equitable title to the property. B. is assumed by the seller's homeowner's insurance company. C. is given to a third party. D. remains with the seller. 72. Each party is bound to a specific date for performance if a real estate sales contract contains: A. a time limit for the buyer to secure mortgage financing. B. a congratulatory clause. C. a due-on-sale clause. D. a provision that time is of the essence. 73. To be valid, an exclusive listing contract must contain all of the following except: https://www.prepagent.com/members/printexam/8544982 12/46 12/8/24, 6:36 PM g Print Practice Exam g A. the signatures of all interested parties. B. an expiration date. C. a description of the property. D. the final contract price. 74. A promise in exchange for a promise, supported by consideration, is the basis for a: A. valid, binding, bilateral, contract. B. multilateral contract. C. offer to lease. D. unilateral contract. 75. Jones, the seller, receives an offer to purchase and puts forth a counteroffer to Brown, the buyer. Until Brown notifies Jones of his acceptance or rejection, Jones: A. cannot accept another offer from a different buyer. B. may produce a new counteroffer. C. may accept Brown's original offer. D. is legally bound to the terms of the counteroffer. 76. Under the statute of frauds, in order to be legally enforceable, all real estate contracts must be: A. drafted by a lawyer. B. in writing. C. on a government approved form. D. a unilateral agreement. 77. The earnest money accompanying a purchase offer: A. is not necessary to establish a valid contract. B. is mandated by federal law. C. must be held in escrow by the seller. D. is generally 7.5% of the proposed purchase price. 78. The party most likely to sue for specific performance in the purchase of real estate is the: A. Buyer. B. Appraiser. C. Broker. D. Lender. 79. Jones goes into a restaurant and orders lunch. At the end of the meal, is he legally obligated to pay the check? https://www.prepagent.com/members/printexam/8544982 13/46 12/8/24, 6:36 PM Print Practice Exam A. Yes, because Jones is liable through the process of novation. B. Yes, because by ordering, Jones entered into an implied contract to pay for the meal. C. Yes, but only if Jones is a legal adult. D. No, because strictly speaking, Jones did not promise to pay. 80. What is it called when a sum of money is submitted by a buyer with an offer to purchase? A. Liquidated damages B. A limited liability premium C. A warranty bond D. An earnest money deposit 81. The most important document in the sales process is the purchase contract because: A. unless a real estate transaction is in writing, state law dictates how the money is spent and distributed. B. it tells the government why the buyer wishes to buy. C. it provides the road map for the closing. D. the agent is not guaranteed fee without it. 82. One effect of a clause in a sales agreement that states that "time is of the essence" might be that: A. The seller can take care of matters at his convenience. B. The agent must see that the contract has been fulfilled prior to closing. C. All parties must attend to those details called for in the agreement in a timely manner. D. The buyer can take care of matters at his convenience. 83. If during negotiations one party crosses out or alters any wording in a contract: A. The whole contract becomes void. B. Each party must initial the change in the margin for it to be valid. C. The document must be retyped. D. The party who didn't make the changes or omissions becomes responsible for the deal. 84. Jones' offer to buy Brown's house has been accepted, but the actual sale will not take place for three months. Until then, their written sales contract is considered to be: A. Conditional. B. Voidable. C. Executory. D. Voided. https://www.prepagent.com/members/printexam/8544982 14/46 12/8/24, 6:36 PM Print Practice Exam 85. In April, Jones accepted an offer to sell his house to Brown. In June, Brown paid the purchase price and received a deed to the house and the keys. After June their contract was considered to be: A. Executed. B. Implied. C. Void. D. Liquidated. 86. When is a contract said to be discharged? A. When there are further actions to be taken. B. When most of its basic terms have been accomplished. C. Once all of its terms and conditions have been met. D. When the contract is in dispute. 87. Jones put his house on the market. Brown made a written purchase offer that Jones accepted in writing. When is the contract valid? A. As soon as the signatures are notarized B. When the broker gets his fee C. Immediately D. When Brown is notified of the acceptance 88. A buyer paid $2,800 for an option to purchase a property within 90 days for $450,000. Within a month, the buyer made an offer to buy the property immediately for $425,000. Which of the following is true in this situation? A. The option money is forfeited. B. The buyer is in default of the option agreement C. Both parties are in violation of contract law D. The owner may accept the offer for $425,000 89. The buyer gives the owner a $2,500 payment and a written agreement stating that, on June 1 of the following year, the buyer will purchase the property for $475,000 cash or the owner may keep the money. This transaction is known as: A. a lease purchase agreement B. a right of first refusal C. an installment sale D. an option agreement 90. The buyer has been held to be in default on a contract of sale. If buyer and seller had not agreed on liquidated damages, the seller could do which of the following? A. Require the buyer to find a substitute purchaser B. Obtain a court order preventing the buyer from purchasing another property C. Arrange for criminal proceedings against the buyer D. Sue the buyer for compensatory damages https://www.prepagent.com/members/printexam/8544982 15/46 12/8/24, 6:36 PM Print Practice Exam 91. When a contract contains provisions outlining what money penalties will be levied against the party that refuses to perform, the amount specified is known as: A. earnest money. B. performance guarantees. C. consideration. D. liquidated damages. 92. A prospect for the lease of a commercial property feels the need for adversarial representation and hires a broker to negotiate the lease on his behalf. What is the name of the contract entered into between the prospect and the broker? A. A property management agreement. B. A buyer broker agreement. C. An authorization to negotiate. D. A cooperative brokerage agreement. 93. What is an "executed contract?" A. A contract that has been terminated by both the listing agent and the home owner. B. A contract that is dead in the water. C. A contract in which all parties have fulfilled their promises, and performed the contract. D. A contract terminated by either party. 94. Which of the following would usually occur in a sale-and-leaseback transaction? A. The property is sold on the condition that the new owner lease it back to the seller at the time title passes. B. The seller gets a return on the purchase in the form of rental payments. C. The buyer keeps capital in inventories rather than in realty. D. The rent that the seller pays is not income-tax deductible. 95. Micah agrees to represent Dan in the sale of a property. The listing contract states that Micah will receive a fee of $25,000 from Dan at closing, regardless of the sales price. Is this a valid form of compensation? A. Yes. The broker is supposed to charge what the traffic will bear. B. Yes. Compensation can be determined in any number of ways, as long as the seller and broker agree. C. No. The seller should pay on a basis of a stated percentage of contract price. D. No. A flat fee exposes the seller to being cheated. 96. When part of an agreement is changed, or an agreement is replaced by a new one, it is called a: A. novation. B. ratification. C. waiver. D. assignment. https://www.prepagent.com/members/printexam/8544982 16/46 12/8/24, 6:36 PM Print Practice Exam 97. When zoning changes occur, but owners are allowed to continue with non- conforming uses, this is a: A. Subordination clause B. Grandfather clause C. Release clause D. Acceleration clause 98. The basic purpose of a listing agreement is to authorize the broker to: A. negotiate the contract. B. find a buyer. C. sell the house. D. market the house. 99. In which of the following situations could a broker receive no commission? A. The broker proves that he is the procuring cause of the buyer in an exclusive agency listing between himself and the seller B. The broker proves that he is the procuring cause of the buyer in an exclusive right to sell listing C. The broker proves that he is the procuring cause of the buyer in an open listing D. The broker proves that he is the procuring cause of the buyer in a net listing 100. If a principal no longer desires the broker to act for him during the period of an exclusive right to sell listing, he may: A. not revoke the agency, because an exclusive right to sell listing is an irrevocable contract. B. revoke the agency created by the listing contract without incurring damages. C. be forced to sell his property. D. revoke the agency created by the listing contract, but may be liable for damages. 101. The act of replacing an existing contract with a new one. A. Hypothecation B. Rediction C. Novation D. Subordination 102. A family signs a lease to rent a house from January 1st to June 30th. This is considered a(n): A. tenancy at sufferance. B. estate for years. C. periodic tenancy. D. tenancy at will. https://www.prepagent.com/members/printexam/8544982 17/46 12/8/24, 6:36 PM Print Practice Exam 103. A buyer has entered into an agreement with more than one buyer's agent at the same time. She only owes compensation to one of the brokers if she uses their services. This arrangement is known as a(n): A. exclusive buyer agency agreement. B. exclusive right agreement. C. multiple-listing agreement. D. open buyer agency agreement. 104. One week after entering into an exclusive authorization and right to sell listing, the owner dies. His designated administrator decides not to sell the property. In this case: A. the administrator must sell for the full 90-day listing period. B. the owner's death terminated the listing contract. C. the owner's heirs will be liable for the commission. D. the owner's estate will be liable for the commission. 105. Mr. Seller signs an open listing on his home with five different brokers. In this case: A. the owner must pay a full commission to all five brokers when it sells. B. each broker has an opportunity to earn the entire commission. C. the owner must pay the first broker to take the listing no matter who sells it. D. the brokers will split the commission five ways regardless of who sells it. 106. Under a lease, the leasehold interest lies in the: A. lessor. B. lessee. C. beneficiary. D. landlord. 107. Which of the following requires real estate listings to be in writing? A. Statute of Frauds B. CAR C. Statute of limitations D. Department of Real Estate 108. All of the following listings require that the broker be the "procuring cause" of the sale if he/she is to be entitled to a commission, EXCEPT: A. an exclusive listing. B. there are no exceptions, all listings require proven procuring cause. C. an open listing. D. an exclusive right to sell listing. https://www.prepagent.com/members/printexam/8544982 18/46 12/8/24, 6:36 PM Print Practice Exam 109. Mr. Owner enters into an exclusive listing with Broker X. One week later, Broker X brings in a full-price offer, but Mr. Owner refuses the offer. Seeking an action of specific performance would be an option for: A. the buyer. B. neither the buyer nor the broker. C. both the buyer and the broker. D. the broker. 110. Broker Jones takes an exclusive listing on a property owned by three different people. Broker Jones takes the listing contract to each of their places of business to get it signed. Broker Jones must: A. give one copy to any of the three owners. B. give a copy to each owner when he/she signs or get them together in one place to sign at the same time. C. Only one signature is needed D. give a copy to the first owner who signs only. 111. A tenant signs a lease that stipulates that the lessee pays the property tax. This lease is probably a: A. standard lease. B. sandwich lease. C. reverse lease. D. net lease. 112. When creating a contract, consideration may be: A. money, work, or a promise. B. a promise. C. work. D. money. 113. Salesperson Beth presented an offer to purchase from her buyer to the listing agent broker Smith. The offer included a $1,000.00 promissory note from the buyer as the earnest money deposit. Broker Smith should do which one of the following upon receipt of the offer? A. Tell Beth he won't present the offer as written to the seller B. Tell Beth the note is not good enough because it did not come with a deed C. Tell Beth that he cannot accept the offer without cash or a check for the deposit D. Tell Beth that a promissory note could be acceptable for the deposit and present the offer to his seller 114. During the term of an exclusive authorization and right to sell listing, the broker has his license revoked by the Real Estate Commission. To prove that he is entitled to a commission, he must prove all of the following, except: https://www.prepagent.com/members/printexam/8544982 19/46 12/8/24, 6:36 PM Print Practice Exam A. that the listing was a legally binding agreement. B. that the buyer and seller agreed to the sale during the listing term. C. that he was licensed at the time the commission was earned. D. that he was the procuring cause of the sale. 115. You enter into a contract with a person, not knowing he was judicially declared incompetent. The incompetence of one of the parties to this agreement would make the contract: A. enforceable. B. void. C. voidable. D. valid. 116. A listing agreement is a(n): A. all are correct. B. unilateral or bilateral contract. C. employment contract. D. contract to find a buyer for a property. 117. A tenant's five-year lease has expired but they continue to live on the premises and pay their rent monthly. If the landlord hasn't asked them to leave and continues to accept rent, this is considered a(n): A. periodic tenancy. B. estate for years. C. estate at will. D. semi-annual tenancy. 118. The Statute of Frauds outlines which contracts must be in writing to be enforceable through court action. Which of the following contracts would be enforceable? A. An exclusive listing taken orally by a broker to sell a single-family residence B. A verbal lease for six months C. An oral agreement to pay a broker a commission for the negotiation of an exchange of two businesses D. A verbal agreement to secure a loan of $1,500 119. Which of the following is NOT essential to a contract? A. Performance B. Consideration C. Acceptance D. Offer 120. Failure to perform any of the terms or conditions of a contract is called a(n): https://www.prepagent.com/members/printexam/8544982 20/46 12/8/24, 6:36 PM Print Practice Exam A. break. B. novation. C. addendum. D. breach. 121. A broker has a combination of a listing and an option on a property. She exercises the option to buy without disclosing to the seller that she has found a buyer at a higher price. The broker: A. created an illegal dual agency. B. has done nothing wrong. C. is attempting to make a secret profit. D. is guilty of theft. 122. Bob signs a contract under duress. By whom can the contract be voided? A. Neither can void B. Only by Bob C. Both can void D. Only the maker voids 123. A broker is going to take a listing on a church that is owned by an unincorporated association. In order to determine who has the proper authority to sign documents and represent the group, the broker should do which of the following? A. Check the County Recorder's records B. Check the charter or bylaws of the group C. Contact the group members and arrange to have a meeting of the majority for a vote D. Contact the head of the group who originally built the building 124. Which of the following is NOT essential to all contracts? A. Capable parties. B. In writing. C. None are correct. D. Mutual consent. 125. Which of the following is TRUE concerning promissory notes? A. They are always used when real estate is sold B. They are used as security for trust deeds C. They are recorded at the county recorder's office D. They are the evidence of the debt 126. An exclusive agency listing between a broker and owner incorrectly states 6 dollars rather than 6 percent as the commission payable to the broker for producing a buyer. If the owner sells the property himself, the broker is entitled to: https://www.prepagent.com/members/printexam/8544982 21/46 12/8/24, 6:36 PM Print Practice Exam A. an amount to be determined by the real estate commission. B. six dollars. C. six percent, regardless of mistakes. D. nothing. 127. A broker accepts an exclusive authorization and right to sell listing from a corporation. During the listing term, all of the officers of the corporation die. In this case: A. the listing must be acknowledged by the newly appointed officers. B. the listing must be signed by the corporation's board of directors. C. the listing remains in full effect. D. the listing is automatically terminated. 128. A lease contains an assignment clause requiring the consent of the landlord. If the lessee assigns the lease without approval, the assignment is: A. illegal. B. valid. C. voidable. D. void. 129. A tenant verbally agrees to lease a house for six months. The following month, the tenant notifies the owner that he has found a more desirable unit and will be moving out. The contract is: A. invalid, since it was not in writing. B. void. C. enforceable. D. unenforceable. 130. A month-to-month lease is considered a(n): A. estate at sufferance. B. periodic tenancy. C. estate for years. D. life estate. 131. An agent must submit all new offers to the owner until: A. the agent decides the seller isn't interested. B. the sale is completed. C. escrow opens on a potential sale. D. the broker decides there have been enough offers. 132. A broker enters into an open listing with a seller, but fails to give a copy of the listing contract to the owner and also fails to include a termination date. The broker then presents an offer which is accepted. Which of the following statements is most applicable? https://www.prepagent.com/members/printexam/8544982 22/46 12/8/24, 6:36 PM Print Practice Exam A. The exclusion of a termination date does not matter, so the broker is entitled to the stated commission B. The broker is entitled to nothing C. The broker is entitled to specific performance D. The exclusion of a termination date nullifies the contract 133. Under an exclusive agency listing, a broker advertises a home for sale. The owner finds a buyer and sells the home prior to the expiration of the listing. The broker is entitled to: A. nothing. B. expenses only. C. half the commission. D. the full commission. 134. A contract based on an illegal consideration is: A. void. B. enforceable. C. valid. D. voidable. 135. The following are required to be in writing EXCEPT the: A. sale of an RV (recreational vehicle). B. sale of a vacant lot. C. sale of a condominium. D. sale of a personal residence. 136. A broker has listed Mr. Applegate's property under an exclusive listing. He also has an option to purchase the property within 30 days. If after 27 days, the broker decides to buy the property, he must: A. disclose all material facts known to him and to the seller. B. All of the answer choices are correct. C. disclose any profit he might make. D. inform the seller of any additional offers on the property. 137. The transferee in an assignment of a lease is called the: A. sublessor. B. assignee. C. sublessee. D. assignor. 138. Jack leases a single-family dwelling property from Mr. Michaels. After the lease agreement is signed and Jack moves in, Mr. Michaels insists that Jack sign an addendum to the lease agreeing to make substantial capital improvements to the property. Mr. Michaels' requirement could make the lease contract: https://www.prepagent.com/members/printexam/8544982 23/46 12/8/24, 6:36 PM Print Practice Exam A. valid and enforceable by law. B. voidable by Jack. C. voidable by Mr. Micheals. D. void. 139. A broker receives a full-price offer on a house he has listed in accordance with the terms of the listing. Before he can present the offer, another broker brings in an offer with slightly better terms, but for $500 less. The listing broker should: A. tell the other broker the property has been sold. B. present both offers at the same time. C. wait until the seller makes a decision on the first offer before presenting the second. D. refuse to accept the second offer. 140. When a lessee transfers all of his/her interest in the property, it is called a(n): A. assignment. B. sale of a personal residence. C. transfer. D. assumption. 141. Owner Jones gives broker Smith a 90-day exclusive listing. One week into the listing, Jones notifies broker Smith in writing that he is terminating the listing. The next day, owner Jones signs an open listing with broker King. Within a week, Broker King brings in an offer, which owner Jones accepts. As to the commission, which of the following is true? A. Jones cannot enter into an open listing which is concurrent with another listing B. Broker Smith is not entitled to a commission because the listing was terminated C. King is entitled to no commission D. Owner Jones is most likely liable to both Smith and King 142. Which of the following statements about promissory notes is true? A. A promissory note is not part of a deed of trust. B. A deed of trust secures a promissory note. C. A promissory note secures a deed of trust. D. A grant deed secures a promissory note. 143. Most real estate contracts contain pre-printed clauses or spaces for information to be added in writing. When interpreting such contracts: A. the written parts and the pre-printed parts are given equal consideration. B. no changes or amendments to the pre-printed clauses are permitted by law. C. pre-printed parts take precedence over the written parts. D. the written parts take precedence over the pre-printed parts. 144. Both a buyer and a seller have agreements with the same real estate agency. Can the buyer make an offer on the seller's property? https://www.prepagent.com/members/printexam/8544982 24/46 12/8/24, 6:36 PM Print Practice Exam A. Yes, if the seller has agreed to pay the commission. B. No, because the agency cannot act as dual agent without a special license. C. Yes, if both the buyer and seller have written agency agreements. D. Yes, if both the buyer and the seller give their consent to dual agency (and if it's legal in their state). 145. A buyer wanted to use a promissory note for consideration on the purchase of a property. Can he do this? A. Yes. This is acceptable as long as the seller agrees. B. No. Only the seller can write a promissory note. C. Yes. The buyer can do as he wishes since he is making the contract. D. No. Only money can be used for consideration. Answer Key 1. One of the main benefits of a sale-leaseback transaction would be: B. the ability of the seller to deduct all of his future rent payments as business expenditures. In a Sale Leaseback, the seller leases the recently-sold property back from the buyer. The seller is now a tenant, allowing the seller to deduct all future rent payments as business expenditures. NOTE - A sale leaseback transaction is used mostly in commercial real estate. 2. When a counteroffer is made: D. the offeree becomes the offeror. In a counteroffer the offeree becomes an offeror, making it a brand new offer. The original offer gets terminated and a new offer gets made. 3. None of the following automatically terminates an offer to buy real property except: B. rejection of the offer by the offeree. If the person receiving an offer (offeree) rejects the offer presented by the offeror, the offer is automatically terminated. It's important to understand the difference between "reject" and "revoke": Reject - dismiss as inadequate, inappropriate, or not to one's taste. Revoke - to nullify by taking back or recalling. Based on the definitions, an offeror can't reject an offer they made (but they can revoke it), while an offeree can't revoke an offer presented to them (but they can reject it). An inquiry by the offeree doesn't affect the status of the offer. 4. In a listing, which clause will allow a broker to collect a commission for a specified period of time after the listing term has expired? C. Protection Period Clause. A Protection Period Clause (safety clause) in a Listing will allow a Broker to collect a commission for a specified period of time after the term of the Listing has expired. It is a designated period of time to close deals with prospects that the licensee has been https://www.prepagent.com/members/printexam/8544982 25/46 12/8/24, 6:36 PM Print Practice Exam working with during the term of the listing. This is not a time to find a new prospect. They must put the name of the prospects in writing at the end of the listing period in order to earn a commission during the protection period clause. 5. Broker A took an exclusive listing, then made an oral agreement with broker B to share the commission on the property if broker B found a buyer. Broker B procured an offer resulting in the sale of the property. If broker A refused to share his commission on the sale: B. Broker B would stand a good chance of winning a court suit against broker A for his share of the commission. If a broker who had already taken a listing then made an oral agreement with a second broker to share the commission, but then refused to share the commission when the second broker had procured an offer resulting in the sale of the property, there is a good chance that in a lawsuit, he would be liable to the second broker for their share of the commission. NOTE - This question is testing you on the validity of the oral agreement, not the type of listing the first broker took. 6. The duration of a listing agreement is: A. whatever is negotiated between the broker and seller. The duration for a listing may be for any length of time agreed to by both the broker and the seller. 7. Which of the following is created when possession and title do not occur at the same time? D. Interim Occupancy Agreement An Interim Occupancy Agreement allows for a buyer to take possession of a property prior to the close of escrow. 8. Which of the following statements about options is false? A. The option binds the optionee to the performance An optionee is under no obligation to buy the property in question. It is their "option" to buy it. Please be aware of the word "false" in the question. 9. An Option: C. Keeps an offer open for a specified period of time An Option is a contract to keep an offer to sell or lease real property open for a set period of time. 10. A safety clause is found in a: A. Listing agreement A Protection Period Clause (safety clause) in a listing will allow a broker to collect a commission for a specified period of time after the term of the Listing has expired. It is a designated period of time to close deals with prospects that the licensee has been working with during the term of the listing. This is not a time to find a new prospect. They must put the name of the prospects in writing at the end of the listing period in order to earn a commission during the protection period clause. 11. According to the Statute of Frauds, a contract which must be in writing in order to maintain a court action for enforcement is: D. any real estate agreement which is not to be performed within one year. https://www.prepagent.com/members/printexam/8544982 26/46 12/8/24, 6:36 PM Print Practice Exam The Statute of Frauds mandates what contracts are required to be in writing in order to be enforceable. Any real estate contract that is not to be performed within one year must be in writing. 12. If a person obtains a contract through duress, that contract is: C. Voidable Examples of voidable contracts include contracts signed under duress, or contracts entered into with threat or menace. 13. All of the following are essentials of each and every contract, except: B. Proper writing A valid contract does not necessarily have to be in writing, nor does it necessarily have to require performance to be valid. The four essentials are mutual consent, lawful object, capable parties and consideration. 14. The law that requires real estate contracts to be in writing to be enforceable is the: B. statute of frauds. Contrary to popular belief, the statute of frauds is not about specific actions defined as fraud, but the requirement in every state that certain documents be in writing, especially those pertaining to real estate. It's called the statute of frauds because it was first enacted in England in 1677 to prevent fraudulent claims of title. 15. To "assign" a contract for the sale of real estate means to: C. transfer one's rights under the contract. An assignment of contract occurs when one party to an existing contract (the "assignor") hands off the contract's obligations and benefits to another party (the "assignee"). Ideally, the assignor wants the assignee to step into his shoes and assume all of his contractual obligations and rights. 16. A property owner lists his property for sale with a broker. During the negotiations, the owner told the broker they wanted $138,000 for the property, and anything above that amount the broker could keep as his commission. The listing with this type of provision is known as the: D. net listing. Net listing agreements are illegal in many states, and frowned upon in the others. That's because of the potential for unfair advantage and conflict of interest they create. For example, let's say a seller believes his home is worth $138,000 and is happy with that amount. However, the broker thinks he can get $175,000 and does. That means that, instead of a more typical $9,500 or so in commissions, the broker realizes $37,000. Of course, it can also work the other way. The homeowner may have been right and the home sells for only $138,000--leaving the broker with a commission of $0 for his costs and efforts. 17. Undue influence or duress applied to one party to a contract makes the contract: C. voidable. A voidable contract provides the option to rescind by either party. At the creation of the contract it is valid, but it could be voided in the future. Most sales contracts are voidable contracts because they contain contingency clauses. Contracts that are entered into under duress, misrepresentation or fraud are voidable. https://www.prepagent.com/members/printexam/8544982 27/46 12/8/24, 6:36 PM Print Practice Exam NOTE - Undue is spelled correctly here, and it means "excessive, unwarranted, or inappropriate". 18. A voidable contract is one which: D. is valid now but can be voided by one party to a contract for due cause. A voidable contract is valid until it is rescinded. Examples of voidable contracts include contracts signed under duress, or contracts entered into with threat or menace. 19. In accordance to the Statute of Frauds, which of the following must be in writing? B. The purchase contract for a single-family residence offered for sale by owner The statute of frauds requires some contracts to be in writing in order to be enforceable, for example contracts for the purchase of real property and contracts for leases longer than a year. 20. The buyer of a home was not informed that the house was on a septic tank system, and she didn't discover this fact until the system backed up a few days before she took possession. The buyer typically has the right to: B. rescind the contract. Licensees and sellers must reveal material facts about a house, such as a leaky roof, poor insulation and if there are retaining walls, a well, or a septic system. A failure to disclose material facts concerning a property generally allows the innocent buyer to rescind the contract. Specifics around such contract disputes can vary state-by-state. 21. In which of the following contracts does one of the parties agree not to revoke an offer for a certain period of time? B. An option An option is a contract to keep an offer to sell or lease real property open for a set period of time. The optionor cannot revoke the offer to sell during the designated period of time. An optionee is under no obligation to buy the property in question. [The optionee is NOT bound by the option.] 22. Any advance fee contract used in connection with a real estate or business opportunity listing must include all of the following except: D. A guarantee that the sale, lease or exchange will be completed; Advance fee contract contains no guarantees of success with respect to the sale or rental of a property. 23. A listing agreement is essentially a/an: D. Employment contract A listing is most often a bilateral employment contract between principal and broker, whereby the broker is employed by the principal to find a buyer and accept a deposit. Open listings are considered unilateral, as only the seller is making a promise (until a broker brings a buyer in). 24. What listing requires an owner to pay a commission, even though the owner sells the property herself? D. Exclusive right to sell listing. Exclusive Authorization and Right to Sell Listing is a contract where the owner agrees to sell the property in question through the listing broker. The listing broker does not need to show that he is the "procuring cause" of the buyer. They get paid no matter who brings the buyer. https://www.prepagent.com/members/printexam/8544982 28/46 12/8/24, 6:36 PM Print Practice Exam 25. The prospective purchaser may withdraw the offer at any time before the seller's acceptance of an offer: C. for any reason. A buyer may cancel for any reason prior to the acceptance by the seller. 26. An optionor and an optionee make a contract for an option on a commercial piece of property. If the optionee decides to exercise his option, when must he perform? C. He must exercise his option under the terms of the option contract Options are generally concerned with only two things, the time and price. Whatever the parties agree to in those regards defines the terms of the option and the obligations of the parties. 27. When agent Andy took a listing, he promised the seller that he would advertise the property in a magazine until it was sold. Andy did not do the advertising that he promised, and never intended to. Andy is guilty of: D. actual fraud. A licensee would be guilty of actual fraud if he made a promise to advertise in a magazine and then did not. Actual fraud is an act intended to deceive another, e.g., making a false statement, making a promise without intending to perform it. 28. Which of the following is NOT true about an option? C. The optionor can revoke the offer to sell during the designated period of time. The optionor CANNOT revoke the offer to sell during the designated period of time. The optionor is bound to perform if the optionee decides to exercise his/her option, it is a unilateral contract. NOTE - This question asks "Which of the following is NOT true" which means it's looking for a false answer, and it's false that the optionor can revoke the offer to sell during the designated period of time. 29. When would a broker have a right to a commission based on negotiations that were started during the term of the listing agreement but completed after the listing agreement had expired? C. The completion was during the protection period clause. A Protection Period Clause (safety clause) in a listing will allow a broker to collect a commission for a specified period of time after the term of the listing has expired. It is a designated period of time to close deals with prospects that the licensee has been working with during the term of the listing. This is not a time to find a new prospect. They must put the name of the prospects in writing at the end of the listing period in order to earn a commission during the protection period clause. 30. What does the term "quiet enjoyment and possession" mean? C. Possession without disturbance from owner of paramount title A tenant has the right to enjoy thier property without disturbance from those with paramount title. The term "owner of paramount title" refers to an individual or entity that holds a superior legal title to the property compared to others. This means they have the highest authority or claim over the property, over and above any other claims or interests. For example, if someone is leasing a property, the landlord typically holds title to that property. However, if the landlord's right to own the property is itself based on a lease from another party, and that party has an underlying or superior ownership claim, the latter would be considered the owner of paramount title. https://www.prepagent.com/members/printexam/8544982 29/46 12/8/24, 6:36 PM Print Practice Exam 31. A contract in which all parties have fulfilled their promises is a(n): D. executed contract. An executed contract is a contract which has been completely carried out by the parties. 32. The primary purpose of a listing agreement is to: D. serve as a contract of employment between the owner and the broker. A listing agreement is a form of employment agreement in which Party A agrees to perform specific tasks for Party B in exchange for a defined amount of compensation. The defining task in a listing agreement is to find a buyer. 33. Which of the following would not make a contract voidable? A. Illegal purpose A voidable contract can be rescinded or invalidated by one party, whereas a void contract has no legal effectiveness. A contract that has an illegal purpose (a contract to steal someone else's property, for example) is simply void, not voidable. Fraud would leave a contract voidable because the buyer still has the option to go through with the contract. An example of this would be if a buyer signed to buy a red house but the house was blue. Although they were deceived about the color of the house, the color of house may not matter to them as they plan to paint it yellow. Undue influence is a form of duress. NOTE - This question asks "Which... would NOT make a contract voidable?" which means it's looking for a false answer, and it's false that illegal purpose makes a contract voidable. 34. All of the following are essential elements of every valid contract, except: D. the payment of money. The four essentials of a valid contract are Meeting of the minds, Capable parties, Lawful object and Consideration. Payment of money (or delivery of whatever consideration was agreed upon) occurs when the valid contract has been performed. NOTE - Consideration is the promise of a payment, while the payment of money would be "performance" of the contract. 35. The document that defines the relationship between the broker and the seller is the: C. listing agreement. While disclosure statements, purchase contracts, and even exclusive agency contracts are also legal documents that the broker or salesperson enters into with the clients, it is the listing agreement that clearly defines the relationships and agreements between the broker and principal. 36. Which of the following is NOT a type of listing contract? A. MLS contract An MLS contract is simply an agreement by which a recognized real estate firm agrees to pay a fee for the privilege of advertising properties in general. Listing agreements are between the firm and a specific seller concerning a specific property. 37. An offeree has the right to: B. reject an offer. https://www.prepagent.com/members/printexam/8544982 30/46 12/8/24, 6:36 PM Print Practice Exam The "offeree" is the person to whom an offer is made, usually the seller, and he or she is free to accept or reject it for any reason. Only the offeror can revoke or rescind (take back) an offer, and release isn't applicable in this context. 38. Which of the following is NOT required for a contract to be legally binding? A. Writing Not all contracts need to be in writing to be legal and enforceable. However, certain types of contracts- including those for real estate transactions- do need to be in writing. In part because of the amounts typically involved, but more importantly to maintain a clear, documented title history. 39. Janice Riceland is shown a home by her agent, Richard. She makes an offer and gives Richard a check. At what point does her offer become an enforceable contract to buy? B. When Janice is notified the seller accepted the offer An enforceable contract requires at least 4 elements: Capable Parties, Legal Object, Offer and Acceptance, and Consideration. The "offer and acceptance" portion of those requirements actually has 3 steps- Offer, Acceptance, and Notification of Acceptance. Once Janice is notified that the seller has accepted her offer, the contract becomes legally enforceable. 40. Which of the following prevents a person from adopting a position that conflicts with a previous position or a previous action? B. Doctrine of estoppels The doctrine of estoppels generally prevents a person from adopting a position that conflicts with a previous position or a previous action. In real estate, tenants are often asked to sign estoppel certificates to verify rental information to interested third parties (lenders, potential purchasers). 41. Monies, labor, supplies or other consideration given by a landlord to a tenant to construct the premises for occupancy would be called: C. Tenant improvement allowance Tenant improvement allowance is when a landlord agrees to allocate a certain amount of money to change the property in accordance to the tenants needs. 42. Tenant Albert agrees to perform certain property repairs for owner Bob. Despite repeated promises, Albert fails to perform the repairs. Bob then writes up a contract, and compels Albert to sign it by threatening to evict him if he doesn't. Such a contract would be: D. voidable. A voidable contract is a contract that may be rejected by either of the parties. It is valid until it is rescinded. Examples of voidable contracts include contracts signed under duress, or contracts entered into with threat or menace. Any time someone is forced to enter into a contract when they don't want to do so, the contract is voidable. 43. Broker Dave has an exclusive agency listing to sell a $200,000 home for owner Jones. Before the listing expires, the home was sold through Jones' own efforts to a friend, and Dave was refused payment of any commission. Dave is legally entitled to receive from Jones: B. no commission. An Exclusive Agency listing is a contract where the seller agrees to pay the listing agent a commission if the property in question sells through the broker. However, if the owner sells https://www.prepagent.com/members/printexam/8544982 31/46 12/8/24, 6:36 PM Print Practice Exam it themselves the broker gets no commission. This is different than an Exclusive Right-to- Sell listing, which guarantees the broker a commission even if the owner finds their own buyer. 44. Under which of the following listing must an owner pay a commission, even if he sells entirely through his own efforts? B. Exclusive right to sell listing An Exclusive Authorization and Right-to-Sell listing is a contract where the owner agrees to sell the property in question through the listing broker. The listing broker does not need to show that they are the "procuring cause" of the buyer- they get paid no matter who brings the buyer. 45. By signing an exclusive right to sell listing, the seller is creating a contract between himself and the: D. Broker A Listing is a Bilateral Employment Contract between principal and broker whereby the broker is employed by the principal to find a buyer and accept a deposit. It is the most essential element of an enforceable broker-principal relationship. The duration for a listing may be for any length of time agreed to by both the broker and the seller 46. When a buyer withdraws his offer to purchase real property prior to acceptance by the seller, the: B. buyer is entitled to a refund of the earnest money deposit. There must be some type of offer and acceptance by the parties for the contract to be binding. If an offer has not yet been accepted by the seller, there is no contract so the buyer is entitled to a refund of any earnest money deposit. 47. Henry made an offer to purchase real property. However, he died of a heart attack before the listing broker could notify him of the signed acceptance by the seller. Based on these facts, which of the following is true? A. The death of Henry constituted a revocation of the offer. In the event that a buyer dies prior to receiving communication of acceptance by the seller, the offer is terminated. Remember that offer and acceptance has 3 components- offer, acceptance, and communication of acceptance. In this case, acceptance couldn't be communicated because of Henry's death, so the agreement was never validated. And common sense says that Henry's estate shouldn't be liable for a purchase he didn't know he was making, because the acceptance was never communicated. 48. An executed contract is a contract: A. Completed and fully performed by both parties A contract is considered "Executed" once both parties have completely performed each of their obligations under the contract. 49. A voidable contract remains binding upon the parties until the contract is: B. rescinded. A voidable contract is a contract that may be rejected by one of the parties to a contract. It is valid until it is rescinded. Examples of voidable contracts include contracts signed under duress, or contracts entered into with threat or menace. In those situations, the person forced or coerced into signing can void the contract (because they weren't a willing party) or choose to honor the contract. The person who did the forcing or coercing cannot void the contract (because they were a willing party). https://www.prepagent.com/members/printexam/8544982 32/46 12/8/24, 6:36 PM Print Practice Exam 50. Joe gave Stephen an option for the purchase of his property. In law, such an option is regarded as: D. a contract to keep the offer open. A real estate purchase option is a contract on a specific piece of real estate that allows the buyer the exclusive right to purchase the property. Once a buyer (Stephen) has an option to buy a property, the seller (Joe) cannot sell the property to anyone else during the agreed-upon time period. An optionor can not rescind their offer to the optionee. 51. Which is true concerning an option contract? C. All of the other answers are correct An option is a contract to keep an offer to sell or lease real property open for a set period of time. The optionor cannot revoke the offer to sell during the designated period of time and the optionee is under no obligation to buy the property in question, but the optionee has no interest or estate in the land until they exercise the option agreement. 52. Which of the following is not a necessary element in the formation of a contract? A. Performance The four legal essentials in any contract are: (1) consideration, (2) an offer and acceptance (i.e., a meeting of the minds), (3) a lawful object, and (4) competent parties. Some contracts require writing as well. Performance can't happen until after the contract is already formed. 53. A contract between the seller of real property and a licensee, in which the seller agrees to pay the licensee a commission for producing a ready, willing, and able buyer and the licensee agrees to use due diligence in procuring the buyer, is called: B. A bilateral executory contract. A bilateral contract is a reciprocal arrangement between two parties by which each promises to perform an act in exchange for the other party's act. In the question above both parties are bound, making it bilateral. Executory indicates that the contract is yet to be performed. 54. A contract that authorizes a real estate agent to sell a property during a specified time and allows that licensee to collect a commission if the sale is made by anyone, including the owner, is: C. an exclusive right to sell. An exclusive right to sell listing agreement is between a broker and a seller in which the broker is given the exclusive right to sell the property. In this type of listing, the broker earns his fee regardless of who brings the buyer, including the owner. 55. Which of the following is necessary for a real property conditional installment sales contract to be valid? A. Consideration, offer and acceptance, lawful object, competent parties, legally sufficient writing. Be careful with this one. All that is really being asked in this question is what are the essentials of a valid contract. It is an easy question disguised as a much harder one. The four legal essentials in any contract are: (1) consideration, (2) an offer and acceptance (i.e., a meeting of the minds), (3) a lawful object, and (4) competent parties. Some contracts require writing as well in order to comply with the state's statute of frauds. 56. A written agreement in which an owner allows an individual to use a property in exchange for rent, and also gives that individual the right to buy the property for a https://www.prepagent.com/members/printexam/8544982 33/46 12/8/24, 6:36 PM Print Practice Exam specified price within a specified period. This contract would most likely be a: D. Lease option A lease option contract is an alternative financing option that allows home buyers to lease a home with an option to buy. Each month's rent payment may consist of not only the rent, but an additional amount which can be applied toward the down payment on an already specified price. 57. Which of the following would terminate an original offer? A. A counter offer A counter offer is a new offer as to price, terms, and conditions, made in response to a prior offer. A counter offer terminates an original offer, as the offeree then becomes the offeror. 58. A voidable contract is a contract that: B. Is valid and enforceable on its face, but it may be rejected by one of the parties. A voidable contract is that which is capable of being adjudged void, but is not void unless action is taken to make it so. 59. When one party is substituted for another party in a contract, the process is appropriately called a: B. novation. A novation (nova is latin for "new") is the act of adding to, or replacing, existing agreements or parties in a contract. It requires the consent of all parties involved. 60. A buyer enters into a verbal contract to purchase a house and immediately gives the broker an earnest money check for $500. Prior to performance under this contract, the verbal contract is considered legally: C. unenforceable. A verbal contract is an agreement that is not in writing and is not signed by the parties. It is a real contract but lacks the formal requirement of a memorandum (written document) to render it enforceable in litigation, making it unenforceable. The statute of frauds requires all purchases of real property to be written in order to be enforceable, so until this real property transaction is performed or entered into a written agreement, the verbal contract is considered unenforceable. 61. Under a lease for a commercial property, a tenant agrees to pay $4,000 per month plus 3% of the gross monthly sales. This type of lease is called a: B. percentage lease. A percentage lease is one in which all or part of the rent is a specified percentage of gross income from total sales made upon the leased premises. 62. A salesperson who prepares a written listing agreement with a seller is helping to create a contractual relationship between the: B. salesperson's broker and the seller. A listing belongs to the broker even though the salesperson solicited the business because the broker is the responsible party. 63. One of the required elements of a valid real estate sales contract is that it MUST: B. be signed by the seller. A valid real estate sales contract must be signed by the seller. The sales contract can still be valid if it's not signed by the buyer, but it might be unenforceable in that case. https://www.prepagent.com/members/printexam/8544982 34/46 12/8/24, 6:36 PM Print Practice Exam 64. Under a sales contract, the legal remedy that may be used to force the seller to consummate the sale is called: B. specific performance. Specific performance is a remedy in a court of equity that compels a defendant to carry out the terms of an agreement or contract. Under certain circumstances, a buyer can sue a seller for specific performance- if the buyer wins, the seller is forced to follow through with the property sale. 65. If a lessee pays a fixed amount of rent plus all expenses such as taxes and insurance, the lease is known as a: C. net lease A net lease is a lease in which the tenant is responsible for payment of rent, plus some or all operating expenses such as taxes, insurance premiums, repairs, utilities, etc. 66. A lease that provides for periodic increases of rent at regular intervals is called a: A. graduated lease A graduated lease a type of long-term lease agreement which provides for a fixed rental fee during the initial period of the lease with increases and/or decreases in rental amount at stated times during the balance of the contract term. 67. When a contract states that "time is of the essence," the contract MUST be delivered and presented: B. as soon as possible Time is of the essence is a standard statement in a contract which ensures that all dates and times of day noted in the contract are important and cannot be ignored by any of the parties without the consent of the others except in breach of the contract. 68. If the owners of a shopping center want a major department store's lease to provide rental payments that reflect the store's sales, they are MOST likely to use which of the following types of leases? B. Percentage In a percentage lease, the amount of rent paid by the lessee is determined by calculating a percentage based on the gross receipts of the lessee's business (i.e., a commercial parking lot). 69. With the exception of court-ordered sales, the amount of earnest money to be deposited by a prospective buyer is determined by the: C. agreement between the seller and the buyer Earnest money is a deposit given to the seller to show that a prospective buyer is serious about buying the house. 70. In the event that a buyer fails to perform on an agreement to purchase, the seller may be allowed to keep the earnest money deposit as: A. liquidated damages. A purchase contract will often state that in the event of buyer default, the owner is entitled to keep the earnest money deposit as liquidated damages. 71. A written purchase agreement has been signed by both a buyer and a seller. The Uniform Vendor and Purchaser Risk Act states that until the buyer has either possession of or title to a property, responsibility for the physical condition of the https://www.prepagent.com/members/printexam/8544982 35/46 12/8/24, 6:36 PM Print Practice Exam property: D. remains with the seller. When a contract for sale is ratified, by virtue of equitable and insurable title being conveyed to the buyer, responsibility for any hazard damage to the property rests with the seller. This is only relevant to states who have adopted the Uniform Vendor and Purchaser Risk Act. 72. Each party is bound to a specific date for performance if a real estate sales contract contains: D. a provision that time is of the essence. When a contract has a "time is of the essence" clause, the dates and times provided for contract performance are considered vital and mandatory to the contract. Failure to act in the timeframe provided can constitute a breach of contract. 73. To be valid, an exclusive listing contract must contain all of the following except: D. the final contract price. The final contract price will not be determined until after an offer is presented and accepted. 74. A promise in exchange for a promise, supported by consideration, is the basis for a: A. valid, binding, bilateral, contract. This is a good definition of a valid, binding, bilateral contract. 75. Jones, the seller, receives an offer to purchase and puts forth a counteroffer to Brown, the buyer. Until Brown notifies Jones of his acceptance or rejection, Jones: B. may produce a new counteroffer. Counteroffers may be withdrawn or changed at any time prior to notice of acceptance, but each counteroffer voids and replaces any previous offer. The property is still available for purchase at any time prior to a ratified contract. 76. Under the statute of frauds, in order to be legally enforceable, all real estate contracts must be: B. in writing. Under the Statute of Frauds, all real estate contracts must be in writing in order to be legally enforceable. 77. The earnest money accompanying a purchase offer: A. is not necessary to establish a valid contract. A sales contract can be valid even without any earnest money. Earnest money's main use is to reassure the seller and prove the buyer's good faith. 78. The party most likely to sue for specific performance in the purchase of real estate is the: A. Buyer. A suit for "specific performance" is a type of lawsuit which intends to force somebody to act, as opposed to a lawsuit that seeks monetary damages. While a seller might be satisfied with monetary damages if a buyer breaches the purchase contract, a buyer might prefer forcing the seller to follow through with the sale, as each parcel of real estate is unique. https://www.prepagent.com/members/printexam/8544982 36/46 12/8/24, 6:36 PM Print Practice Exam 79. Jones goes into a restaurant and orders lunch. At the end of the meal, is he legally obligated to pay the check? B. Yes, because by ordering, Jones entered into an implied contract to pay for the meal. A valid contract can b