California Real Estate Instructor Materials Chapter 7 Quiz PDF

Principles of California Real Estate Instructor Materials Chapter 7 Quiz 1. A broker received a $50,000 deposit on a sell- 5. The usual listing contract will authorize a bro- ing price of $400,000. However, the buyer ker to: breached the contract, and...

Principles of California Real Estate Instructor Materials Chapter 7 Quiz 1. A broker received a $50,000 deposit on a sell- 5. The usual listing contract will authorize a bro- ing price of $400,000. However, the buyer ker to: breached the contract, and the seller claimed  $ ¿QGDSXUFKDVHUDQGDFFHSWWKHEX\HU¶VR൵HU that the buyer had forfeited the deposit. In this on behalf of the seller situation, the seller: B. guarantee to a prospective buyer that the A. may not retain any of the deposit VHOOHUZLOODFFHSWKLVR൵HU B. may retain no more than 3% of the purchase C. deed the property over to the buyer price as liquidated damages  ' ¿QGDEX\HUDQGDFFHSWDGHSRVLWZLWKWKH C. could deduct any actual damages caused R൵HUWRSXUFKDVH by the breach from the deposit D. may retain the entire deposit 6. There are limits placed on the size of the secu- rity deposit that can be required on a residential   :KLFKLVWKHEHVWGH¿QLWLRQRI³UHQW´" unit. The limits are based on: A. A contract between tenant and landlord A. the length of term of the lease B. Consideration paid for a leasehold interest B. whether the unit is furnished or not in real property C. the square footage of the rental unit C. Consideration that validates any real estate D. Both A and B contract D. The fee paid for a license to use real 7. A tenant with a net lease would pay a pro- property portionate share of all of the following EXCEPT: 3. Which of the following statements concerning A. property taxes OLVWLQJVLVWUXH" B. insurance A. Both husband and wife must sign a listing C. leasing commissions agreement to sell community property D. janitorial expenses B. Net listings are strictly illegal in California C. Exclusive listings may be no longer than 8. When a contingency clause is used in a pur- 100 days chase agreement, which of the following D. An exclusive listing may be only one day LQIRUPDWLRQVKRXOGEHLQFOXGHG" A. Nature of the contingency 4. A one-year lease: B. Duration of the contingency A. must be in writing to be enforceable C. Conditions for removal of the contin- B. must be signed by landlord and tenant gency C. may be surrendered by landlord and tenant D. All of the above after six months D. may be unilaterally rescinded at any time 12  Chapter 7: Types of Real Estate Contracts 9. A landlord sued a tenant for breaching the 12. What clause allows a broker to collect a terms of the lease by moving out. The ten- commission even after the listing period has ant responded that the landlord had failed to H[SLUHG" respond to plumbing problems that left the A. Protection clause unit uninhabitable. Which of the following B. Habendum clause ZRXOGOLNHO\RFFXU" C. Acceleration clause A. The tenant would be awarded punitive D. Bump clause damages B. The landlord would be entitled to the re- 13. A sublease is: mainder of the rent due during the lease term A. not allowed to be longer than one year C. The tenant would be able to avoid further B. the same as an assignment liability because of the landlord’s breach of C. a transfer of an entire leasehold the warranty of habitability D. a transfer of less than an entire leasehold D. The lease would not terminate, but the tenant would be able to make the repairs 14. How is the maximum commission rate a broker himself and demand reimbursement from PD\FKDUJHHVWDEOLVKHG" the landlord A. It’s set by the multiple listing service B. It’s mandated by the Real Estate Law 10. If there is a 30- or 60-day safety clause in a list- C. It’s set by agreement between principal and LQJDJUHHPHQWZKLFKRIWKHIROORZLQJLVWUXH" broker A. The agent is owed a commission if the D. It must be within limits prescribed by real property sells during the safety period estate professional associations’ ethical B. The agent must provide a list of the people codes he worked with and if the seller sells to any of those people during the safety period, she 15. Brokers Frank and Dean both took open list- owes the agent a commission ings on the same property. Frank shows the  & 7KHVHOOHUPD\³EXPS´DFRQWLQJHQWR൵HULQ property to a prospective buyer, who decides IDYRURIDQR൵HUWKDWFRQWDLQVQRFRQWLQJHQ- not to buy it. One week later, Dean shows the cies same property to the same buyer, who decides D. The agent is entitled to liquidated damages to purchase the property. Who receives the if the buyer and seller reach an agreement FRPPLVVLRQ" but then withdraw from the sale A. Frank receives entire commission B. Dean receives entire commission 11. Which one of the following is an illegal act for C. Frank and Dean split commission DUHDOHVWDWHEURNHULQ&DOLIRUQLD" D. Frank and Dean each receive a full A. Using a net listing if the amount of com- commission mission is disclosed B. Claiming a commission on an exclusive list- LQJWKDWKDGQRVSHFL¿HGWHUPLQDWLRQGDWH C. Collecting a commission after the termi- nation date on an exclusive listing has passed D. Selling his own property and claiming a commission for income tax purposes 13  Principles of California Real Estate Instructor Materials Answer Key 1. B. Assuming that the buyer and seller 6. D. State law requires a maximum security signed a liquidated damages provi- deposit of two months’ rent for an un- sion in the deposit receipt, the buyer’s furnished unit and three months’ rent breach of contract entitles the seller for a furnished unit. If the lease term is to keep no more than 3% of a residen- six months or more, though, the securi- tial property’s sale price as liquidated ty deposit may be equal to any amount damages. as long as it’s designated as advance payment of rent. 2. B. Rent is the consideration that makes a lease a valid contract. Rent refers spe- 7. C. In a net lease, the tenant will assume FL¿FDOO\WRDOHDVHKROGLQWHUHVWQRWD partial or total responsibility for pay- license. ing for property taxes, insurance, utilities, and maintenance expenses. 3. D. The length of the listing period is de- termined by agreement between the 8. D. A contingency clause should always broker and the seller. There is no mini- describe what the parties must do to mum or maximum length, so long as IXO¿OOWKHFRQWLQJHQF\DQGKRZORQJ the length is determined in advance. WKH\KDYHWRIXO¿OOWKHFRQWLQJHQF\,W should also describe how notice of ful- 4. C. Surrender may be used to terminate the ¿OOPHQWVKRXOGEHPDGHZKHWKHUWKH lease at any point before it expires, so contingency can be waived, and the long as the landlord and tenant agree. rights of the parties if the contingency A lease cannot be rescinded, but it can LVQ¶WIXO¿OOHG be surrendered by mutual consent of landlord and tenant. A one-year lease 9. C. If a landlord breaches the implied needs to be signed only by the land- warranty of habitability by failing to lord, and does not need to be in writing respond to notice of maintenance prob- (although a lease of more than one lems that cause unsafe or unsanitary year needs to be in writing). conditions, the tenant may terminate the lease and move out with no further 5. D. A typical listing agreement only au- obligations to pay rent. WKRUL]HVWKHEURNHUWR¿QGDEX\HU and accept the buyer’s deposit. The 10. B. Many safety clauses require the broker seller would need to execute a power to keep a list of the potential buyers of attorney for the broker to be able to that he had contact with during the DFFHSWDQR൵HURUFRQYH\WKHWLWOHWR listing period. This enables the seller the property. to know whether the safety clause will require payment of a commission if the property is sold to a particular person during the safety period. 14  Chapter 7: Types of Real Estate Contracts 11. B. A broker in California who does not include a termination date in an exclu- sive listing agreement will be subject to disciplinary action. 12. A. A protection or safety clause provides that a broker may receive a commis- sion if a property sells during a period that follows the termination of a listing agreement. This prevents a seller from avoiding a commission by waiting until after a listing has expired before DFFHSWLQJDQR൵HU 13. D. A sublease transfers possession of a leasehold for less than the entire re- maining term of a lease; the sublessor is still holder of the lease and primarily liable for rent. 14. C. There are no legal limits on commis- sion rates. They are determined by agreement between the broker and the principal. 15. B. Even though Frank already showed the property to the buyer, Dean was the one who negotiated and secured the R൵HUDQGDFFHSWDQFH7KHUHIRUH'HDQ is the procuring cause and receives the commission. 15