Question 1

When a buyer signs an offer to purchase a property,the broker receives a monetary amount from the purchaser of 5 or 10 percent of the purchase price.This deposit is commonly referred to as the:

Accepted Answer

A)  commission
B)  earnest money
C)  closing cost
D)  title insurance premium B

Question 2

When a party in a contract fails to perform (e.g.breach of contract,nonperformance,or default)the other party has a variety of remedies.All of the following are remedies that an aggrieved seller may pursue EXCEPT:

Accepted Answer

A)  Sue for damages.
B)  Retain the earnest money deposit as liquidated damages.
C)  Agree to rescission of the contract.
D)  Sue for specific performance. D

Question 3

The final step in a real estate transaction is the closing.In most closings,which party is responsible for seeing that the closing is completed successfully?

Accepted Answer

A)  Escrow agent
B)  Lender
C)  Selling Broker
D)  Listing broker D

Question 4

While fee splitting between cooperating real estate brokers is permitted,RESPA explicitly prohibits such actions as rebating part of the title insurance premium to the lender who recommended or required the title insurance.These unearned fees are commonly referred to as:

Accepted Answer

A)  commissions
B)  kickbacks
C)  damages
D)  specific performance dues

Question 5

In certain circumstances,mutual assent between the contracting parties may be broken,thus invalidating the contract.Which of the following defects to mutual assent involves compelling a person to act by the use of force?

Accepted Answer

A)  One of the parties is under duress.
B)  One of the parties is under undue influence.
C)  One of the parties is under menace.
D)  One of the parties is committing frauD.

Question 6

The successful conveyance of real estate depends on a well-formed contract for sale since the contract dictates the rights and type of deed involved,as well as choreographs the entire transaction.Which of the following features of the contract for sale refers to the arrangements agreed to by the parties,such as price and date of closing?

Accepted Answer

A)  Contract terms
B)  Contract conditions
C)  Equitable title
D)  Contingency clause

Question 7

Since property taxes are paid in arrears,the buyer will be responsible for paying them after closing.Suppose that the closing date on the home for sale is February 28th of a leap year (e.g. ,2012,2016,etc).How many calendar days would the seller be responsible for when calculating his/her share of the property tax owed for the year in which the home was sold.

Accepted Answer

A)  58 days
B)  59 days
C)  307 days
D)  308 days

Question 8

Since hazard insurance premiums are paid up-front,the buyer will have to reimburse (credit)the seller a portion of the premium at the closing.Suppose that the insurance policy's coverage began on December 15th of the prior year and the property transaction is set to close on March 16th of a 365-day year.The premium paid originally by the seller was $250.If the coverage will expire as of the end of day December 14th in the current year,what is the dollar amount that the buyer must credit the seller?

Accepted Answer

A)  $0.00
B)  $62.33
C)  $187.67
D)  $250.00

Question 9

When the seller in a contract for sale fails to perform (e.g.breach of contract,nonperformance,or default),the buyer has a variety of remedies.One such remedy is to appeal to the court to force the defaulting seller to carry out the contract.This remedy is most commonly referred to as suing for:

Accepted Answer

A)  Damages.
B)  Earnest.
C)  Recission.
D)  Specific performance.

Question 10

Any contract,whether it is for the sale of real estate or some other entity,must contain five basic elements.However,any contract for the sale of real estate must adhere to two additional requirements.Which of the following contract elements is an additional requirement that must be satisfied in a contract for sale of real estate that isn't necessarily a part of other contracts?

Accepted Answer

A)  No defects to mutual assent
B)  Consideration
C)  Offer and acceptance
D)  Written form

Question 11

Both parties to a valid and enforceable contract must provide consideration.In a contract for the sale and purchase of real estate,which of the following depicts the seller's
Consideration?

Accepted Answer

A)  A meeting of the minds with the buyer.
B)  The option to present a counteroffer.
C)  The property to be given up.
D)  The money or goods that constitute the purchase price.

Question 12

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

Accepted Answer

A)  Any type of personal performance contracted by one party cannot be assigned without that party's permission.
B)  Land contracts are not assignable without the owner's permission
C)  If buyers of real estate assign the contract,the new buyers may pay the agreed upon price and obtain title to the property.
D)  When buyers assign their rights to someone else,they escape liability under the original contract.

Question 13

At the closing,the buyer will be credited for a number of costs that have been paid up-front (or will be paid after closing)as well as a number of prorated expenses that account for the period of time during which the seller occupied the house.All of the following items detailed in the closing costs involve credits that are commonly passed on to the buyer EXCEPT:

Accepted Answer

A)  Earnest money
B)  Hazard insurance premiums
C)  Property taxes
D)  Mortgage interest

Question 14

The Real Estate Settlement Procedures Act (RESPA)is a federal law that requires federally chartered or insured lenders to provide buyers and sellers with information on all settlement costs.According to RESPA,loan closing information must be prepared on a special form known as the:

Accepted Answer

A)  Uniform Settlement Statement or HUD-1 form
B)  Good-faith estimate of settlement costs
C)  Settlement Costs and You booklet
D)  Certificate of occupancy

Question 15

Since the seller often has utilized the property for a portion of the year in which the transaction is being made,certain costs associated with the property will be prorated at the closing.All of the following items are subject to being prorated EXCEPT:

Accepted Answer

A)  Broker commission
B)  Prepaid rent
C)  Property tax
D)  Mortgage interest

Question 16

While the principal parties to a transaction must be legally competent for a contract to be valid,it is possible for a party acting on behalf of a principal to obtain this legal right.In order for personal representatives and trustees to be authorized to act on behalf of a principal,a legal instrument commonly referred to as ____________ must be in place.

Accepted Answer

A)  assignment
B)  power of attorney
C)  mutual assent
D)  consideration

Question 17

In accordance with RESPA,whenever a buyer obtains a new first mortgage loan from a chartered or insured lender,when the loan is insured by the FHA or guaranteed by the VA,or when the loan will be sold to one of the federally related secondary mortgage market agencies,a good-faith estimate of the settlement costs must be provided by the lender within:

Accepted Answer

A)  3 business days
B)  5 business days
C)  30 calendar days
D)  90 calendar days

Question 18

If a property transaction is scheduled to close on May 14th,calculate the individual tax responsibility for the buyer if the total tax owed at the end of the year is $5,000.For this problem,assume that we are dealing with a 365 day calendar year.

Accepted Answer

A)  $0.00
B)  $1,821.92
C)  $3,178.08
D)  $5,000.00

Question 19

Certain closing costs will be prorated to account for the period of time during which the seller occupied the house.If a transaction is scheduled to close on May 17,136 days into a 365-day year,calculate the amount that the buyer will be credited if the particular closing cost in question is estimated to be $1000 for the entire year.

Accepted Answer

A)  $182.19
B)  $372.60
C)  $624.66
D)  $1000

Question 20

If property owners fail to pay their taxes in a timely fashion,this can create a first lien on the mortgaged property.In order to protect against this,lenders often require that borrowers add what fraction of their estimated tax bill to their required monthly mortgage payments?

Accepted Answer

A)  1/12
B)  1/6
C)  1/4
D)  1/2

Exam 13: Contracts for Sale and Closing

When a buyer signs an offer to purchase a property,the broker receives a monetary amount from the purchaser of 5 or 10 percent of the purchase price.This deposit is commonly referred to as the:

When a party in a contract fails to perform (e.g.breach of contract,nonperformance,or default) the other party has a variety of remedies.All of the following are remedies that an aggrieved seller may pursue EXCEPT:

The final step in a real estate transaction is the closing.In most closings,which party is responsible for seeing that the closing is completed successfully?

While fee splitting between cooperating real estate brokers is permitted,RESPA explicitly prohibits such actions as rebating part of the title insurance premium to the lender who recommended or required the title insurance.These unearned fees are commonly referred to as:

In certain circumstances,mutual assent between the contracting parties may be broken,thus invalidating the contract.Which of the following defects to mutual assent involves compelling a person to act by the use of force?

When the seller in a contract for sale fails to perform (e.g.breach of contract,nonperformance,or default) ,the buyer has a variety of remedies.One such remedy is to appeal to the court to force the defaulting seller to carry out the contract.This remedy is most commonly referred to as suing for:

Both parties to a valid and enforceable contract must provide consideration.In a contract for the sale and purchase of real estate,which of the following depicts the seller's Consideration?

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

The Real Estate Settlement Procedures Act (RESPA) is a federal law that requires federally chartered or insured lenders to provide buyers and sellers with information on all settlement costs.According to RESPA,loan closing information must be prepared on a special form known as the:

Since the seller often has utilized the property for a portion of the year in which the transaction is being made,certain costs associated with the property will be prorated at the closing.All of the following items are subject to being prorated EXCEPT:

If a property transaction is scheduled to close on May 14^th,calculate the individual tax responsibility for the buyer if the total tax owed at the end of the year is $5,000.For this problem,assume that we are dealing with a 365 day calendar year.

If property owners fail to pay their taxes in a timely fashion,this can create a first lien on the mortgaged property.In order to protect against this,lenders often require that borrowers add what fraction of their estimated tax bill to their required monthly mortgage payments?