Download Law of Contracts - #1251: FINAL EXAM Questions with Correct answers and more Exams Law in PDF only on Docsity!
Law of Contracts - #1251: FINAL EXAM Questions
with Correct answers
Which of the following are NOT included in the description of land? A)A sewer system B)The earth's surface extending downward to the center of the earth C)Trees and water on the earth's surface D)Formations such as hills and plateaus Correct Answer-A) A sewer system A man owns 200 acres of prime hunting land. He has had a problem in the past with people using the land without his permission. He decides to post No Trespassing signs to prevent this in the future. The man is exercising his _______. A)right of disposition B)right of enjoyment C)subsurface rights D)right of exclusion Correct Answer-D) Right of exclusion Fee simple ownership, shared walls, and a fractional interest in common areas are all characteristics of _______. A)single-family home ownership
B)cooperative ownership C)time-share ownership D)town-house ownership Correct Answer-D) Town-house ownership A woman rents space in a commercial building where she operates a bookstore. In the bookstore, she has installed large reading tables fastened to the walls and bookshelves that create aisles from the front of the store to the back. These shelves are bolted to both the ceiling and the floor. Which of the following best characterizes the contents of the bookstore? A)The shelves and tables are trade fixtures and may properly be removed by the woman before her lease expires. B)The shelves and tables are trade fixtures and will transfer when the property owner sells the building. C)Because the woman is a tenant, the shelves and tables are fixtures and may not be removed except with the building owner's permission. D)Because the shelves and tables are attached to the building, they are treated the same as other fixtures. Correct Answer-A) The shelves and tables are trade fixtures and may properly be removed by the woman before her lease expires. Which of the following is a physical characteristic of land? A)Improvements B)Area preference
D)Limited corporation Correct Answer-B) Limited liability company (LLC) A corporation is a legal entity created under the authority of ______. A)federal laws B)the laws of the municipality from which it receives its charter C)the laws of the state from which it receives its charter D)corporate laws Correct Answer-B) The laws of the municipality from which it receives its charter All of the following are essential elements of a valid contract EXCEPT: A)offer and acceptance B)consideration C)legal purpose D)notarization Correct Answer-D) Notarization Which type of lease, generally used for retail businesses, bases its rent on a minimum fixed rental fee plus a portion of the gross income generated by the tenant's business? A)Net lease B)Gross lease
C)Variable lease D)Percentage lease Correct Answer-D) Percentage lease A store has been in business for 40 years, and the seller is ready to retire. His long-time employee is interested in taking over the business. The seller and the employee enter into a contract that will give the employee the right to purchase the business for $280,000 if she does it within the next 14 months. This is an example of _______. A)an option B)a land contract C)a sale-and-leaseback D)a lease purchase Correct Answer-A) An option Which of the following BEST describes when a corporation holds title to the land and the building? A)Condominium B)Cooperative C)Town house D)All of these Correct Answer-B) Cooperative A tenant received a job offer in another state and requested that the landlord allow her friend to take over her lease. The landlord agrees to
D)can be withheld from the owner by the sales agent if they are not full- price offers Correct Answer-A) Must be in writing and presented to the property owner as quickly as is reasonably practical Making a counteroffer ______. A)necessitates an entirely new contract B)is a right given only to sellers C)terminates the original offer D)is a right given only to buyers Correct Answer-C) Terminates the original offer What law requires certain types of contracts to be in writing to be enforceable? A)Parol evidence rule B)Statute of frauds C)Real Estate Settlement Procedures Act D)The Homestead Act Correct Answer-B) Statute of frauds The sales contract says the buyer will purchase only if the buyer's current home closes within the next 30 days. This is called a ______. A)contingency B)reservation
C)warranty D)consideration Correct Answer-A) Contingency A buyer purchases a home under a land contract. Until the contract is paid in full, the buyer: A)holds legal title to the premises B)has equitable title in the property C)has no legal interest in the property D)possesses a legal life estate in the premises Correct Answer-B) Has equitable title in the property Contingencies in a contract create ______. A)an invalid contract B)a voidable contract C)a void contract D)an unenforceable contract Correct Answer-B) A voidable contract The seller's disclosure of property condition as required under Section 5.008 of the Texas Property Code is required for transactions ______. A)from a seller to a buyer B)pursuant to a court order or foreclosure sale
D)disclosure of known lead-based paint hazards be given for any property built after 1978 Correct Answer-B) That sellers and landlords disclose known lead-based paint hazards for any property built before 1978 Which of the following is a likely outcome of a property home inspection? A)The contract terminates if the home inspector finds a list of defective items B)The seller agrees to correct all defective items, but the buyer decides not to buy anyway and terminates the contract C)The sale can only go through if the seller corrects all defective items D)A seller who is unable, or does not wish, to make the corrections may offer a monetary amount of credit to be given at settlement Correct Answer-D) A seller who is unable, or does not wish, to make the corrections may offer a monetary amount of credit to be given at settlement Under the Deceptive Trade Practices Act (DTPA), in order for treble damages to be awarded, a real estate professional must ______. A)act knowingly B)commit an act of commission C)commit an unconscionable act D)commit an act of omission Correct Answer-C) Commit an unconscionable act
In what kind of state does a mortgagor retain legal and equitable title to a property? A)Title theory B)Modified title theory C)Lien theory D)Modified lien theory Correct Answer-C) Lien theory Which of the following is TRUE regarding promissory notes? A)It is the borrower's personal promise to repay a debt according to agreed terms B)It is the seller's personal promise to sell the property to the buyer C)It is also called a security D)It protects the borrower against a cloud on the title Correct Answer-A) It is the borrower's personal promise to repay a debt according to agreed terms A contract that lacks one or all essential elements is considered ______. A)invalid B)void C)voidable
C)passing title D)a covenant of seisin Correct Answer-A) A granting clause A bargain and sale deed _______. A)implies that the grantor holds title and possession of a property but contains no express warranties against encumbrances B)carries no covenants or warranties and generally conveys only whatever interest the grantor may have when the deed is delivered C)provides the greatest protection to the buyer and includes five basic warranties, or covenants D)includes the covenant of quiet enjoyment and the covenant against encumbrances Correct Answer-A) Implies that the grantor holds title and possession of a property but contains no express warranties against encumbrances Which of the following is NOT an example of an action that might lead to involuntary alienation? A)Land is needed for public use B)Debt secured by real property is not paid C)Property is gifted to another D)A person dies intestate with no heirs Correct Answer-C) Property is gifted to another
Which of the following is NOT part of the loan approval process? A)Underwriting B)Lender obtaining a credit report for the applicant C)Lender ordering a home inspection D)Lender ordering an appraisal of the property Correct Answer-C) Lender ordering a home inspection What important tasks must the closing agent complete in preparation for closing? A)Prepare the deed and the Closing Disclosure B)Conduct a final inspection of the property C)Prepare the Loan Estimate and the deed D)Prepare the deed and execute an affidavit of title Correct Answer-A) Prepare the deed and the Closing Disclosure Which of the following is a task to be completed by the seller in preparation for closing? A)Review the Loan Estimate B)Review the Closing Disclosure C)Obtain a title insurance policy D)All of these Correct Answer-B) Review the Closing Disclosure
A)indicate that the seller will remain on the property for one week beyond the closing date B)provide factual statements about the transaction C)define legal rights of the buyer D)provide a timeframe for an offer response Correct Answer-B) Provide factual statements about the transaction A property title free of defects is said to be ______. A)valid B)marketable C)legally sufficient D)binding Correct Answer-B) Marketable Common areas of concern in sales contract include all of the following EXCEPT: A)disposition of real and personal property B)resolution of title defects C)electronic signatures D)an incomplete legal description Correct Answer-C) Electronic signatures A seller sold his house using a contract for deed. When will the buyer receive title?
A)Upon giving notice to accept the option right B)When the seller has repaid his current loan on the house C)After the contract for deed is recorded D)Upon final payment Correct Answer-D) Upon final payment A voidable contract ______. A)has no legal effect B)may be disaffirmed by one party C)is oral D)has not been signed by all parties Correct Answer-B) May be disaffirmed by one party Fannie Mae's secondary market loan packages include ______. A)special assistance loans B)only conventional loans C)only FHA loans D)conventional, VA, and FHA loans Correct Answer-D) Conventional, VA, and FHA loans During the option period, a buyer may terminate the contract for ______.
Which of the following is commonly used to show proof of ownership? A)A certificate of title B)Torrens certificate C)Title insurance D)All of these Correct Answer-D) All of these A buyer makes an offer to purchase and leaves a deposit with the listing broker to show good faith. When the contract is accepted, how should the broker handle the earnest money? A)Deposit the funds in an escrow account or a title company within two business days B)Apply the funds to the listing expenses C)Give the funds to the seller to deposit when the offer is presented D)Deposit the funds in the brokerage escrow account within two days Correct Answer-A) Deposit the funds in an escrow account or a title company within two business days A suit for specific performance of a real estate contract asks for ______. A)money damages B)conveyance of the property C)a deficiency judgment
D)a new contract Correct Answer-B) Conveyance of the property A contract for deed or installment contract is a ______. A)contract to buy land only B)mortgage on land C)method of selling real estate where the seller is also the lender D)means of conveying title immediately at closing Correct Answer-C) Method of selling real estate where the seller is also the lender An option-to-purchase contract ______. A)requires option money that is refundable if the buyer does not buy B)binds the buyer only C)allows the buyer to buy for a fixed price within a specified time period D)binds both buyer and seller Correct Answer-C) Allows the buyer to buy for a fixed price within a specified time period Under a contract for deed, all of the following are true of the buyer's rights and obligations EXCEPT the buyer _______. A)has possession B)has legal title C)is obligated to pay taxes and insurance
