Real Estate Contracts and Transactions, Exams of Advanced Education

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Which of the following parties would be most capable? A. Person under 18 B. Person under guardianship C. An 18 year old married couple D. An intoxicated bachelor - Correct Answer-C. An 18 year old married couple A corporate officer can contract for corporate assets by virtue of a A. Power of Attorney B. Codicil C. Partnership agreement D. Corporate Resolution - Correct Answer-D. Corporate Resolution By virtue of what power can a partner contract without all partner's approval?

A. Uniform Partnership Act B. Uniform Landlord and Tenant Act C. Uniform Corporate Act D. Uniform Vendor & Purchaser Risk Act - Correct Answer-A. Uniform Partnership Act Which of the following legal descriptions is used in Tennessee today? A. Emoluments B. Government Rectangular Survey C. Federal Square Method D. Metes and Bounds - Correct Answer-D. Metes and Bounds Which of the following is not an essential part of a contract? A. Offer B. Acceptance C. Earnest money D. Legal purpose - Correct Answer-C. Earnest money Which of the following contracts is not a bilateral contract? A. Mortgage

B. Lease C. Sales Agreement D. Open Listing - Correct Answer-D. Open Listing Most Affiliate Brokers and Brokers under the principal Broker of record are usually classified as: A. Independent Contractors B. Employees C. Employ/Independent Contractor D. Temporary workers - Correct Answer-A. Independent Contracts The party making an offer is known by which of the following terms? A. Offeror B. Offeree C. Vendor D. Vendee - Correct Answer-A. Offeror An affiliate broker is made an independent contractor by which of the following laws?

A. TEFRA

B. ERTA

C. Tax Reform Act of 1986 D. Sherman Antitrust Act - Correct Answer-A. TEFRA (Tax Equity and Fiscal Responsibility Act) The names and signatures of the parties to a contract are required because of what law? A. Statute of Signatures B. Statute of Limitations C. Statute of Frauds D. Statute of Misdemeanors - Correct Answer-C. Statute of Frauds The legal description most used in urban areas of Tennessee is which of the following? A. Metes and Bounds B. Government Rectangular Survey C. Monument D. Lot & Block Number - Correct Answer-D. Lot & Block Number

The legal description most used in rural areas of Tennessee is which of the following? A. Metes and Bounds B. Government Rectangular Survey C. Monuments D. Lot & Block Number - Correct Answer-A. Metes and Bounds For a contract to be valid, which of the following elements must be presented? A. Duress B. Undue influence C. Misrepresentation D. Legal purpose - Correct Answer-D. Legal purpose If a party defaults on completing the terms of a contract, the other party can take which of the following actions? A. Specific performance B. Non-specific performance C. General performance

D. Universal performance - Correct Answer-A. Specific performance A vendee in a sales contract holds which of these types of a title? A. Legal title B. Equitable title C. Has no title D. Fee simple title - Correct Answer-B. Equitable title An independent contractor agreement should be signed A. When affiliating with a firm B. Every January 1 C. When there's a change in the policy manual D. At license renewal - Correct Answer-A. When affiliating with a firm If a contract is signed by a minor, it is A. Void B. Voidable by either party C. Voidable by the minor

D. Unenforceable by the minor - Correct Answer-C. Voidable by a minor For a contract to be valid, which of the following must be present? A. Earnest money B. Legal description C. Legal capacity D. Acknowledgement - Correct Answer-C. Legal capacity In an option contract, the option money is? A. Automatically applied to the purchase price if the option is exercised B. Refundable to the purchaser C. Void D. Paid for the option only - Correct Answer-D. Paid for the option only If the optioner dies during the option contract period, the contract is A. Terminated

B. Not terminated C. Automatically renewed D. Continuously renews for 10 years - Correct Answer-B. Not terminated The leasehold estate giving the tenant the least rights is which of the following? A. Estate for years B. Estate for year to year C. Estate at will D. Estate at sufferance - Correct Answer-D. Estate at sufferance Which of the following contracts does not have to be in writing and signed to be enforceable? A. Lease for 10 months B. Sales contract C. Lease for 10 years D. Option agreement - Correct Answer-A. Lease for 10 months Which of the following leases automatically renews?

A. Estate for period to period B. Estate for years C. Estate at sufferance D. Estate at large - Correct Answer-A. Estate for period to period Competing brokerage companies conspiring to charge the same Commission rate would be guilty of which federal law? A. The monopoly act B. Trust Avoidance Act C. Sherman Act D. Shaw Trade Act - Correct Answer-C. Sherman Act If a written clause in a contract contradicts a printed standard clause in the contract, which of the following is true? A. The written clause is superior to the printed clause B. The printed clause is superior to the written clause C. Both written and printed clauses have the same weight D. Neither written nor printed clause have any weight - Correct Answer-A. The written clause is superior to the printed clause

While having a property inspected, an affiliate broker has an obligation to perform which following action? A. Have the property inspected by a professional inspection service B. Rely on the statements of the seller C. Not disclose any known as caveat emptor D. Make a physical inspection and disclose any defects to all prospective buyers - Correct Answer-A. Have the property inspected by a professional inspection service The wrongful actions of a landlord forcing a tenant to vacate the property is known by which of the following terms? A. Potential eviction B. Actual eviction C. Constructive eviction D. Published eviction - Correct Answer-C. Constructive eviction When a party has rights in real property for a definite time period it is best described as a A. Determinable estate B. Leasehold estate

C. Freehold estate D. Freehold interest - Correct Answer-B. Leasehold estate All of the following are characteristics of a valid real estate sales contract, EXCEPT A. Consideration B. Signature of all parties C. Broker's commission D. Closing date - Correct Answer-C. Broker's commission A real estate sales agreement is best described as A. Bilateral and executed B. Unilateral and executory C. Unilateral and executed D. Bilateral and executory - Correct Answer-D. Bilateral and executory If an agent breaches his fiduciary duties to his principal, the following liabilities could be imposed on the agent: A. Monetary damages B. Forfeit the right to a commission

C. Disciplinary action by the Real Estate Commission D. All of the above - Correct Answer-D. All of the above Under the disclosure rule, when must the written disclosure take place? A. Before showing any property B. Before closing C. Before an offer is prepared D. Before the commission is received - Correct Answer-C. Before an offer is prepared An undisclosed dual agency is which of the following? A. Illegal B. Legal C. Allowed by the Tennessee Real Estate Commission D. Allowed by the laws of the agency - Correct Answer-A. Illegal Which of the following is not a duty of the agent in the principal/agent relationship? A. Duty of loyalty

B. Duty to obey C. Duty to collect a commission D. Duty to exercise due care - Correct Answer-C. Duty to collect a commission (COLAD) A buyer's broker would not perform which of the following in a sales negotiation? A. Negotiate a large amount of earnest money B. Negotiate the lowest possible sales price C. Seek contingencies favorable to the buyer D. Ask for an outside inspection - Correct Answer-A. Negotiate a large amount of earnest money A real estate agent should perform the following steps to best comply with proper agency procedures EXCEPT one: A. Choose B. Conceal C. Communicate D. Conduct - Correct Answer-B. Conceal

Which of the following persons would not be a party in a principal/agent relationship? A. Seller's agent B. Buyer's agent C. Sub-agent D. Facilitator - Correct Answer-D. Facilitator A buyer's agent should provide which level of service to his/her principal? A. Client level B. Customer level C. Broker level D. Agent level - Correct Answer-A. Client level Real estate sales contracts can be terminated by all of the following EXCEPT one: A. Performance B. Mutual release by the parties C. Bankruptcy D. Death - Correct Answer-D. Death

To be valid, a real estate sales contract must have all of the following EXCEPT one: A. Legal purpose B. Earnest money C. Competent parties D. Reality of consent - Correct Answer-B. Earnest money A real estate salesperson who makes an exaggerated statement of opinion regarding a parcel of property is probably A. Puffing B. Making a misrepresentation C. Not a problem D. Guilty of fraud - Correct Answer-A. Puffing Exaggerated or superlative comments or opinions made by real estate agents. A real estate broker who markets a specific parcel of property is A. General agent B. Specific agent

C. Subagent D. Client - Correct Answer-B. Specific agent One who is authorized by a principal to perform a single act or transaction; a real estate broker is usually a special agent authorized to find a ready, willing, and able buyer for a particular property If a seller hires any number of brokers to find a buyer for his property and the seller agrees to pay only one commission to the broker who finds the ready, willing, and able buyer acceptable to the seller, then the seller has given a (an) A. Net listing B. Exclusive Right to Sell listing C. Open listing D. Exclusive agency listing - Correct Answer-C. Open listing Which type of real estate activity does NOT require a real estate license? A. Listing property B. Selling property C. Leasing property

D. Appraising property - Correct Answer-D. Appraising property Which responsibility is NOT included in the list of fiduciary responsibilities of the broker/affiliate broker to the principal? A. Care B. Courtesy C. Loyalty D. Obedience - Correct Answer-B. Courtesy COLAD Care - Obedience - Loyalty - Accounting - Disclosure If a real estate licensee has a written agency agreement with both buyer and seller in the same real estate transaction, he/she is known as a: A. Single agent B. Designated agent C. Dual agent D. Subagent - Correct Answer-C. Dual agent

One who is authorized by a principal to represent the principal in a specific range of matters is A. Special agent B. Dual agent C. General agent D. Universal agent - Correct Answer-C. General agent If a broker charges an 8% commission on the first $40,000 of sales price, 6% on the next $40,000 of the sales price, and 4% of the balance, how much commission would he/she receive if the sales price is $96,000? A. $5, B. $6, C. $5, D. $6,240 - Correct Answer- Assume a broker charges 7% commission if the first $50,000 of sales price and 5% on all the rest of the sales price, how much more would he/she have received if he/she charged a flat 6% commission on the sale of a $100,000 home? A. $ B. $

C. $

D. -0- - Correct Answer- A buyer who is prepared to buy on the seller's terms and is ready to take positive steps toward the consummation of the transaction is A. A positive buyer B. Excited about buying a new home C. Ready to get things started D. A ready, willing, and able buyer - Correct Answer-D. A ready, willing, and able buyer Compensation to an affiliate broker is set by an agreement between A. The seller and the principal broker in the listing agreement B. The seller and the affiliate broker C. The principal broker and affiliate broker in the Independent Contractor agreement D. The buyer and the seller - Correct Answer-C. The principal broker and affiliate broker in the Independent Contractor agreement

A fiduciary is A. An employee of a manufacturing facility B. A person who holds a position of trust and confidence C. A salesperson assisting a buyer/customer D. An indispensable piece of equipment in a real estate office - Correct Answer-B. A person who holds a position of trust and confidence (Usually a reference to a broker employed under the terms of a listing contract) An affiliate broker may receive real estate compensation from A. Only from his/her principal broker B. A seller C. A buyer D. Another licensed broker - Correct Answer-A. Only from his/her principal broker The amount of real estate commission that is paid to a broker is A. Fixed by state law B. Set by local custom

C. Determined by MLS rules D. Established by negotiating of the parties - Correct Answer- D. Established by negotiating of the parties A licensed salesperson acting as an independent contractor with a licensed broker is A. Not responsible to the broker for his actions B. Allowed to receive employee benefits C. Must work specific hours in the office D. Responsible for paying his/her own income taxes - Correct Answer- When has a real estate broker earned a commission? A. At the signing of the listing agreement B. When the offer to purchase has been accepted by the offeree and Communicated to the offeror C. At the settlement table D. When the offer to purchase has been presented - Correct Answer- Arthur borrowed $50,000 to buy a house. His annual interest rate is 9 1/2% and his monthly payment to principal and

interest is $420.43. What amount will he pay to interest for the first two payments? A. $791.66 B. $49.39 C. $791.47 D. $4,395.83 - Correct Answer- Dedication is A. A type of leasehold estate B. A voluntary alienation C. A clause found in a mortgage D. An involuntary alienation - Correct Answer- A restaurant has been operating in an area that has no zoning laws. Five years later the property is annexed into the city where zoning requires residential use only. If the restaurant continues to operate, this is a (an) A. Variance B. Adverse possession C. Non-conforming use D. Illegal use of restaurant - Correct Answer-

Mary and Nancy own property together. If Mary owns 70% and Nancy owns 30%, they are: A. Joint tenants B. Tenants by the Entireties C. Tenants in Severalty D. Tenants in common - Correct Answer- Adam wishes to build a two-story house. The dimensions are 38 feet by 32 feet and the builder quotes a price of $52,00 per square to construct. Adam owns his lot, valued at $28,000. What will his total property likely be worth? A. $91,232 B. $154,464 C. $126,464 D. $161,629 - Correct Answer- What clause in a lease agreement "excuses" a landlord from liability to a tenant for negligence in maintaining leased property? A. Rights of the landlord clause B. Rights to lease clause

C. Exculpatory clause D. Excuse clause - Correct Answer- When a licensee has been chosen by his/her principal broker to serve as the agent of an actual or prospective party in a transaction to the exclusion of other licensees affiliated with such broker, the licensee is a (an) A. Designated agent B. Subagent C. Single agent D. Dual agent - Correct Answer- Any licensee who assists one or more parties in a real estate transaction and has not entered into a specific written agency agreement to represent one or more of the parties a (an) A. Single agent B. Facilitator or Transaction Broker C. Designated agent for the buyer D. Appointed agent - Correct Answer-

A homeowner wants to build a front porch on her house but it is not allowed in her zone. In order to build the porch, she must appeal for a A. Building permit B. Non conforming use C. Variance D. Certificate of occupancy - Correct Answer- "E" leases a house from "D". The toilet leaks and bathroom floor becomes dangerously weak because of the rotted wood. "D" refuses to repair the problem. "E" moves out. This is likely an example of A. Constructive eviction B. Constructive notice C. Actual eviction D. Destructive cause - Correct Answer- John, Barry, and Lloyd own a fishing cabin together. All of their names are on the one title and they have right of survivorship. They are A. Tenant in severalty B. Tenants in common