Agency Relationships Contract Exam

MANTLE REALTY

Buddy wanted to offer to purchase the Walkers' home and engaged Joan to be his agent. When the offer was delivered to Walker, it contained a provision limiting the time for acceptance to 48 hours. Walker rejected the offer out of hand as inadequate. After thinking about it for twenty-four hours though, Walker called agent Joan and said, "I've changed my mind. I'll take Buddy's offer. " What is the status of Buddy's offer?
- It was terminated when Walker first rejected it
- It is still open because Buddy has not formally withdrawn it
- It is still open because it had 48 hours to run
- It is a binding contract, now that Walker has accepted it
An earnest money deposit, if any is offered, is usually given to the agency at the time a sales contract is authorized by the offeror and presented to the offeree. Absent any contrary instructions in the sales contract, the agency has a legal responsibility to:
- Hold the check in the transaction file until closing
- Put the check in the brokerage's fire-proof safe
- Deposit the earnest money in his/her operating account
- Deposit the check in the brokerage's special account
Contract law requires that the amount of earnest money to submit with a sales contract be:
- 10% of the asking price
- At least $1000
- 6% of the offer
- No earnest money is required to form a contract
Seller Joe's agent personally delivered Mary's offer to buy Joe's house. Joe said he would like to think about it for a couple of days. Later that week, without making a single change in the contract, Joe decided to accept Mary's offer and signed it. Then he addressed it to Mary and went to the post office and mailed it. Is the contract binding on both parties?
- Yes, because Joe sent it to Mary in the mail
- No, because Joe didn't give it back to his agent
- Yes, because all that was required was Joe's signature
- No, because Mary hadn't received it from her agent
A seller and buyer agree on terms of a purchase and sale agreement and are now waiting for closing to occur. Unfortunately, before closing occurs, the improvements on the property are struck by lightning, catch on fire and are totally destroyed. The remedies of the buyer are:
- All answers choices given
- Accept the property as is
- Accept the property and claim the insurance proceeds
- Terminate the contract
Seller Sam decides to purchase Buyer Bob's home and submits a written offer, stipulating that time is of the essence and that the offer must be accepted in writing before 12 o'clock noon three days hence. On the third day at 11:30 AM Buyer Bob telephones Sam to say that he has decided to accept the offer as written. Do the parties have a binding contract?
- No, because Buyer Bob didn't wait until 12:00 noon to accept
- No, because acceptance was not made in the manner specified
- Yes, because Buyer Bob communicated acceptance to Seller Sam
- Yes, because Sam cannot revoke the offer
A subdivision developer employs agent Sue to sell lots. John, a licensed agent, offers to buy lot B-3 for $20,000, and a sales contract is executed. However, through a typographical error which no one noticed, the contract identified the lot as D-3 (which was listed at $25,000.) What is the contract status?
- Enforceable
- Voidable
- Void
- Invalid
If seller Adams simply decides not to go through with the closing on a sale to buyer Williams, what can Williams do about it?
- Sue for specific performance
- Sue for damages
- Sue for both specific performance and damages
- Nothing, because the deal has not yet been closed
When a broker deposits clients' money in the same bank account as the brokerage's operating funds this is referred to as:
- Blending
- Theft
- Merger
- Commingling
A buyer submits an offer to purchase a home and the seller, wishing to keep the dining room chandelier, adds to the contract the words "dining room chandelier not included "before signing and returning it to the buyer. Is the contract binding?
- No, the seller rejected the buyer's offer
- Yes, the seller only made an insignificant change
- No, to be binding, the seller's counteroffer must now be accepted by the buyer without further change
- No, the seller rejected the buyer's offer AND to be binding, the seller's counteroffer must now be accepted by the buyer without further change
Broker Bruce, on behalf of his client, Jim, who wanted to buy a lot from Tom, submits to Tom a purchase and sale agreement signed by Jim and stipulating a price of $25,000, a sales commission of 6% and closing within 90 days. Tom accepts the price, changes the commission rate to 5%, the closing period to 45 days, initials the changes, then signs and returns the contract to Broker Bruce who gives it to Jim. Is the contract valid?
- Yes, because Tom initialed his changes
- No, because there was no meeting of the minds
- Yes, because it it in writing and signed by both parties
- No, because the broker's commission is non-negotiable
Once both parties have signed a purchase and sale agreement and the buyer's earnest money check is deposited in the special account, whose money is it?
- The seller's, up to and including closing
- Nobody's, until the transaction is either completed, rescinded, or breached
- The buyer's, up to and including closing
- The licensee's, as a pre-payment of the commission
When a property is listed, it is:
- An option
- An offer to sell
- A solicitation of offers to buy
- A contract
Walton decides to sell his cabin on the lake and offers it in a letter to his regular postman, Bill, at a price of $5,000. The next day, Walton receives a note from a neighbor, a close friend of the postman, who says, "I accept your offer. " Is Walton obligated to sell to the neighbor?
- No, because only the offeree can accept an offer
- Yes, because the acceptance was within three days
- No, because no licensed agent was involved
- Yes, because both the offer and the acceptance were in writing
Broker A conveys an offer from his client to Broker B wherein A's client wishes to purchase a 300-acre farm by giving B's client $100,000, 2 year-old tractors and 50 head of Black Angus cattle. What would the consideration offered by A's client be called?
- Valuable
- Good and valuable
- Inadequate
- Good
If a client's earnest money check, upon being deposited in the broker's trust account, is returned for insufficient funds, the broker should:
- Call the police
- Tell the cooperating broker that the check bounced
- Cover the bad check personally
- Resign the agency
Can a buyer tender a personal note rather than cash or check as a good faith earnest money deposit?
- Yes, if the broker will co-sign the note
- No, because that would require a credit report
- No, because the broker might not get a commission
- Yes, if the seller is fully informed and approves in writing
A purchase and sales agreement stipulates that the earnest money deposit be placed in a separate interest-bearing account with any interest earned to be split between the buyer and seller. This is:
- Not okay, and the broker should resign the listing
- Against the law
- Money laundering
- Okay, because the buyer and seller have agreed to do it this way
Licensee Sue has just completed a purchase and sale agreement with her client, Buyer Bob, in order to make an offer on a house. The agreement includes a good faith deposit of $5000 in the form of a check, which Bob has given to Sue. Absent any specific instructions, what should Sue do with Buyer Bob's check?
- Deposit the check in her personal savings account
- Give it to the seller to hold until closing
- Turn it over to her sponsoring broker immediately
- Once the seller has accepted the offer, give the check to her sponsoring broker to deposit in the brokerage trust account
Susan offered to trade her four-bedroom three-story town home near the subway station for John's one-room cabin in the mountains. John promptly accepted her offer. A week later, at Susan's attorney's office, they signed a contract setting forth the even swap. In light of the apparent wide disparity in the values of the two properties, does Susan have to go through with the deal if she changes her mind before closing?
- Yes, if all of the elements of a contract are present, the adequacy and equality of consideration is not critical to its validity
- No, Susan was under undue influence
- Yes, because Susan initiated the transaction
- No, because John is obviously taking unfair advantage

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