LAW OF CONTRACTS TEST BANK 2026
QUESTIONS WITH DETAILED ANSWERS
◉ To make a contract valid, someone may need to contract through
the power of attorney if they: Answer: are of unsound mind
◉ In the event that the buyer cannot secure financing, a financing
contingency allows: Answer: the buyer to back out of the home
purchase and reclaim their earnest money
◉ WHAT must be delivered to the seller or the seller's agent within
three days after the effective date of the contract? Answer: Option
Fee
◉ Joe is a real estate agent assisting a client with a promulgated
form. The client does not agree with a few phrases in the form, so Joe
strikes those phrases out. Which of the following is TRUE? Answer:
Joe should not have done that as agents may only fill in approbate
blanks in a form or add their business details
◉ The government of Pleasantville is seizing land in order to widen
several major streets in the city. They take the land without the
property owners' consent. This is an example of: Answer: Eminent
domain
,◉ Condominium owners: Answer: Do own the interior of a
residential unit
◉ A seller's homeowner's insurance policy is cancelled at the time of
closing. They will receive WHAT after closing for the part of their
premium that was paid in advance? Answer: a refund check
◉ A promissory note is: Answer: the borrowers personal promise to
repay the loan to the lender
◉ Sharkari owes $23,000 on a first lien mortgage and $13,000 on a
second lien recorded just a few weeks ago. Her property goes into
foreclosure. Which sum will be paid off first? Answer: the 23,000
because it was recorded first
◉ What is an exclusive right to sell listing? Answer: a listing
agreement that gives the broker the ring to the commission no
matter who sells the property
◉ An estate for years, a periodic estate, an estate at will, and a
tenancy at sufferance are all: Answer: leasehold estate
◉ Helder is a buyer who wants to breach his contract and back out
of his sale contract. But he also doesn't want to lose money. Which of
, the following is most TRUE of Helder's situation? Answer: Helder
will forfeit his earnest money if he backs out
◉ A homeowner who has given notice of title by recording their
property deed is protected against: Answer: Future claims of
interest in their property
◉ A void contract: Answer: has No legal effect and does not impose
and legal rights
◉ Who is responsible for encouraging and setting up the
appointment for a final walkthrough inspection with the buyer?
Answer: Buyers broker
◉ What does RESPA stand for? Answer: Real estate settlement
procedures act
◉ Four investors agree to co-ownership of an investment property.
They have arranged the ownership structure so that if one of them
dies, the decedent's ownership stake passes to the remaining
investors. What form of co-ownership do the investors have?
Answer: Joint tenancy
◉ Geri is about to sign a buyer/tenant representation agreement
with a client. Which of the following is FALSE about Geri and Geri's
QUESTIONS WITH DETAILED ANSWERS
◉ To make a contract valid, someone may need to contract through
the power of attorney if they: Answer: are of unsound mind
◉ In the event that the buyer cannot secure financing, a financing
contingency allows: Answer: the buyer to back out of the home
purchase and reclaim their earnest money
◉ WHAT must be delivered to the seller or the seller's agent within
three days after the effective date of the contract? Answer: Option
Fee
◉ Joe is a real estate agent assisting a client with a promulgated
form. The client does not agree with a few phrases in the form, so Joe
strikes those phrases out. Which of the following is TRUE? Answer:
Joe should not have done that as agents may only fill in approbate
blanks in a form or add their business details
◉ The government of Pleasantville is seizing land in order to widen
several major streets in the city. They take the land without the
property owners' consent. This is an example of: Answer: Eminent
domain
,◉ Condominium owners: Answer: Do own the interior of a
residential unit
◉ A seller's homeowner's insurance policy is cancelled at the time of
closing. They will receive WHAT after closing for the part of their
premium that was paid in advance? Answer: a refund check
◉ A promissory note is: Answer: the borrowers personal promise to
repay the loan to the lender
◉ Sharkari owes $23,000 on a first lien mortgage and $13,000 on a
second lien recorded just a few weeks ago. Her property goes into
foreclosure. Which sum will be paid off first? Answer: the 23,000
because it was recorded first
◉ What is an exclusive right to sell listing? Answer: a listing
agreement that gives the broker the ring to the commission no
matter who sells the property
◉ An estate for years, a periodic estate, an estate at will, and a
tenancy at sufferance are all: Answer: leasehold estate
◉ Helder is a buyer who wants to breach his contract and back out
of his sale contract. But he also doesn't want to lose money. Which of
, the following is most TRUE of Helder's situation? Answer: Helder
will forfeit his earnest money if he backs out
◉ A homeowner who has given notice of title by recording their
property deed is protected against: Answer: Future claims of
interest in their property
◉ A void contract: Answer: has No legal effect and does not impose
and legal rights
◉ Who is responsible for encouraging and setting up the
appointment for a final walkthrough inspection with the buyer?
Answer: Buyers broker
◉ What does RESPA stand for? Answer: Real estate settlement
procedures act
◉ Four investors agree to co-ownership of an investment property.
They have arranged the ownership structure so that if one of them
dies, the decedent's ownership stake passes to the remaining
investors. What form of co-ownership do the investors have?
Answer: Joint tenancy
◉ Geri is about to sign a buyer/tenant representation agreement
with a client. Which of the following is FALSE about Geri and Geri's
