Law of Contracts Exam Study Guide Questions And Answers Verified 100% Correct

Law of Contracts Exam Study Guide Questions And Answers Verified 100% Correct A(n) ________ to a contract is an attachment that adds or further describes the rights and duties of the parties. - ANSWER addendum . ________ is the legal procedure whereby secured property may be sold to satisfy a borrower's unpaid promissory note. - ANSWER Foreclosure The SAFE Act mandated the term ________. - ANSWER Residential Mortgage Loan Originator A(n) ________ occurs when a new contract is substituted for an existing one. - ANSWER novation A(n) ________ is a business venture that is owned by one individual. - ANSWER sole proprietorship . A(n) ________ is an agreement between two or more parties to do something or to refrain from doing something. - ANSWER contract If a property violates zoning, the owners must request a(n) ________. - ANSWER variance A(n) ________ is a listing in which the real estate broker's commission is the difference between the minimum net established by the seller and the price that the buyer is willing to pay. - ANSWER net listing ________ of an offer means that the accepting party does so with no change to the contract whatsoever. - ANSWER Acceptance The ________ ensures that all consumers are given an equal chance to obtain credit. - ANSWER Equal Credit Opportunity Act The formal judicial proceeding to prove the validity of a will and to distribute the assets of a decedent's estate is calle - ANSWER probate A ________ is a deed with no guarantees or warranties. - ANSWER Quitclaim deed Mortgage loan originators can be broken down into three categories: mortgage bankers, mortgage brokers and ________ - ANSWER Correspondent lenders A ________ is the borrower's unconditional promise to repay the lender. - ANSWER promissory note A "Section 502 Loan" is insured by the ________. - ANSWER USDA ________ is evidence an individual has of his or her right to possess land. - ANSWER title A(n) ________ mortgage covers more than one piece of property. - ANSWER blanket Real property conveyed by will is called a ________. - ANSWER devise An offer may be withdrawn at any time prior to its acceptance by the offeree - ANSWER true The four categories of leasehold estates are: estate for years, tenancy at sufferance, tenancy at will and ________. - ANSWER Periodic tenancy Which of the following is a physical characteristic of land? - ANSWER Indestructability Which disclosure is provided to comply with federal requirements for properties built before 1978? - ANSWER lead based paint disclosure An offer by a prospective purchaser can be terminated prior to acceptance due to: - ANSWER (a) expiration of a specified time period (b) bankruptcy of either party (c) a change in the law that renders the contract illegal (d) all of the above D The most common type of financing used in residential transactions is - ANSWER Third Party Financing If the loan factor is $4.49 and the loan amount is $357,500, taxes are $7300/year and the insurance is $3103 per year, what is the monthly PITI payment? - ANSWER $2,472.09 Rationale: $357,500 / 1000 = 537.5 357.5 x 4.49 = $1605.18 Loan Payment (P&I) $7300 / 12 = 608.33 Taxes (T) $3,103 / 12 = 258.58 Insurance (I) Total = $2,472 A loan assumption might be desirable because: - ANSWER The loan assumption is generally less costly than a new loan Earnest money is deposited in an escrow account when: - ANSWER The contract is signed by all parties and acceptance is communicated Damage or destruction of a property under contract prior to closing: - ANSWER May result in termination of the contract Jake (Seller) and Sarah (Buyer) entered into a contract for the sale of Jake's personal residence. In the contract, Jake promised to deliver a seller's disclosure of property condition within 5 days of the effective date of the contract. Jake never delivered the disclosure as promised. Which of the following statements is true? - ANSWER Sarah has the right to terminate the contract and receive a refund of earnest money prior to closing When a party is considering consulting an attorney for advice in a transaction an agent should: - ANSWER Buyers' and sellers' marital status is not required in the contract. - ANSWER true A buyer defaults on a contract and the seller chooses to receive the earnest money. This is an example of: - ANSWER Liquidated damages In a residential lease with a "right of first refusal" provision: - ANSWER The tenant has the right to match or better any offer the landlord receives to prevent the property from being sold to someone else Bill is the buyer purchasing a property from Sally. All contingencies have been met and the parties are ready to close. One day prior to closing, Sally announces that she has changed her mind and is going to keep the property. Bill is determined to complete the purchase and acquire the property. The only default remedy in the contract that could result in Bill acquiring the property is___________________________. - ANSWER Specific Performance Elmer Fleckenfleck, an agent with After Hours Realty, was preparing a contract. The seller told Elmer that he wanted to stay in the property for at least a week after closing. Elmer said that would be no problem and entered the following text to Paragraph 11: "Seller and Buyer agree that Seller will remain in the Property for 7 days after closing and funding." In this case, Elmer has: - ANSWER Engaged in the unlawful practice of law