A broker finds a buyer who is willing to enter into an option on a property for 90 days. The potential buyer pays $1,000 for the option right, which is acceptable to the property owner. Which of the following is TRUE?

A. The sales commission is earned only if the sale is closed. B. The sales commission is earned only if the option is exercised.

C. The $1,000 must be credited to the sales price.

D. The commission is earned upon mutual signing of the option agreement

B. The sales commission is earned only if the option is exercised

Note: in an option=

-owner agrees to sell or lease for a certain price within a certain period of time.

-buyer/lessee must decide  to exercise option or all the option expire, Option is enforceable by optionee

An implied contract would arise from the:

A. spoken words of the parties.

B. written words of the parties.

C. actions of the parties.

D. written or spoken words of the parties

A buyer and seller entered into a purchase and sale agreement on a property. At the time of the parties signing the contract, the:

A. seller retained legal title and the buyer cannot sue for specific performance.

B. seller had equitable title and the buyer had legal title.

C. legal title remained with the seller and the buyer received equitable title.

D. the buyer and seller held joint legal title until closing

An option is an example of:

A. a unilateral contract.

B. a bilateral contract.

C. an executed contract.

D. a voidable contract.

A. a unilateral contract.

Note: an option contract is a unilateral contract (one-sided agreement) 

A real estate sales agreement contains the language “time is of the essence.” Such language in a contract most nearly means:

A. the parties must perform within reasonable periods of time.

B. the time limits stipulated in the contract require punctual performance.

C. any time limits in the contract are merely suggestions. D. if the time limits are not met, the parties shall have 7 days to perform.

Which of the following is TRUE concerning conflicting wording in a contract?

A. Preprinted controls typewritten which controls handwritten.

B. Typewritten controls preprinted which controls handwritten.

C. Handwritten controls preprinted which controls typewritten.

D. Handwritten controls typewritten which controls preprinted.

When a buyer contracts to buy a parcel of real estate and the agreement includes the purchase of personal property, which of the following is TRUE?

A. Personal property passes with the deed if mentioned in the sales contract.

B. Personal property cannot be mentioned in a real estate sales contract.

C. The personal property in a real estate contract is best transferred with a bill of sale.

D. The contract must always state that the personal property value is $0. 

A buyer submits an offer to purchase contingent on the buyer’s spouse approving the property within 48 hours. Which of the following statements is correct concerning this agreement?

A. If accepted by the seller, the contract would be voidable by the buyer.

B. Real estate contracts cannot contain contingencies.

C. The contingency is not valid as it requires a personal judgement.

D. The contingency would have to be made on a separate amendment agreement.

Novation is:

A. A court action to enforce a contract.

B. The action of putting earnest money in an escrow account.

C. The substitution of a party in a contract for another and release of the first party from further liability.

D. The taking of private property for public benefit.

C. The substitution of a party in a contract for another and release of the first party from further liability.

Note: by definition Novation= substitution of a new contract. 

A buyer orders a termite inspection and termite damage to the structure is found. Who is responsible for correcting the existing damage?

A. The buyer ordered the report and would pay for inspection and any damage found.

B. The buyer would pay for the damages and the seller would pay for the inspection.

C. The seller would pay for the damages and the buyer would pay for the inspection.

D. The party specified in the sales contract. 

 An intoxicated buyer made an offer on a seller’s property. The seller accepted the offer and communicated the acceptance to the buyer. This contract would be:

A. valid and is binding in a court of law.

B. void and has no legal effect.

C. voidable by the offeree.

D. voidable by the offeror. 

In a land contract (contract for deed), which of the following statements is correct?

A. The vendor holds equitable title.

B. The vendee holds legal title.

C. The seller retains legal title.

D. The buyer received legal title.

C. The seller retains legal title.

Note: In land contracts, the seller holds legal title until the contract has been satisfied by buyer with either obtaining a loan or making final payment to the seller . 

Under the Electronic Signatures in Global and National Commerce Act (E-Sign), which of the following statements is correct?

A. A contract can be denied its legal effect because an electronic signature was used.

B. If a state’s law requires a signature on a contract, an electronic signature is not sufficient.

C. Contracts using e-mail have the same legal significance as those found on paper.

D. If the state’s statute of frauds law requires certain contracts to be in writing and signed by the parties involved to be legally enforceable, an electronic contract and signature are not legally sufficient.

A borrower is in default on their loan. Rather than experiencing the delay and expense of a foreclosure action, the lender agrees to release the mortgage so the property can be sold to a new purchaser. If the sale produces less money than is owed to the lender, the transaction would be referred to as a:

A. deed in lieu of foreclosure.

B. short sale.

C. land contract.

D. power of sale

An elderly mother has moved to a nursing home and wants her son to sell her home. To act as the agent of the mother, the son would need:

A. A deed signed by the mother.

B. A power of attorney signed by the mother.

C. A listing agreement signed by the son.

D. A power of attorney signed by the son

 A prospective purchaser asked the seller to lease the house with an option to purchase. If the seller agrees to this type of arrangement, when should you prepare to write the required sales contract?

A. Before you write the lease.

B. At the same time you write the lease, attach a copy to the lease, consult with your broker, and have both contracts signed by the parties.

C. Before the “option to purchase” clause expires.

D. After the lease expires.

A buyer made an offer on a seller’s residential property. The offer included earnest money in the form of an antique clock valued at $3,000. The agent should:

A. Advise the buyer that only cash or personal checks are acceptable forms of earnest money.

B. Advise the buyer that the clock cannot be deposited into the broker’s trust account and a cash deposit is required.

C. Advise the seller of the form and value of the earnest money being offered.

D. Advise the seller the earnest money is $3,000 cash

Due to an ambiguity in the financing terms, the sellers failed to understand they will be carrying a second mortgage note for five years and wanted to cancel the contract. Might the court cancel the contract?

A. Yes, if the sellers can prove to the court that they are financially incapable.

B. Yes, if a contract contains any ambiguity the court will generally rule against the party who prepared it.

C. No, because a signed and accepted contract is valid.

D. No, because Regulation Z does not apply since no lender was involved

B. Yes, if a contract contains any ambiguity the court will generally rule against the party who prepared it.

Note: If a contract contains any ambiguity, the court will generally interpret the agreement against the party who prepared it. In a contract between a business and a consumer, the court will tend to favor the consumer unless it can be shown that the consumer signed the contract with full knowledge of and consent to its terms.

A licensee is asked by a buyer to prepare a sales contract that will have no earnest money. According to the law and the rules of the Commission, can a licensee help negotiate a contract without earnest money?

A. Yes, because neither the law nor the Real Estate Commission require the purchaser to pay earnest money. B. Yes, because the seller cannot reject an offer solely based on the amount of the earnest money.

C. No, because it is illegal for a licensee to present an offer for which there is no earnest money.

D. No, because Georgia law establishes earnest money as one of the essential elements of an enforceable real estate sales contract.

When an offer to purchase is made on a property on which a sales contract already exists, the licensee should be sure that the subsequent offer contains a contingency. If it does not, the licensee should:

A. advise the seller to reject the offer and make a counteroffer including such a clause.

B. not present the offer to the seller.

C. advise the seller to accept it and write in such a clause.

D. advise the seller to accept the new offer and cancel the existing contract

A contract must include the purchase price and method of payment, including the amount of earnest money, if any. If no definite purchase price exists, the contract:

A. purchase price would be established by the lender’s appraisal.

B. must clearly establish the criteria for calculation of the price.

C. purchase price would be the same as the listing price.

D. purchase price would be established at closing.

In Georgia, when securing a brokerage engagement, the licensee must furnish each person signing a true copy:

A. at the closing.

B. when the deed is recorded.

C. when requested by the parties.

D. when securing the brokerage engagement.

 In Georgia, each exclusive brokerage engagement must have a:

A. security deposit.

B. definite expiration date.

C. closing date.

D. 90-day broker’s protected period.