4.3 Purchase Contracts pt.2

After a purchase contract is accepted, the seller continues to put off the closing well beyond the agreed-to-date. In this situation, the:

• contract is null and void

• buyer has no recourse

• seller has no liability

• buyer may sue for specific performance

Answer explanation

the buyer could sue to have the closing take place as agreed. This is an example of specific performance.

An older home is put up for sale, and the owner doesn't tell the listing agent about the poor electrical wiring. When a prospective buyer comes to view the home and asks about the electrical wiring, the agent states that it is in "good working condition." The agent:

• has made a considerable misrepresentation

• has not done anything because they did not know about the problem

• cannot be held liable for any repairs because they were unaware of the problem

• has made a puffing statement

Answer explanation

licensee did not know actual condition. he should've said its unknowing and since it is an older house, the buyer should look into it.

A property that was previously used as a gas station is for sale and priced way below market value. If a buyer is interested in purchasing the property, the listing agent should:

• tell the buyer that gas stations are making a comeback in the area

• inform the buyer that there might be environmental cleanup costs on the property

• suggest that the buyer offer the full list price

• provide comps in the area to show what a great value the property is

Answer explanation

this would be a material fact that the listing agent is obligated to disclose.

When a closing to purchase a property occurs at the same time that the seller is closing on the acquisition of that same property, it is known as a(an):

• double offer

• assignment of interest

• dual agency

• double escrow

A hazard insurance premium is determined by the:

• lender

• property value

• escrow

• real estate broker

Answer explanation

the value of the property is the prime determination when setting the premium for a property hazard insurance premium. The insurer will likely also consider the claims history, but these other factors are not considered.

The amount agreed upon as the full damages in the event a contract is breached is known as:

• liquidated damages

• judgment damages

• punitive damages

• nominal damages

Answer explanation

amount of liquidated damages should be included in the contract.

In connection with a purchase agreement, the decision of whether to accept an earnest money forfeiture, let the buyer withdraw or sue for specific performance or damages is made by the:

• seller

• buyer

• broker

• escrow

In the event that a property is damaged by fire prior to closing, the:

• buyer would have to buy the property

• risk of loss would be upon the buyer

• risk of loss would be upon the seller

• buyer must forfeit the earnest money

Which of the following would NOT reveal insurance claims or losses related to a specific property of claimant?

• C.L.U.E. report

• claims history

• loss history report

• loss payee

Answer explanation

loss payee is merely the party who receives a payout from an insurance policy

Which of the following would NOT be indicated on a wood infestation report?

• visible evidence of termites

• dry rot in some of the wood

• termite infestation known to be at a neighbor's house

• cellulose debris