Chapter 10- Book Quiz (plus)

What is the outcome in Pennsylvania when a real estate licensee provides legal advice to the sellers or the buyers?

• civil disobedience

• authorized practice of law

• consumers more loyal to the licensee

• criminal offense

Answer explanation

The answer is criminal offense. In Pennsylvania, real estate licensees are prohibited from providing legal advice unless properly licensed to do so. The unauthorized practice of law is a criminal offense, punishable by up to one year in prison and a $2500 fine. (p. 156)

A buyer and a seller sign a contract to purchase. The seller backs out, and the buyer sues for specific performance. What is the buyer seeking in this lawsuit?

• new contract

• deficiency judgment

• money damages

• transfer of the property

Answer explanation

The answer is transfer of the property. Specific performance is the legal remedy by which an aggrieved party asks the court to force the other party to perform the obligation or fulfill the promise agreed to in the contract. The buyer is asking the court to require the seller to convey title to the property. (p. 155)

If a real estate sales contract states that time is of the essence and the stipulated date of transfer comes and goes without a closing, the contract is

• breached

• still valid

• novated

• binding for only 30 more days

Answer explanation

The answer is breacher. Time is of the essence means that the contract obligations must be performed within the specific time frame stated in the contract. A party who fails to perform on time is liable for breach of contract. (p. 154)

Under the statute of frauds, contracts for the sale of real estate must be

• originated by a real estate broker.

• accompanied by earnest money deposits.

• on preprinted forms.

• in writing to be enforceable.

Answer explanation

The answer is in writing to be enforceable. The statute of frauds requires contracts for the sale of real estate to be in writing in order to be enforceable. (p. 150)

A licensee has found a buyer for the seller's home. The buyer has indicated in writing his willingness to buy the property for $1000 less than the asking price and has deposited $5000 earnest money with the broker. The seller is out of town for the weekend, and the licensee has been unable to inform the seller of the signed document. At this point, the buyer has signed

• an executory agreement.

• a voidable contract.

• an implied contract.

• an offer.

Answer explanation

The answer is and offer. Offer and acceptance is essential for a valid contract. The seller has not accepted the terms of the offer made by the buyer. Therefore, the buyer has only signed and made an offer to purchase, but the document has no legal standing as a contract. (p. 152)

Which of the following is NOT one of the essentials of a valid contract?

• legality of object

• earnest money

• consideration

• offer and acceptance

Answer explanation

The answer is earnest money. The requirements of a valid contract include offer and acceptance, consideration, and legality of object. (p. 152)

A son forged his mother's signature on the listing agreement because he didn't want to bother her with details. What is the status of the listing agreement?

• voidable

• void

• valid, if she affirms her acceptance

• unenforceable

Answer explanation

The answer is void. One of the requirements for a valid contract is legal purpose; a forged signature renders the contract void. (p. 151)

While suffering from a mental illness that caused delusions, hallucinations, and loss of memory, a person signed a contract to purchase real estate. Under these conditions, what is the status of the contract?

• void

• lacked consent

• voidable

• fully valid and enforceable

Answer explanation

The answer is voidable. Mental capacity to enter into a contract is not the same as medical insanity. The question is whether the individual in question is capable of understanding her actions. In this situation, the contract is voidable, but experts should be consulted. (p. 151)

The buyer asked the real estate licensee to prepare an agreement to purchase because the buyer wanted to make an offer. With these instructions, the licensee

• must refer the buyer to an attorney.

• reprint a previous contract and changes the details.

• should supervise the buyer filling out a preprinted form

• is permitted to fill in the blanks of a preprinted form.

Answer explanation

The answer is permitted to fill in the blanks of a preprinted form. To avoid the unauthorized practice of law, a real estate licensee is permitted to fill in the blanks of a preprinted form at the direction of the buyer. (p. 156)

A void contract is

• not legally enforceable.

• voidable by only one of the parties.

• not in writing.

• rescindable by agreement

Answer explanation

The answer is not legally enforceable. A void contract has no legal force or effect because it lacks some or all of the essential elements of a contract. A void contract was never a legal contract. (p. 151)