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Champions School of Real Estate-Law of Contracts Exam 1 Questions and Answers Fully Solved
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Champions School of Real Estate-Law of Contracts Exam 1
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Champions School of Real Estate-Law ofContracts Exam 1
Default of Contract - answer When a party to a contract fails to perform under the
contract, also known as breach of contract.
Buyer Default(Remedies) - answer In the event of default by the buyer, the seller may
have several options which include:
-Liquidated Damages
-Monetary Damages
-Specific Performance
Liquidated Damages - answerThe seller can choose to accept the buyer's earnest
money as liquidated damages, releasing all parties from any further obligation under the
contract. Liquidated damages are damages that are established in the contract.
Monetary Damages - answerIn addition to specific performance, the injured party may
"seek such other relief as may be provided by law." This would be an award of
monetary damages by the court. Because monetary damages are awarded by the court,
one never knows what they will be until the court rules.
Specific Performance - answerThe injured party files a court action seeking an order of
the court directing the defaulting party to perform according to the terms of the contract.
Specific performance is the only remedy that would possibly result in the full execution
(closing) of the transaction.
Buyer Default - answerIn the event of default by the buyer, the seller may have several
options which include:
-Liquidated Damages
-Monetary Damages
-Refund of Earnest Money
Refund of Earnest Money - answerThe buyer's acceptance of an earnest money refund
terminates the contract, releasing both parties from any further obligation under the
contract. Because this is a refund of the buyer's earnest money, this cannot be
considered liquidated damages.
TREC has only two promulgated lease forms: - answer1. Buyer's Temporary Residential
Lease
2. Seller's Temporary Residential Lease
,Buyer's Temporary Residential Lease - answerFor use when the buyer occupies the
property for
no more than 90 days prior to closing.
Seller's Temporary Residential Lease - answerFor use when the seller occupies the
property for no more than 90 days after closing.
Right of First Refusal - answerGives the tenant the right to purchase the leased property
by matching or bettering any offer before the property will be sold to someone else.
-TREC does not have promulgated forms for this.
Lease-Purchase Agreement - answerGives the tenant occupancy in the present time
and the right to purchase at a future date. In an option to purchase, the price is set
when the lease agreement is negotiated, which is advantageous to the tenant-buyer.
-TREC does not have promulgated forms for this.
TVLB (Texas Veteran's Loan Program) - answerTo participate in the program, the
veteran obtains an FHA, VA, or conventional loan from a participating lender. The
qualification process is the same as for any other FHA, VA, or conventional loan. The
difference is that the loan is sold to the Texas Veterans Land Board (VLB), as opposed
to a secondary market purchaser such as Fannie Mae or Freddie Mac. The primary
benefit to the veteran is that the rate on the Veterans Land Board loan is often up to one
percent below prevailing market rates.
Physical Characteristics of Land - answer1. Indestructibility or durability
2. Immobility
3. Nonhomogeneity
Economic Characteristics of Land - answer1. Scarcity
2. Modification
3. Fixity
4. Stitus
Indestructibility or Durability - answerRefers to the fact that land cannot be destroyed
Immobility - answerRefers to the fact that land cannot be moved.
Nonhomogeneity - answerRefers to the fact that no two parcels of land are the same.
Scarcity - answerComes from the theory of supply and demand. When there is a
shortage of something that individuals want, the price goes up.
Modification - answerRefers to the fact that value is affected by man-made changes to
the land.
, Fixity - answerRefers to the fact that land, and additions to the land, such as buildings,
take long periods to pay for themselves.
Stitus - answerRefers to the location of the property or land from an economic, not
geographic view point.
Responsibility of Agents when Receiving an Offer - answerA license holder has a duty
to communicate or submit offers to his or her client. The communication or submission
of an offer should be done promptly because the license holder's duty is to keep the
principal or client informed at all times of material information.
An Offer can be Communicated by: - answer- Phone
- Fax
- Letter
- Hand Delivery
What can be done when an offer is made? - answer1. Do nothing
2. Reject
3. Accept
4. Counteroffer
What is done when a seller receives multiple offers? - answerIf a broker receives more
than one offer, all offers must be presented to the seller unless instructed otherwise. No
offer has a priority of presentation over another.
-Ex: , if a license holder receives an offer at 9 a.m. and presents it to the seller. Then,
receives a second offer at 3 p.m. (before the seller has accepted the first offer), the
license holder has the duty to submit the later offer to the seller. If the agent
representing the second buyer is aware that multiple offers have been received, then
the listing agent should notify the agent representing the first buyer that multiple offers
have been received.
Termination of Offers - answerAn offer can be terminated prior to acceptance by the
offeree due to:
- The acts of the parties
- The operation of law
Abstract of Title - answerAn investigation of all the documents that have been recorded
about a property.
Title Policy - answerInsurance policy against losses resulting from defects in title.
Attorney's Opinion of Title - answerAn opinion regarding the state of the title and its
ability to be transferred.
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