What this section covers: Types and required elements of contracts, Contract performance, breach and remedies, Sales contracts, earnest money, options, installment contracts, Agency: types, creation, termination, duties to clients and customers.
5 free practice questions
Click an answer: you see at once whether it is right, with the explanation.
-
Question 1An option contract, in which only the seller is bound until the buyer decides to buy, is an example of a:
Show the answer
Answer: C — Unilateral contract.
A unilateral contract is a promise by one party only. In an option, the optionor (owner) must sell if the optionee chooses to buy, but the optionee has no obligation to buy. A purchase contract, with promises on both sides, is bilateral.
Checked against: National outline IV.A.2 Unilateral vs. bilateral; IV.D.6 Option contract
-
Question 2A 17-year-old signs a contract to buy land. In most states, the contract is:
Show the answer
Answer: D — Voidable by the minor.
Parties must be legally competent. A contract signed by a minor is generally voidable at the minor's option: the minor may cancel it, but the adult party is bound if the minor chooses to go ahead.
Checked against: National outline IV.B.3 Legally competent parties; IV.C.3 Voidable vs. unenforceable
-
Question 3A buyer offers $300,000. The seller answers that she will sell for $310,000. The buyer refuses. The next day the seller says she will take the $300,000 after all. Is there a contract at $300,000?
Show the answer
Answer: A — No: the seller's counteroffer terminated the buyer's offer, so the seller is now making a new offer the buyer may accept or reject.
A counteroffer rejects and ends the original offer. The seller cannot revive the buyer's $300,000 offer by accepting it later; her statement is a new offer, and there is a contract only if the buyer accepts it.
Checked against: National outline IV.D.1 Offer and counteroffer
-
Question 4What is the main purpose of an earnest money deposit in a purchase contract?
Show the answer
Answer: B — It shows the buyer's good faith and may serve as damages if the buyer defaults.
Earnest money shows the buyer's good faith. The contract may provide that the seller keeps it as liquidated damages if the buyer defaults. It is not required for validity: mutual promises are enough consideration.
Checked against: National outline IV.D.2 Earnest money and liquidated damages
-
Question 5A seller dies one week into a six-month exclusive listing. What happens to the listing agreement?
Show the answer
Answer: C — It terminates, because the death of the principal ends the agency.
An agency relationship ends by operation of law on the death or incapacity of either the principal or the broker. The estate's representative would have to sign a new listing.
Checked against: National outline IV.F Creation and termination of agency
Instant access: by paying you request immediate access to the digital content and acknowledge you lose your right to cancel.
More Real Estate Exam (national portion) practice
Full free Real Estate Exam (national portion) practice test
Mixed questions, test format and official rules.
Real property, legal descriptions and land use practice questions
5 free questions
Ownership, transfer and title practice questions
5 free questions
Property value and appraisal practice questions
5 free questions
Real estate practice and fair housing questions
5 free questions
Disclosures and environmental issues practice questions
5 free questions
Financing and settlement practice questions
5 free questions
Real estate math practice questions
5 free questions
Pearson VUE and PSI are trademarks of their owners. passmock is not affiliated with or endorsed by Pearson VUE, PSI Services, any state real estate commission or department, or any real estate school. Original practice questions, not questions from the real test.
Short on time? A professional can help
Prefer to work with a professional? A tutor, a prep course or a driving school: we can pass your request to up to 3 partners. Free, no obligation; passmock does not teach. How to choose.