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CA SALESPERSON EXAM PREP EDGE » Summer 2021 » Contracts Exam

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Question #1

The owner of ABC Construction entered into a contract to build two homes for brothers Jack and John. The contract specified that the homes must be completed by April 1. ABC finished the homes on March 30. Of what is this an example?

A. Non-performance

B. Performance

C. Voiding

D. Partial performance

Question #2

A valid contract must include which of the following elements?

A. Electronic signature

B. Legally competent parties

C. Fairness clause

D. Counter-offer

Question #3

A developer, Howard, has purchased land with the expectation of constructing an apartment building. He explains to his lender that he’ll need a construction loan as well, so the mortgage they sign includes what kind of clause to allow the construction loan’s lien position to take priority?

A. Exculpatory

B. Non-recourse

C. Pre-payment

D. Subordination

Question #4

A legally competent party means that an individual has the capacity, legally and ______, to enter into a contract.

A. Mentally

B. Purposefully

C. Financially

D. Morally

Question #5

California law requires a notice about compensation to the broker in the listing agreement. What does that notice need to communicate?

A. The amount or rate of the commission is not fixed by law.

B. Net listings are required by law.

C. Net listings are illegal.

D. The amount or rate of the commission is fixed by law.

Question #6

Albert wants to sell his house to his cousin, who's willing to assume his FHA loan. What clause in Albert's mortgage requires him to obtain the lender's permission to do this?

A. Non-recourse clause

B. Acceleration clause

C. Alienation clause

D. Transfer clause

Question #7

Which of the following situations entitles Gary to commission with a 30-day protection clause?

A. The seller told a group of colleagues about the house 20 days after the listing expired, and one eventually came to see the house, which led to a contract.

B. Buyers viewed the property 15 days after the listing expired and made an offer that was accepted.

C. Gary told his overseas cousin about the property, and his cousin returned to the U.S. 35 days after the listing expired to make an offer.

D. Buyers who viewed the property while it was listed with Gary made an accepted offer 10 days after the listing expired.

Question #8

Which of these statements is true?

A. It is highly unusual for buyers to make offers contingent on the sale of their property.

B. Buyers who need to sell their property before purchasing a new one should make the offer contingent on that sale.

C. The Sale of Buyer's Property contingency form is a required addendum to all sales contracts.

D. There is no buyer's sale contingency in California.

Question #9

Which of these sentences accurately lists rules for interpreting a contract?

A. Typed text takes precedence over pre-printed text, and spelled-out numbers (e.g. four) take precedence over numerals (e.g. 5).

B. Pre-printed text takes precedence over typed and handwritten text.

C. Typed text takes precedence over pre-printed text, and numbers (e.g. 2) take precedence over spelled-out numbers (e.g. three).

D. Typed text takes precedence over handwritten text.

Question #10

In a contract, consideration is the giving of ______.

A. Something of value in exchange for something without value

B. Thoughtfulness and courtesy to all parties

C. Notice to attorneys that they may review the terms of the agreement

D. Something of value in exchange for something of value

Question #11

A/an_______ contract is an offer to purchase a specific piece of real estate that does not obligate the offeror to buy it.

A. Buyer agency

B. Option

C. Listing

D. Sales

Question #12

Which of the following elements is always required for a real estate contract to be valid?

A. Attorney review

B. Consideration

C. Earnest money

D. Profit

Question #13

Which type of a buyer representation agreement allows a buyer to enter into agreements with multiple brokers and pay only the broker who found the property that was ultimately purchased by the buyer?

A. Non-exclusive buyer representation agreement

B. Non-exclusive, not for compensation buyer representation agreement

C. Open listing agreement

D. Exclusive listing agreement

Question #14

Bill and Mindy, who are neighbors, get into a disagreement about late-night noise. The two come to an agreement: Bill promises to stop having loud parties and Mindy promises to keep her dogs inside after 10 p.m. Their promises represent the ______ in their agreement.

A. Flaw

B. Legal competency

C. Consideration

D. Undue influence

Question #15

The appraisal finally came in and it's lower than the sales price the parties have contracted; an appraisal contingency was in place, but the lender failed to meet the appraisal deadline. What happens now?

A. The buyer will be sued for default.

B. The seller can sue for breach of contract.

C. The seller must reduce the sales price to the appraised value.

D. The buyer's earnest money is at risk.

Question #16

Doris and Kathleen, who are neighbors, enter into an agreement to not permit their real estate agents to sell their homes to families with children. This agreement lacks ______, so it's void.

A. A lawful objective

B. Two parties

C. A purpose

D. A mutual agreement

Question #17

Which of these advance fee agreements is legal in California?

A. A broker and seller agree to an advance fee for marketing a time-share property and the agreement was approved by the Department of Real Estate.

B. A broker and seller agree to an advance fee for marketing a multi-million dollar property that is not approved by the Department of Real Estate.

C. A broker tells a new buyer client the types of wine she prefers just before winking suggestively.

D. A broker and a property owner agree to an advance fee for loan modification that will save the money in the long run.

Question #18

Which of the following features is shared by the mortgage and the deed of trust?

A. The borrower is required to maintain the property and pay property taxes and insurance.

B. In the case of foreclosure, the borrower has a statutory right of redemption.

C. There are three parties involved: a lender, a borrower, and a party who holds title to the property.

D. Non-judicial foreclosure is standard.

Question #19

What’s the name of the clause in a promissory note where this language appears: “If the Note Holder has not received the full amount of any monthly payment by the end of ______ calendar days after the date it is due, I will pay a late charge to the Note Holder”?

A. Lock-in clause

B. Prepayment provision

C. Fees and additional charges clause

D. Late charge provision

Question #20

Which of these is a contract between a client and agent to sell real property?

A. Listing agreement

B. Deposit receipt

C. Covenant

D. Contract for sale

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