RE Exam questions with verified
solutions
A contract between the seller of real property and a licensee whereby the seller agrees to pay the
licensee a commission if he produces a "ready, willing, and able" buyer and the licensee agrees to use
due diligence in procuring a buyer, is called: - correct answer ✔✔Bilateral executory contract
A bilateral contract is a contract between two parties with each promising to act (a promise for a
promise). An executory contract is a contract yet to be performed. This type of contract is a bilateral
executory contract.
Exculpatory clauses are generally unsuccessful at protecting a licensee from liability to the buyer because
they: - correct answer ✔✔violate public policy.
Assume an offer has been accepted and the acceptance has been communicated to the buyer. The buyer
then changed his mind and decided not to purchase the property. Which of the following is true? -
correct answer ✔✔The seller could sue for liquidated damages if the parties agreed to liquidated
damages in the contract
For a real estate broker to be entitled to a commission if the property sells after the expiration of the
listing, the broker should place into the listing agreement a: - correct answer ✔✔Safety Clause
A "carryover" clause (often referred to as a safety clause) may be contained in a listing. It provides that a
broker is still entitled to a commission for a set period of time after the listing has expired if the property
is sold to a prospect of the broker introduced to the property during the period of the listing.
A buyer asks an agent to hold a deposit check for 30 days. The agent should: - correct answer ✔✔accept
the check and advise the seller that the buyer requests the hold.
It is up to the agent to advise the seller on all matters, but it is up to the seller to make the decision if a
30 day hold is acceptable.
,A husband and wife have been searching for a new home. One day when the husband was at work, his
wife learns that a new listing has appeared on the MLS. Her agent calls her and urges her to come see it
ASAP. She goes to view the property, without her husband, loves the house but cannot reach her
husband at work to sign an offer on the home. If the seller accepts the offer, the contract is: - correct
answer ✔✔Valid
The community property system views marriage as an economic partnership between husband and wife
in which the contributions of each are valued equally. In general, the earnings of either spouse during
marriage, and all proceeds from those earnings, are deemed community property. During the marriage,
the spouses have equal rights to use and control the community property. Therefore, one wife can use
community property assets to purchase the home. However, if the husband's signature is required to sell
or transfer the property.
Which of the following is not essential to the creation of an agency relationship? - correct answer
✔✔Agreement to pay consideration
Agency does not require consideration. A broker could act as an agent without getting paid.
Broker Jones secured an agency listing in writing from the Johnson Co. on a commercial building that had
been vacant for some months. The listing broker entered into a verbal agreement to share his
commission with a cooperating broker. The cooperating broker procured a buyer, but broker Jones
refused to split the commission. The cooperating broker: - correct answer ✔✔may recover his share in
court.
The Statute of Frauds does not require an agreement between brokers to split a commission to be in
writing to be enforceable. If the cooperating broker can prove his case, he can recover his share in court.
An agency relationship, such as in a listing, may be terminated by all of the following methods except: -
correct answer ✔✔revocation by the principal if the agent has an interest in the subject matter of the
agency.
When the agent has an interest in the subject matter of the agency; for example the broker is a co-owner
of the property, the agency cannot be revoked by the principal.
,The relationship of a real estate salesperson to his or her broker under the License Law is as: - correct
answer ✔✔an employee.
As far as the real estate License Law is concerned, a salesperson is an employee of the broker. For IRS
purposes, the salesperson usually is a statutory non-employee.
An agency relationship is created by all of the following except: - correct answer ✔✔specific
performance.
A real estate agency can be created by express agreement, ratification, and estoppel.
Broker Bob collected rents from an apartment house under agreement with the owner. He had been
collecting rents on the 1st of each month for several months and as of July 1, he had collected all but
one. On July 2 the owner died. On July 3 the broker went to collect the last rental but the tenant refused
to give the rent to the broker on the grounds that the owner had died and, therefore, the agency
between broker and the owner was terminated. Which of the following is correct? - correct answer
✔✔The tenant is correct
Agency terminates upon death of either party.
An agent who pays part of the commission to the buyer: - correct answer ✔✔must inform the seller.
An agent may pay part of the commission to the buyer if he informs the seller.
Broker White obtained a deposit from buyer Farley. The seller did not accept the offer, however, and
broker would not return deposit. Farley contacted the Real Estate Commissioner. The Commissioner can:
- correct answer ✔✔investigate as required by real estate law.
The law states that, "The Commissioner...shall, upon the verified complaint in writing of any person,
investigate the actions...."
An agent has only a duty of honesty and fairness in dealing with: - correct answer ✔✔third parties
, the agent has an obligation always to act fairly and honestly with third parties
A listing: - correct answer ✔✔usually reflects the highest price an owner believes he can obtain for his
property.
The broker works with the owner to set a listing price that is realistic, but it usually has more to do with
what the owner BELIEVES he can obtain than with the actual fair market value of the property.
Mr. "A" gave Mr. "B" an option to buy his ranch. This burdened the ranch with: - correct answer ✔✔a
contract to offer to sell.
A non-illusory instrument is a: - correct answer ✔✔definitive instrument which becomes a binding
contract when executed.
A non-illusory contract is the opposite of an illusory contract. An illusory instrument is an agreement in
which one party gives as consideration a promise that is so insubstantial as to impose no obligation.
(Black's Law). Therefore, if a contract is non-illusory it is binding and enforceable, has all the basic
elements required by law, and is definite in its terms. It is a valid contract.
Listings are often confused with options. Which of the following is a correct statement concerning these
contracts? - correct answer ✔✔A) A listing creates a fiduciary relationship, an option does not
B)An option requires consideration to be a valid contract and the listing also requires consideration
C)The owner may be sued for performance on an option but a suit for specific performance cannot be
instituted on a listing
D)All of the above are correct
All of the Above are correct
A listing agreement may be recorded at the county recorder's office by the: - correct answer ✔✔None of
the Above
solutions
A contract between the seller of real property and a licensee whereby the seller agrees to pay the
licensee a commission if he produces a "ready, willing, and able" buyer and the licensee agrees to use
due diligence in procuring a buyer, is called: - correct answer ✔✔Bilateral executory contract
A bilateral contract is a contract between two parties with each promising to act (a promise for a
promise). An executory contract is a contract yet to be performed. This type of contract is a bilateral
executory contract.
Exculpatory clauses are generally unsuccessful at protecting a licensee from liability to the buyer because
they: - correct answer ✔✔violate public policy.
Assume an offer has been accepted and the acceptance has been communicated to the buyer. The buyer
then changed his mind and decided not to purchase the property. Which of the following is true? -
correct answer ✔✔The seller could sue for liquidated damages if the parties agreed to liquidated
damages in the contract
For a real estate broker to be entitled to a commission if the property sells after the expiration of the
listing, the broker should place into the listing agreement a: - correct answer ✔✔Safety Clause
A "carryover" clause (often referred to as a safety clause) may be contained in a listing. It provides that a
broker is still entitled to a commission for a set period of time after the listing has expired if the property
is sold to a prospect of the broker introduced to the property during the period of the listing.
A buyer asks an agent to hold a deposit check for 30 days. The agent should: - correct answer ✔✔accept
the check and advise the seller that the buyer requests the hold.
It is up to the agent to advise the seller on all matters, but it is up to the seller to make the decision if a
30 day hold is acceptable.
,A husband and wife have been searching for a new home. One day when the husband was at work, his
wife learns that a new listing has appeared on the MLS. Her agent calls her and urges her to come see it
ASAP. She goes to view the property, without her husband, loves the house but cannot reach her
husband at work to sign an offer on the home. If the seller accepts the offer, the contract is: - correct
answer ✔✔Valid
The community property system views marriage as an economic partnership between husband and wife
in which the contributions of each are valued equally. In general, the earnings of either spouse during
marriage, and all proceeds from those earnings, are deemed community property. During the marriage,
the spouses have equal rights to use and control the community property. Therefore, one wife can use
community property assets to purchase the home. However, if the husband's signature is required to sell
or transfer the property.
Which of the following is not essential to the creation of an agency relationship? - correct answer
✔✔Agreement to pay consideration
Agency does not require consideration. A broker could act as an agent without getting paid.
Broker Jones secured an agency listing in writing from the Johnson Co. on a commercial building that had
been vacant for some months. The listing broker entered into a verbal agreement to share his
commission with a cooperating broker. The cooperating broker procured a buyer, but broker Jones
refused to split the commission. The cooperating broker: - correct answer ✔✔may recover his share in
court.
The Statute of Frauds does not require an agreement between brokers to split a commission to be in
writing to be enforceable. If the cooperating broker can prove his case, he can recover his share in court.
An agency relationship, such as in a listing, may be terminated by all of the following methods except: -
correct answer ✔✔revocation by the principal if the agent has an interest in the subject matter of the
agency.
When the agent has an interest in the subject matter of the agency; for example the broker is a co-owner
of the property, the agency cannot be revoked by the principal.
,The relationship of a real estate salesperson to his or her broker under the License Law is as: - correct
answer ✔✔an employee.
As far as the real estate License Law is concerned, a salesperson is an employee of the broker. For IRS
purposes, the salesperson usually is a statutory non-employee.
An agency relationship is created by all of the following except: - correct answer ✔✔specific
performance.
A real estate agency can be created by express agreement, ratification, and estoppel.
Broker Bob collected rents from an apartment house under agreement with the owner. He had been
collecting rents on the 1st of each month for several months and as of July 1, he had collected all but
one. On July 2 the owner died. On July 3 the broker went to collect the last rental but the tenant refused
to give the rent to the broker on the grounds that the owner had died and, therefore, the agency
between broker and the owner was terminated. Which of the following is correct? - correct answer
✔✔The tenant is correct
Agency terminates upon death of either party.
An agent who pays part of the commission to the buyer: - correct answer ✔✔must inform the seller.
An agent may pay part of the commission to the buyer if he informs the seller.
Broker White obtained a deposit from buyer Farley. The seller did not accept the offer, however, and
broker would not return deposit. Farley contacted the Real Estate Commissioner. The Commissioner can:
- correct answer ✔✔investigate as required by real estate law.
The law states that, "The Commissioner...shall, upon the verified complaint in writing of any person,
investigate the actions...."
An agent has only a duty of honesty and fairness in dealing with: - correct answer ✔✔third parties
, the agent has an obligation always to act fairly and honestly with third parties
A listing: - correct answer ✔✔usually reflects the highest price an owner believes he can obtain for his
property.
The broker works with the owner to set a listing price that is realistic, but it usually has more to do with
what the owner BELIEVES he can obtain than with the actual fair market value of the property.
Mr. "A" gave Mr. "B" an option to buy his ranch. This burdened the ranch with: - correct answer ✔✔a
contract to offer to sell.
A non-illusory instrument is a: - correct answer ✔✔definitive instrument which becomes a binding
contract when executed.
A non-illusory contract is the opposite of an illusory contract. An illusory instrument is an agreement in
which one party gives as consideration a promise that is so insubstantial as to impose no obligation.
(Black's Law). Therefore, if a contract is non-illusory it is binding and enforceable, has all the basic
elements required by law, and is definite in its terms. It is a valid contract.
Listings are often confused with options. Which of the following is a correct statement concerning these
contracts? - correct answer ✔✔A) A listing creates a fiduciary relationship, an option does not
B)An option requires consideration to be a valid contract and the listing also requires consideration
C)The owner may be sued for performance on an option but a suit for specific performance cannot be
instituted on a listing
D)All of the above are correct
All of the Above are correct
A listing agreement may be recorded at the county recorder's office by the: - correct answer ✔✔None of
the Above
