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29 Cards in this Set

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If items listed in the Inclusions and Exclusions Section of of the Contract to Buy and Sell Real Estate are not a part of the property, the broker should:




do nothing, if the listing item is not on the property as of the date of the contract, it is not included nor necessary to cross it out




cross out the items to show they are not included




if not crossed out the seller could be obligated to install the item




check the appropriate box

A: do nothing, if the listing item is not on the property as of the date of the contract, it is not included nor necessary to cross it out




The Inclusions section lists a number of items which may or may not be a part of the property. Just being in this list does not mean the item is a part of the property. These items are included "if on the Property whether attached or not on the date of this Contract". This means a listed item is only included if it was a part of the property on the date of the purchase agreement.

An Exclusive Right to Buy and Sell contract may disclose which of the following in the Acknowledgments section?




The broker is an agent of the buyer




The broker is a transaction broker




The broker is an agent of both the buyer and the seller




The broker is either a Buyers' Agent or a Transaction Broker or a Seller's Agent

A: The broker is either a Buyers' Agent or a Transaction Broker or a Seller's Agent




The Acknowledgements section of the Exclusive Right to Buy/Sell (AKA Purchase Contract) is the place where the brokers disclose their relationship to their clients.




Here is a wiggle for you: the person writing an Exclusive Right to Buy and Sell agreement (Purchase Contract) for the buyer may be working either as a Transaction Broker for the buyer or seller, or as a buyers agent, or as a Sellers agent.How can the agent working with the buyer be a seller's agent?




Ans. When the seller's agent is selling a property to a customer ie. an unrepresented buyer. As an example: the sellers agent sells the property to someone who does not have an agent, but who saw the property in an open house the agent was holding. In this case the agent discloses that he/she represents the seller and that the buyer is a customer.

On the Commission-approved purchase and sale agreement regarding remedies in the event of a buyer default; if no box is checked what is the default?




no default - a judge will have to decide




the liquidated damages clause is automatically in effect




the buyer cannot sue for specific performance




the seller can sue for specific performance

A: the liquidated damages clause is automatically in effect




On the commission approved purchase and sale agreement form; if the specific performance box is not checked the liquidated damages clause is automatically in effect.




If Buyer is in Default:


___ Specific Performance. Seller may elect to treat this Contract as canceled, in which case all Earnest Money (whether or not paid by Buyer) will be paid to Seller and retained by Seller; and Seller may recover such damages as may be proper; or Seller may elect to treat this Contract as being in full force and effect and Seller has the right to specific performance or damages, or both.Liquidated Damages, Applicable. This applies unless the box above is checked. All Earnest Money (whether or not paid by Buyer) will be paid to Seller, and retained by Seller. Both parties will thereafter be released from all obligations hereunder. It is agreed that the Earnest Money specified is LIQUIDATED DAMAGES, and not a penalty, which amount the parties agree is fair and reasonable and (except as provided in §§ xx.x), said payment of Earnest Money is SELLER’S ONLY REMEDY for Buyer’s failure to perform the obligations of this Contract. Seller expressly waives the remedies of specific performance and additional damages.

As per the Contract to Buy/Sell Real Estate Mediation shall terminate in the event the entire dispute is not resolved within how many days of written notice requesting mediation delivered by one party to the other at the party's last known address?




10




30




45




60

A: 30




MEDIATION. If a dispute arises relating to this Contract, prior to or after Closing, and is not resolved, the parties must first proceed in good faith to submit the matter to mediation. Mediation is a process in which the parties meet with an impartial person who helps to resolve the dispute informally and confidentially. Mediators cannot impose binding decisions. The parties to the650 dispute must agree, in writing, before any settlement is binding. The parties will jointly appoint an acceptable mediator and will share equally in the cost of such mediation. The mediation, unless otherwise agreed, will terminate in the event the entire dispute is not resolved within thirty days of the date written notice requesting mediation is delivered by one party to the other at the party’s last known address. This section will not alter any date in this Contract, unless otherwise agreed.

In the South Kenyon exercise, in the Earnest Money clause you entered:




The form, amount and holder of the Earnest Money




The form and holder of the Earnest Money.




The amount and holder of the Earnest Money




The amount of the Earnest Money

A: The form and holder of the Earnest Money.




Earnest Money. The Earnest Money set forth in this section, in the form of ______________________, will be payable to and held by ________________________________________ (Earnest Money Holder), in its trust account, on behalf of both Seller and Buyer. The Earnest Money deposit must be tendered, by Buyer, with this Contract unless the parties mutually agree to an Alternative Earnest Money Deadline (§ 3) for its payment. The parties authorize delivery of the Earnest Money deposit to the company conducting the Closing (Closing Company), if any, at or before Closing. In the event Earnest Money Holder has agreed to have interest on Earnest Money deposits transferred to a fund established for the purpose of providing affordable housing to Colorado residents, Seller and Buyer acknowledge and agree that any interest accruing on the Earnest Money deposited with the Earnest Money Holder in this transaction will be transferred to such fund.

What is a mandatory recommendation in the Contract to Buy/Sell Real Estate?




Use of a home inspector




Use of Legal Counsel




Use of a surveyer to verify property boundaries




Use of Legal and Tax Counsel

A: Use of Legal and Tax Counsel




Brokers are required to recommend use of legal and tax counsel to their clients. This is accomplished through the following verbiage:




From the Contract to Buy/Sell Real Estate;




RECOMMENDATION OF LEGAL AND TAX COUNSEL. By signing this Contract, Buyer and Seller acknowledge that the respective broker has advised that this Contract has important legal consequences and has recommended the examination of title and consultation with legal and tax or other counsel before signing this Contract.

The Colorado Contract to Buy & Sell includes a provision about lead based paint disclosure. According to this provision, if the building permit was issued prior to Jan 1, 1978:




The broker is responsible to disclose the age of the property




The contract is void unless disclosure is signed by the seller, buyer and brokers prior to the parties signing the sales agreement




Disclosure is required only if the sellers are aware of lead based paint on the property




The seller and brokers must make a disclosure prior to closing

A: The contract is void unless disclosure is signed by the seller, buyer and brokers prior to the parties signing the sales agreement




It must be signed by buyer, seller and brokers prior to the contract being accepted. If not, the contract is VOID.




From the Contract to Buy/Sell Real Estate:




Lead-Based Paint. Unless exempt, if the improvements on the Property include one or more residential dwellings for which a building permit was issued prior to January 1, 1978, this Contract is void unless (1) a completed Lead-Based Paint Disclosure (Sales) form is signed by Seller, the required real estate licensees and Buyer, and (2) Seller receives the completed and fully executed form prior to the time when this Contract is signed by all parties. Buyer acknowledges timely receipt of a completed Lead-Based Paint Disclosure (Sales) form signed by Seller and the real estate licensees.

Regarding delivery of Earnest Money:




It must be delivered at the time of tender of this contract




If other than at the time of tender of this contract it must be delivered no later than the Alternative Earnest Money Deadline




If other than at the time of tender of this contract it must be delivered no later than the Earnest Money Deadline

A: If other than at the time of tender of this contract it must be delivered no later than the Alternative Earnest Money Deadline




Earnest money checks are not always delivered with the contract. Most often they are delivered by the Alternative Earnest Money Deadline.




From the Contract to Buy/Sell Real Estate:




Alternative Earnest Money Deadline. The deadline for delivering the Earnest Money, if other than at the time of tender of this Contract, is as set forth as the Alternative Earnest Money Deadline

In reference to Exercise 1 Scenario, the buyers of the South Ivy Circle Property want:




The dining room chandelier to remain with the property




A home warranty to be provided by the sellers




Washer and dryer to be included




The furnace to be certified by a licensed HVAC contractor

A: A home warranty to be provided by the sellers

A written office policy regarding brokerage relationships is a requirement of offices that are staffed by:




six or more agents




three or more agents




two or more agents




one or more agents

A: one or more agents




Colorado statutes require all offices to have a written office policy regarding agency.

"MEC" in the Contract to Buy/Sell Real Estate means:




the date upon which both parties have signed the contract.




the date mediation commences




the date the deed was entered into the public record




Mutual Execution Condition deadline

A: the date upon which both parties have signed the contract.




Applicability of Terms. Any box checked in this Contract means the corresponding provision applies. Any box, blank or line in this Contract left blank or completed with the abbreviation “N/A”, or the word “Deleted” means such provision, including any deadline, is not applicable and the corresponding provision of this Contract to which reference is made is deleted. The abbreviation “MEC” (mutual execution of this Contract) means the date upon which both parties have signed this Contract.

If the buyer and seller have not reached a resolution on inspection issues by the Inspection Resolution Deadline the contract will terminate:




one day following the resolution deadline.




on the expiration of the resolution deadline.




one day following the objection deadline.




on the objection deadline.

A: on the expiration of the resolution deadline.




The Buyer solely determines if the condition of a property is satisfactory or not. Although the Buyers normally will list items they wish the Seller to address; they are not required to do so. The Buyer can simply terminate the contract should they so desire. Should the Buyer submit items to correct to the Seller, the Seller has until a resolution deadline to come to a negotiated agreement regarding the items with the Buyer. If a satisfactory agreement is not reached, the contract will terminate automatically on the deadline unless the Buyer withdraws the objections.

In the Colorado Contract to Buy & Sell encumbrances to be paid by the seller:




Must be paid prior to closing




Must be paid at or before closing




Must not be paid from proceeds from the sale of the property




May be paid by the seller after closing

A: Must be paid at or before closing




The encumbrances must be paid by the Seller before the property can transfer.From the Contract to Buy/Sell Real Estate:PAYMENT OF ENCUMBRANCES. Any encumbrance required to be paid will be paid at or before Closing from the proceeds of this transaction or from any other source.

In reference to Exercise 1 Scenario, as per the South Ivy Circle exercise:




Both the Specific Damages and the Liquidated Damages boxes were checked and applicable.




The Liquidated Damages box was checked and selected.




The Specific Performance box was checked and selected.




There is no box to select Liquidated Damages.




The Specific Performance box was not checked.

A: There is no box to select Liquidated Damages. The Specific Performance box was not checked.




Specific Performance and Liquidated Damages are remedies for the seller in the event of a default on the contract by the buyer. Only the Specific Performance option has a selection box. If it is not checked Liquidated damages is the default option and thus there is no Liquidated Damages selection box. For more information read the following contract language.

As per the South Kenyon Court purchase contract, the seller remedy for the buyer default is:




The Liquidated Damages box was checked, the seller receives the earnest money only.




The Specific Performance box was checked, the seller gets the earnest money and can sue for damages.




There is no selection box for Liquidated Damages. It is the default. The seller receives the earnest money only.




There is no selection box for Specific Performance. It is the default. The seller gets the earnest money and can sue for damages.

A: The Specific Performance box was checked, the seller gets the earnest money and can sue for damages.




The contract specifies Specific Performance as the seller remedy in the event of a default by the buyer. Specific Performance and Liquidated Damages are the two options as remedies for the seller in the event of a default on the contract by the buyer. Only the Specific Performance option has a selection box. If it is not checked Liquidated damages is the default option and thus there is no Liquidated Damages selection box. For more information read the following contract language.

Who is responsible for the cost of Mediation?




The buyer




The seller




The losing party




Split equally between buyer and seller

A: Split equally between buyer and seller




MEDIATION. If a dispute arises relating to this Contract, prior to or after Closing, and is not resolved, the parties must first proceed in good faith to submit the matter to mediation. Mediation is a process in which the parties meet with an impartial person who helps to resolve the dispute informally and confidentially. Mediators cannot impose binding decisions. The parties to the dispute must agree, in writing, before any settlement is binding. The parties will jointly appoint an acceptable mediator and will share equally in the cost of such mediation. The mediation, unless otherwise agreed, will terminate in the event the entire dispute is not resolved within thirty days of the date written notice requesting mediation is delivered by one party to the other at the party’s last known address. This section will not alter any date in this Contract, unless otherwise agreed.

As per the Mediation clause in the Contact to Buy/Sale Real Estate: "The mediation, unless otherwise agreed, will terminate in the event the entire dispute is not resolved within _________ days of the date written notice requesting mediation is delivered by one party to the other at the party’s last known address.




30




45




60




90

A: 30

In the South Kenyon contract, the buyer wants $3,000 from the seller to apply to his closing costs; Where should this be specified in the contract:




Add to the Cash at Closing amount




Indicate the amount as a contribution in Seller or Private Financing




Indicate the amount and form of payment in Seller Concession




Indicate the amount in Seller Concession

A: Indicate the amount in Seller Concession




From the Contract to Buy/Sell Real Estate:




Seller Concession. Seller, at Closing, will credit, as directed by Buyer, an amount of $______________ to assist with any or all of the following: Buyer’s closing costs, loan discount points, loan origination fees, prepaid items (including any amounts that Seller agrees to pay because Buyer is not allowed to pay due to FHA, CHFA, VA, etc.), and any other fee, cost, charge, expense or expenditure related to Buyer’s New Loan or other allowable Seller concession (collectively, Seller Concession). Seller Concession is in addition to any sum Seller has agreed to pay or credit Buyer elsewhere in this Contract. Seller Concession will be reduced to the extent it exceeds the aggregate of what is allowed by Buyer’s lender as set forth in the Closing Statement at Closing.

As per the Assignability and Inurement clause in the Contract to Buy/Sell Real Estate:




Checking the "Is" box means the contract is assignable with the seller's prior written consent




Checking the "Is" box means the contract is assignable without the seller's prior written consent

A: Checking the "Is" box means the contract is assignable without the seller's prior written consent




Assignability and Inurement. This Contract ___ Is ___ Is Not assignable by Buyer without Seller’s prior written consent.

What is the effect of a Loan Objection Deadline when specified in an approved Residential Contract to Buy and Sell?




If the buyer cannot get a satisfactory written loan commitment by that date, the buyer may terminate the contract upon written notice to the seller.




The contract is contingent on actual funding of the new loan at closing.




If the buyer cannot get a satisfactory written loan commitment, the contract terminates on that date.




The buyer must provide the written commitment to the seller by that date or he will be in default.

A: If the buyer cannot get a satisfactory written loan commitment by that date, the buyer may terminate the contract upon written notice to the seller.




A buyer has until the Loan Objection Deadline to provide written notice s/he cannot get a commitment for a satisfactory loan and wants to terminate the contract. If s/he does provide such notice, the earnest money is refunded to the buyer. If the buyer does not provide such notice, the contract continues, but the buyer's earnest money becomes nonrefundable should s/he not receive a loan.




From the Contract to Buy/Sell Real Estate:




Loan Objection. If Buyer is to pay all or part of the Purchase Price with a New Loan, this Contract is conditional upon Buyer determining, in Buyer’s sole subjective discretion, whether the New Loan is satisfactory to Buyer, including its availability, payments, interest rate, terms, conditions, and cost of such New Loan. This condition is for the sole benefit of Buyer. Buyer has the Right to Terminate on or before Loan Objection Deadline, if the New Loan is not satisfactory to Buyer, in Buyer’s sole subjective discretion. IF SELLER IS NOT IN DEFAULT AND DOES NOT TIMELY RECEIVE BUYER’S WRITTEN NOTICE TO TERMINATE, BUYER’S EARNEST MONEY WILL BE NONREFUNDABLE, except as otherwise provided in this Contract (e.g., Appraisal, Title, Survey).

Complete this Clause. Inspection Objection: Unless otherwise provided in the Contract, Buyer acknowledges that Seller is conveying the Property to Buyer...




in an “as is” condition, “where is” and “with all faults."




in an "as is" condition subject to the agreed adjustments as per the Inspection Resolution.




in an "as is" condition.




in an "as is" and "with all faults" condition.

A: in an “as is” condition, “where is” and “with all faults."




Inspection Objection. Unless otherwise provided in this Contract, Buyer acknowledges that Seller is conveying the Property to Buyer in an “as is” condition, “where is” and “with all faults.” Colorado law requires that Seller disclose to Buyer any latent defects actually known by Seller. Disclosure of latent defects must be in writing. Buyer, acting in good faith, has the right to have inspections (by one or more third parties, personally or both) of the Property and Inclusions (Inspection), at Buyer’s expense. If (1) the physical condition of the Property, including, but not limited to, the roof, walls, structural integrity of the Property, the electrical, plumbing, HVAC and other mechanical systems of the Property, (2) the physical condition of the Inclusions, (3) service to the Property (including utilities and communication services), systems and components of the Property (e.g. heating and plumbing), (4) any proposed or existing transportation project, road, street or highway, or (5) any other activity, odor or noise (whether on or off the Property) and its effect or expected effect on the Property or its occupants is unsatisfactory, in Buyer’s sole subjective discretion, Buyer may, on or before Inspection Objection Deadline

A broker enters into an exclusive right-to-buy contract with a purchaser. The purchaser finds a satisfactory property and makes an offer, which is accepted. The listing broker is unavailable during much of the transaction and the selling broker performs several of the listing broker's responsibilities. In gratitude, the seller offers a $500 bonus to the selling broker. When is it acceptable for the broker to receive this money?




Never, as he is an agent of the buyer




Only with the listing broker's permission




With full written disclosure to both parties




After clearing it with the Real Estate Commission

A: With full written disclosure to both parties




Dual commissions are legal with full written disclosure to all parties. However, the bonus must be given to the selling broker's broker to be received by the selling broker. You can only receive money from your broker.

In the Colorado Contract to Buy & Sell , if the buyer receives a property inspection report on the day after the Inspection Objection Deadline , and the report contains several serious matters. The buyer:




Can compel the seller to correct these serious defects




Is in default for missing the deadline and the seller may terminate the contract




May still object since they did not receive the report until after the deadline




Missed the opportunity to object based on inspections issues, and the contract is still in force.

A: Missed the opportunity to object based on inspections issues, and the contract is still in force.




Dates matter. If the buyer does not file an objection prior to the deadline they have signified the condition of the property is satisfactory. Further they have lost the right to object to an inspection item.

A Seller signs an offer prior to the acceptance time and date. Before the offer is returned to the Buyer, the Buyer calls and withdraws the offer. This offer is:




binding on all parties as it has already been signed prior to the acceptance time and date




void and not binding as it was withdrawn before acceptance was cummunicated to the Buyer




void, but the Buyer is in default and will forfeit the earnest money




binding, the withdrawal must be in writing

A: void and not binding as it was withdrawn before acceptance was communicated to the Buyer




Standard contract law states that a contract must be signed and accepted to be binding. The Buyer has every right to withdraw an offer at no penalty before the signed contract was accepted. A signature alone is not sufficient to constitute valid acceptance: the accepting party must also communicate acceptance to the party who made the last offer or counteroffer. Since acceptance was not communicated, the purchase contract was not binding and either party could withdraw at no penalty.

In the approved Contract to Buy and Sell, "Property" includes:




The real property plus fixtures, improvements, and appurtenances




The real property and all rights such as water rights




The real property plus fixtures, improvements, appurtenances, plus inclusions, minus exclusions




The real property and everything now attached

A: The real property plus fixtures, improvements, and appurtenances




Property as described in the Contract to Buy and Sell includes appurtenances, improvements, and fixtures


From the Contract to Buy and Sell:


Property. The Property is the following legally described real estate in the County of Arapahoe, Colorado:


Legal Description Hereknown as No. ,999 Maple Street Aurora Co 80999together with the interests, easements, rights, benefits, improvements and attached fixtures appurtenant thereto, and all interest of Seller in vacated streets and alleys adjacent thereto, except as herein excluded (Property).

Fill in the blank. As per the Contract to Buy/Sell Real Estate:


LEGAL FEES, COST AND EXPENSES. Anything to the contrary herein notwithstanding, in the event of any arbitration or litigation relating to this Contract, prior to or after Closing Date (§ x), the arbitrator or court must award to ______________________________, including attorney fees, legal fees and expenses.




each party an equal share of reasonable costs and expenses




the prevailing party damages




the losing party all reasonable costs and expense




the prevailing party all reasonable costs and expense

A: the prevailing party all reasonable costs and expense




Do not confuse litigation and arbitration with mediation. Mediation is a non-binding process and all parties share in the costs equally. Litigation and arbitration is binding and the prevailing party will be awarded costs and expense from the losing party.

When a Seller decides to submit a Counterproposal in response to a Contract to Buy and Sell, the Seller:




Checks the Countered box, signs both the original Contract and the Counterproposal




Checks the Rejected box, initials the original Contract and signs the Counterproposal




Checks the Countered box, initials the original Contract and signs the Counterproposal




Carefully signs and submits only the Counterproposal

A: Checks the Countered box, initials the original Contract and signs the Counterproposal




To counter: the Seller would check the Countered box, initialing directly underneath in the space provided indicating the Seller is the one countering, The next step is to complete and sign the Counterproposal. The last step is to return the original offer and the counterproposal to the Buyer. The Seller does not sign the original offer as that would indicate acceptance.

In reference to Exercise 1 Scenario, the legal description for the South Ivy Circle property is:




Lot 2, Block 4, Filing No 1, Maple Subdivision, CIty of Aurora




Lot 2, Block 4, Filing No 1, Feldman Subdivision, City of Aurora




5252 South Ivy Circle Aurora CO 80013




Beginning at a point on the northeasterly corner of the intersection of South St. and South Ivy Circle.; running thence northerly along South Ivy Circle. 200 feet, thence easterly parallel to South St. 150 feet; thence southerly parallel to South Ivy Circle. 200 feet; thence westerly along South St. 150 feet to the point of beginning

A: Lot 2, Block 4, Filing No 1, Maple Subdivision, CIty of Aurora




The correct example was the provided Lot and Block legal description in answer A. Answer C is the mailing address of the property and not a legal description. The last answer is a Metes and Bounds legal description, but not of the subject property.




More info:


What is a legal description? - A Legal description is the geographical description of a real estate property for the purpose of identifying the property for legal transactions. A legal description of the property unambiguously identifies the location, boundaries, and any existing easements on the property. A legal description of the real estate is usually provided in a deed, mortgage, or other purchase document. It can also be obtained from a county recorder, tax assessor, or similar official.




What is a Lot and Block legal description? - A method of describing land reference to a recorded plat or map. This method is used frequently in metropolitan areas. Usually it is used in conjunction with the rectangular survey or a metes-and-bounds description of a larger tract that is being divided (e.g., a residential subdivision).. The property to be divided is surveyed and laid out in lots that are numbered in sequence. These lots are platted and when sold are described by their designated numbers.




What is a Metes and Bounds legal description?A method of describing land by specifying the exterior boundaries of the property using compass directions, monuments or landmarks where directions change and linear measurement of distances between these points.

On October 2 a buyer made an offer, which he agreed to keep open for three days. The seller made a counter offer, which the buyer rejected. The seller then accepted the original offer. The status of the original contract is:




unenforceable




enforceable




void




valid

A: valid




The seller’s counter offer has the effect of rejecting the original offer. The seller cannot later change his mind and accept it.