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40 Cards in this Set
- Front
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Title companies derive directions for closing from which of the following documents? The purchase and sale contract The closing instructions Amendments to the purchase and sale contract All of the above |
A: All of the above Title companies derive their directions for closing from the original contract, and all amendments to the contract, and the closing instructions executed by the buyer and seller. |
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Some brokerage companies have standardized addendums they require agents to attach to all purchase or sale contracts. These addendums add to or redefine the terms and conditions of the contract to which they are attached. They: may be prepared by any licensee of the brokerage firm are not legal may be prepared by the legal counsel of the employing broker |
A: may be prepared by the legal counsel of the employing broker Real Estate Commission Rule F-3. Addenda (a) If a broker originates or initiates the use of a preprinted or prepared addendum that modifies or adds to the terms of a Commission-approved contract form which does not result from the negotiations of the parties (editor note: generally the Contract to Buy and Sell Real Estate), such addendum must be prepared by: (1) an attorney representing the broker or brokerage firm; or (2) a principal party to the transaction; or (3) an attorney representing a principal party.(b) An addendum permitted by this Rule F- 3 (a), shall not be included within the body of, or in the “Additional Provisions” section of, a Commission-approved form.( c) A broker who is not a principal party to the contract may not insert personal provisions, personal disclaimers or exculpatory language in favor of the broker in an addendum. (d) If an addendum is prepared by a broker’s attorney, the following disclosure must appear on the first page of the addendum in the same sized type as the size of type used in the addendum: “This addendum has not been approved by the Colorado Real Estate Commission. It was prepared by (insert licensed name of broker or brokerage firm’s)legal counsel.” (e) If an addendum to a listing, tenant or right to buy contract (editor note: these are contracts the brokerage firm IS a party to), is prepared by a broker or brokerage firm, the following disclosure must appear on the first page of the addendum in the same sized type as the size of type used in the addendum:“This addendum has not been approved by the Colorado Real Estate Commission. It was prepared by (insert licensed name of broker or brokerage firm). |
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In order to be effective, a Commission-approved Counter Proposal: must be attached to each copy of the original offer signed by the buyer must be signed by the seller at the same time he signs the original offer after the original is signed by both parties the counterproposal must be signed by both parties. the original offer must only be signed by the seller but the counterproposal must be signed by both parties |
A: must be attached to each copy of the original offer signed by the buyer This is stated as a note on the bottom of the counterproposal. The counterproposal changes the terms and conditions of the original offer. As such, it does not stand alone and must be combined with the original offer to create an updated full offer. |
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Relative to a contract to purchase and sell real estate: information must be abbreviated to fit within the preprinted blanks information may be added outside of the body of the contract preprinted information always takes precedence over inserted information inserted information must be typed or computer-generated |
A: information may be added outside of the body of the contract Information may be added outside the body of the contract. It may be done on an addendum, or amend/extend form, and included with the contract or attached to the contract. |
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When a seller makes a counter offer to a purchaser, the earnest money check is: held by the seller until the purchaser signs the counter offer held by the listing broker until the purchaser signs the counter offer deposited in the listing broker's trust account within one banking day returned to the purchaser with the counter offer form |
A: returned to the purchaser with the counter offer form Legally, the earnest money should be returned to the buyer as the counteroffer form has the effect of rejecting the original offer of which the earnest money was a part. Do not confuse "legal" with "practical". Legally - as stated, the earnest money should accompany the written counteroffer. Practically - many negotiations are performed electronically or by phone. In these cases, the earnest money check does not go back and forth. However, the State exam tests on the "legal" and not on the "practical." |
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Licensees are NOT required to use the Licensee Buyout Addendum to Contract to Buy and Sell under which of the following circumstances? When the licensee enters into a contract to purchase a property concurrent with the listing of such property When the licensee enters into a contract to purchase a property as an inducement or to facilitate the seller’s purchase of another property When a licensee enters into a contract to purchase a property from the owner but continues to market it for that owner under an existing listing agreement When an agent decides to purchase a property listed by another broker |
A: When an agent decides to purchase a property listed by another broker The licensee buyout addendum must only be used when the licensee is purchasing his/her own listing. |
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You answered this question correctly A seller must provide a Seller's Property Disclosure form based on which of the following? seller's opinion of condition at the time of the contract seller's current actual knowledge results of a professional property inspection advice of the listing agent regarding the condition of the property |
A: seller's current actual knowledge The Property Disclosure of the Residential Contract to Buy and Sell specifies that the form should be completed by the seller (not the broker) and based on the seller's current actual knowledge. |
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The Colorado-approved Amend/Extend Contract form should be signed: before the listing expires after the sales contract expired before the sales contract has been accepted before the sales contract has been fully executed |
A: before the sales contract has been fully executed The Agreement to Amend/Extend Contract is used only to amend the terms and conditions of a sales contract while it is in process. You cannot amend a contract once it is complete (AKA "executed"), or terminated, or expired. More info: First make sure you understand the difference between the Agreement to Amend and Extend and the Agreement to Amend and Extend With Broker. Both agreements are used to alter the terms and conditions of a contract. The Agreement to Amend and Extend is used to alter the terms of the sales agreement between the buyer and seller. The Agreement to Amend and Extend With Broker is used to amend the terms of an agreement with the client and their broker such as a listing agreement or buyer agency agreement. As to why would you extend a contract before it is executed, understand the difference between the terms “executory” and “executed”. When a contract is signed by all parties it is in “executory” status. This means it is in process but not complete. When it is “executed” this means it is complete i.e. fully performed. Real Estate Commission rules say that you cannot amend the terms of an agreement after it has been expired, executed or otherwise terminated. When a closing occurs, the deal is done, the associated listing and sales contracts are fully executed, can't-be-changed, done, dead, history, ex-contracts, ended, finished, achieved, accomplished, done-with, taken-to-the-bank and all-over-including-the-shouting. |
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Associate Broker Jane Holmes is a party to which executory contract? Contract to Buy and Sell Real Estate Counterproposal Agreement to Amend/Extend None of the above |
A: None of the above The broker would be a party to a right to buy or listing contract, but not to a purchase and sale contract. All of the contracts listed in the answers are purchase contracts or related to a purchase contract, and the broker is never a party to a purchase contract, only the buyer and seller are. The broker IS a party to any service contract, which is the listing agreement - either to buy or sell. |
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The purpose of Commission Rule F is: to help brokers conform to the Conway-Bogue Realty vs. the Colorado Bar Association decision to conform to UCC regulations to conform to RESPA to standardize forms for attorneys who perform closings |
A: to help brokers conform to the Conway-Bogue Realty vs. the Colorado Bar Association decision The Conway-Bogue court decision ruled that real estate agents are practicing law without a license but are permitted to do so as long as agents use commission forms and comply with commission Rule F. (Read this if you haven’t already done so.) |
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The Colorado approved Agreement to Amend/Extend form should be signed Before the listing expires After the purchase contract has expired. After the purchase contract has been accepted. After the offer has been made |
A: After the purchase contract has been accepted The Amend and Extend is used with contracts between the buyer and seller - the most important one being the Contract to Buy and Sell Real Estate (Purchase Contract). The Amend and Extend With Broker contract is used for contracts between the client and their broker - principally the listing contract or the buyer agency agreement. They are often confused. For either to be used you must have an executory contract i.e. a contract that is signed but not completed - it is in the process of being executed. Once a contract is complete - neither of these Amend/Extend agreements can be used. |
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A 1031 Exchange is: changing a transaction broker relationship to a buyer broker relationship a tax deferred exchange of investment properties a tax deferred exchange of owner occupied residential properties a transaction where a promissory note will be exchanged for cash prior to closing |
A: a tax deferred exchange of investment properties A §l031 Exchange is a transaction in which a taxpayer is allowed to exchange one investment property for another by deferring the tax consequence of a sale. The transaction is authorized by §1031 of the IRS Code.The IRS Code actually reads: "No gain or loss shall be recognized on the exchange of property held for productive use in a trade or business or for investment, if such property is exchanged solely for property of like kind, which is to be held either for productive use in a trade or business or for investment." Requirements for a 1031 Exchange Timelines for a 1031 Exchange The investor (or exchanger) must follow the strict 45- / 180-day guidelines for an exchange. Once the exchanger sells his/her property (relinquished property) he/she has 45 days to identify property(s) of equal or greater value. Once identified, the exchanger has 180 days from the day he/she sold their property to acquire the property(s) identified (or 135 days from the end of the 45-day period). Like-Kind Property in a 1031 Exchange The investor must acquire "like-kind" property. This means that it must be other qualifying forms of real estate. For example, the exchanger could sell a duplex and purchase a commercial property, or he/she could sell a piece of land and buy an apartment building. The property just needs to be "like-kind." |
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If a Lead-Based Paint Disclosure form is not executed at the time of the sale of a dwelling built prior to 1978, the purchaser: may sue the seller for damages is not obligated under the terms of the contract is entitled to an inspection paid for by the seller may suffer damages as a result of caveat emptor |
A: is not obligated under the terms of the contract Penalties for failure to comply with Federal Lead-Based Paint Disclosure Laws include treble damages, attorney fees, costs and a penalty up to $10,000 for each violation. A buyer is not obligated under the terms of a contract until the lead-based disclosure has been executed. |
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The Colorado Real Estate Commission has approved all but which of the following forms? Closing Instruction and Earnest Money receipt Earnest Money Promissory Note Agency/Subagency Disclosure Intent to Pay off Loan |
A: Intent to Pay off Loan Intent to pay off loan is not a Colorado Real Estate Commission approved form. |
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When sections are omitted from the preprinted portions of a Real Estate Commission approved contract: You are not allowed to omit any part of an approved contract Only certain paragraphs are allowed to be omitted as not applicable You must request the approval of the Real Estate Commission |
A: Only certain paragraphs are allowed to be omitted as not applicable Whenever a section which is allowed to be omitted from any approved contract is omitted (such as the Seller Financing section of the Contract to Buy and Sell contact when the buyer is getting a new loan from a bank), you cannot remove it completely. You need to either: 1) cross it out cleanly such that someone can see what you are crossing out, 2) put n/a for "not applicable" in all the blank fields of the paragraph, or 3) if you are using a contract software package the software will remove the paragraph, but leave the title of the paragraph with the words “omitted as not applicable" next to it. |
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Which of the following is one of the primary reasons that the real estate commission has approved a broad variety of forms and made their use mandatory by licensees? allows the commission to discipline brokers for improper contracting protects the public by requiring the same forms for all real estate transactions in Colorado assists attorneys and the public in following commission rules when contracting assures the broker's compliance with the Conway-Bogue decision of the Colorado Supreme Court |
A: assures the broker's compliance with the Conway-Bogue decision of the Colorado Supreme Court The Conway-Bogue decision gives real estate licensees the limited right to practice law by completing standard and approved forms, thus these numerous mandatory forms assist brokers in their compliance with this statute. |
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When a seller is in default in a transaction, pursuant to a licensee buyout addendum, the buyer's remedy is to: have the earnest money returned sue the seller for specific performance sue the seller for specific performance if the specific performance box has been checked sue the seller for actual damages only |
A: have the earnest money returned The licensee is entitled to have their earnest money returned if there was any(usually there is none) and continue performing per the other terms of the contract.A is correct. A is the only verbiage listed NOT in the Licensee Buyout Addendum. |
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When a seller wishes to counter an offer made by a purchaser, which of the following documents should be signed by the seller? The purchase and sale contract The counter offer The purchase and sale contract and the counter offer The purchase and sale contract after the appropriate changes have been stricken or changed and initialed |
A: The counter offer By signing the purchase and sale contract the seller is agreeing to those terms. Changing and initialing is a poor practice |
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In transactions requiring the use of a licensee buyout addendum: the seller has a choice of whether or not to pay a commission the buyer has a choice of whether or not a commission shall be paid the seller pays no commission the seller pays a reduced commission |
A: the seller pays no commission The seller pays no sales commission pursuant to a licensee buyout addendum. Usually, the licensee has negotiated a price low enough to cover what his/her commission would be and any anticipated holding costs. |
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You answered this question correctly If a printed form says one thing, but typing in a blank space says something contradictory: the contract is void for uncertainty the typing prevails the printed form prevails the contract is void because of the conflict |
A: the typing prevails Typing, or whatever form you use to fill in the contract blanks, prevails. This best shows intent of the parties. |
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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. |
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Which of the following is true about licensees filling in blanks on a standard commission-approved form? This is the practice of law and must be done by attorneys. This is not the practice of law. This is the practice of law but it is specifically permitted by Colorado law. This must be done entirely with preapproved standard clauses. |
A: This is the practice of law but it is specifically permitted by Colorado law. The Colorado Supreme Court issued a decision that the practice of filling in blanks by real estate licensees is authorized, but that it still constitutes the practice of law. |
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Broker Betty at an open house meets a young couple looking to purchase their first home. The couple asked if the Broker thought they had enough income to qualify for a loan to purchase the property. Realizing this information is of a confidential nature Broker Betty makes the agency disclosure that her office policy and State statute require. The buyers are very skeptical about making a commitment and have been coached by family members not to sign anything. They refuse to sign the signature block on the Brokerage Disclosure to Buyer form. Betty should: refuse to answer unless they sign answer the question, then ask them to sign once again call their attorney and make the disclosure to him make a note of the date and time the disclosure was made and reference the fact that the buyers declined to sign the form - then have the discussion. |
A: make a note of the date and time the disclosure was made and reference the fact that the buyers declined to sign the form - then have the discussion. Brokers are required to make agency disclosure. Buyers are not required to sign the disclosure. It is acceptable to note the date and time the disclosure was made, and indicate that the buyers declined to sign the form. |
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In a transaction that is subject to a licensee buyout agreement, if the buyer defaults, the seller may: sue the buyer only if the specific performance box has been checked sue the buyer for specific performance only keep the buyer's earnest money as liquidated damages keep the buyer's earnest money as liquidated damages if the liquidated damages box has been checked |
A: sue the buyer for specific performance “Liquidated damages” (buyer lose earnest money) is deleted in a licensee buyout addendum to a contract to buy and sell real estate. The remedy should the buyer/broker get cold feet is "Specific Performance" meaning the seller can sue for damages and force the agent to buy. |
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The purpose of Commission rule F is: To reduce the licensee’s liability To have forms for all transactions To encourage compliance with Conway-Bogue To require disclosure |
A: To encourage compliance with Conway-Bogue Commission rule F is to helpColo. real estate licensees to comply with Conway-Bogue. |
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Under Commission Rule F, all of the following are approved forms except: Contract to Exchange Real Estate Agreement to Amend/Extend Contract Business Opportunity Agreement Change of Status |
A: Business Opportunity Agreement Because of the diverse and complex agreements associated with business opportunities, they must be prepared by an attorney. |
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Regarding filling in blanks in a standard commission approved form, this is the practice of law and must be done by attorneys. Is not the practice of law. Must be done entirely with preapproved standard clauses. Is the practice of law but is specifically permitted by Colorado law. |
A: Is the practice of law but is specifically permitted by Colorado law. Filling in blanks in a standard commission approved form is the practice of law but is specifically permitted by Colorado law. |
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Closing instructions are to be generated by: the listing broker the selling broker the title company the lender |
A: the listing broker Closing instructions are to be generated by the listing broker when the property is listed, so that they are ready for the buyers signature as soon as a purchase contract is offered. Although not an absolute rule, the Real Estate Commission prefers the closing instructions are signed by both parties at the same time a purchase contract is signed by both parties. In this way, the closing instructions are signed prior to earnest money being turned over to the closing company. Note: closing instructions appoint the closing agent (title company) and give them authority to do their job. |
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Filling in blanks in a standard commission approved form is: Is not the practice of law Is the practice of law and must be done by attorneys Must be done entirely with standard preapproved clauses Is the practice of law but is specifically permitted by Colorado law. |
A: Is the practice of law but is specifically permitted by Colorado law. The Colorado Supreme Court decided that the practice of filling in blanks of standard CREC approved forms by real estate licensees is authorized, approved, ok and legal, but that it still constitutes the practice of law. |
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The Definitions of Working Relationships form has the effect of: establishing an agency relationship disclosing the different types of relationships that are available complete disclosure of agency as required by Colorado statute disclosing only the types of relationships that the broker prefers to offer |
A: disclosing the different types of relationships that are available The definitions form does not establish a specific relationship with a buyer or seller- only discloses the type of relationships that are available. |
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A contract to amend/extend with broker is used for the purpose of: modifying the terms of a purchase and sale contract that is being negotiated modifying the terms of an accepted purchase and sale contract modifying the terms of a broker to-broker commission agreement modifying the terms on an exclusive right-to-buy or exclusive right-to-sell contract |
A: modifying the terms on an exclusive right-to-buy or exclusive right-to-sell contract The Agreement to Amend/Extend Contract is used only to amend the terms and conditions of a sales contract while it is in process. You cannot amend a contract once it is complete (AKA "executed"), or terminated, or expired. More info: First make sure you understand the difference between the Agreement to Amend and Extend and the Agreement to Amend and Extend With Broker. Both agreements are used to alter the terms and conditions of a contract. The Agreement to Amend and Extend is used to alter the terms of the sales agreement between the buyer and seller. The Agreement to Amend and Extend With Broker is used to amend the terms of an agreement with the client and their broker such as a listing agreement or buyer agency agreement. As to why would you extend a contract before it is executed, understand the difference between the terms “executory” and “executed”. When a contract is signed by all parties it is in “executory” status. This means it is in process but not complete. When it is “executed” this means it is complete i.e. fully performed. Real Estate Commission rules say that you cannot amend the terms of an agreement after it has been expired, executed or otherwise terminated. When a closing occurs, the deal is done, the associated listing and sales contracts are fully executed, can't-be-changed, done, dead, history, ex-contracts, ended, finished, achieved, accomplished, done-with, taken-to-the-bank and all-over-including-the-shouting. |
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When a seller decides to counter an offer presented to him, which is true? Seller should sign the original offer as well as the counter offer Seller should not sign either the original offer or the counter offer Seller should sign only the counter offer Seller should sign the original offer only |
A: Seller should sign only the counter offer To counter: the seller initials the original offer by the box he/she checked indicating it is countered. The seller does not sign the original offer (that would constitute acceptance). The seller's agent then indicates the counter offer on a Counter Proposal form. The sellers signs the Counter Proposal form. The original offer and Counter Proposal are returned to the buyer or buyer's agent. |
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When a broker prints the approved forms for use in his office, and he is inserting special wording in Italics, what statement must appear at the top of the first page? “The printed portions of this form, except differentiated additions, have been approved by the Colorado Real Estate Commission.” “The printed portions of this form have been approved by the Colorado Real Estate Commission.” “The printed Portions and the name of the company have been approved by the state Real Estate Commission.” None of the above have to be printed at the top of approved forms. |
A: “The printed portions of this form, except differentiated additions, have been approved by the Colorado Real Estate Commission.” At the top of all Colorado Real Estate Contracts it states that any changes or additions must be differentiated from the printed type. |
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All the following contracts fall under Commission Rule F except: open listing agreements exclusive tenant contract to buy and sell real estate new construction contracts |
A: new construction contracts The builders write their own new construction contracts. |
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Which of the following requires the use of the Licensee Buyout Addendum to the contract to Buy & Sell? A listing associates offer to purchase a listing immediately after it expires A broker is not offering a guarantee to sell the property, as an inducement to list with his company. An associate in the brokerage wishes to purchase another associates listing A licensee offers to purchase a property as an inducement to the Seller to purchase another |
A: A licensee offers to purchase a property as an inducement to the Seller to purchase another Rule F-11 specifies certain conditions for the use of the Licensee Buyout addendum. Rule F-11 only applies in one or more of the following instances:When a licensee enters into a contract to purchase a property: (1) concurrent with the listing of such property; (2) as an inducement or to facilitate the property owner's purchase of another property; or (3) continues to market that property on behalf of the owner under an existing listing contract . . .A is correct. A is the only verbiage listed NOT in the Licensee Buyout Addendum. |
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In which of the following instances would you use the Agreement to Amend/Extend Contract? To make changes in the purchase price of an offer that has not been accepted To change the loan application deadline in an accepted purchase contract To change the time allowed to accept an offer to purchase All of the above |
A: To change the loan application deadline in an accepted purchase contract The Agreement to Amend/Extend Contract is used to changes the conditions in an accepted contract to purchase. It cannot be used to change the conditions of an offer as an offer has not been accepted. If you want to change the terms or conditions of an offer prior to acceptance, you need to rewrite the contract or use a counterproposal. |
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A seller receives an offer from a buyer, the seller may respond by: Write rejected at the top signing it at the bottom on the appropriate seller line Telling his broker to call the buyer with a counteroffer Checking the appropriate box, initialing the form and submitting a counteroffer Telling his broker to call the buyer with his acceptance |
A: Checking the appropriate box, initialing the form and submitting a counteroffer The seller must follow the proper procedure by checking the counteroffer box, initialing the form, and submitting a counter proposal attached to the original offer, or just do nothing if he doesn't want to counter, and the time for acceptance will automatically pass and the contract will terminate. |
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The seller's property disclosure indicates the condition of all but which of the following? The appliances The title The heating and cooling system The electrical system |
A: The title The title to the property is addressed the the Exclusive Right to Buy Sell (Purchase Contract) |
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Under which circumstance is it NOT necessary to use a Colorado Real Estate Commission-approved form? When purchasing a home in the resale market through a licensed broker When purchasing a newly constructed home When purchasing a duplex When purchasing a commercial property |
A: When purchasing a newly constructed home Builder's use contracts prepared by their own attorneys. |
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Fees for the preparation of legal documents at a closing are to be paid by: the buyer or seller, when prepared by the attorney representing the parties to the transactions the licensee when delegating legal documentation preparation to an agent for their clients the licensee if preparing legal documents and closing their own transaction all of the above |
A: all of the above They may all pay for the preparation fees. The rules regarding who pays for legal document preparation at a closing are a part of the Conway-Bogues court decision that allows a real estate agent to practice a limited form of law.The short version of this ruling as it pertains to contracts and closing documents is that anybody but the real estate agent can draft legal documents. This is logical when you understand that the real estate commission has no jurisdiction over buyers and sellers. Therefore they and their attorneys can create legal documents. Interestingly, an attorney for the brokerage company can create legal documents.Real estate agents can only fill in the blanks on contracts approved by the real estate commission, but we are generally responsible for the cost of legal preparation of closing documents. There is a limit to this; we are not responsible for the cost of preparing documents should the parties decide to use their own lawyers. As a practical matter, the title company prepares the legal documents that are required of the agent. They typically charge us a cursory $5 for this service, as we are the rainmakers that bring them the lucrative title insurance business. Legally, they have to charge us something and so the $5. Here is the legal explanation that covers this area: “Closing FeesCommission position statement CP-7, Closing Costs, and Rule E-37 state that there is no obligation for a broker to prepare any legal document as part of a real estate transaction or closing. However, as the result of the Conway-Bogue decision (see Chapter 5, “Landmark Case Law and Opinions”), brokers may prepare certain legal documents and complete standard and approved forms.Certain fees are generally charged for preparation of real estate documents and closings: (1) a fee for closing and preparing non-legal documents such as the settlement statements, and (2) a fee for preparing legal documents executed by the parties, i.e., contracts, deeds, notes, deeds of trust, mortgages, and other security instruments. Upon agreement of the parties, fees for preparing non-legal documents may be charged to anyone. However, in the absence of an attorney representing one of the parties to the transaction, the broker must pay any fees for preparing legal documents. The broker must ensure that the proper parties pay for the closing costs. Brokers may charge (with written authorization from the parties) for the transactions that they close “in-house,” when such charges are not tied to preparation of legal documents. The broker may not designate his or her own attorney to prepare the documents, and then pass these charges to the parties, as if the attorney were representing them.” |
