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Real Estate Salesperson Exam — National Portion

Contracts: practice questions

Our Real Estate (National) bank has 19 questions on this topic. Here are 5 of them with answers; the full mock exam draws from every topic, like the real one.

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Question 1

Who holds the earnest money deposit, typically?

  1. An escrow agent or the broker's trust account
  2. The buyer's friend
  3. The seller personally, until the closing takes place
  4. The appraiser
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A. An escrow agent or the broker's trust account — It must be handled according to state law.

Question 2

What is 'consideration' in a contract?

  1. Something of value exchanged by the parties
  2. A notary seal
  3. A thank-you note or other gesture of goodwill between the parties
  4. A signature
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A. Something of value exchanged by the parties — It can be money or a promise.

Question 3

What is a voidable contract?

  1. A contract that has been completed
  2. A contract that both must cancel
  3. A valid contract that one party can choose to cancel, such as one signed by a minor
  4. A contract that is illegal
Show the answer

C. A valid contract that one party can choose to cancel, such as one signed by a minor — The minor may disaffirm it.

Question 4

What is liquidated damages?

  1. An amount agreed in advance as compensation if a party breaches, often the earnest money
  2. Damages decided by a jury
  3. A loan payment
  4. A broker's commission
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A. An amount agreed in advance as compensation if a party breaches, often the earnest money — Common in purchase contracts.

Question 5

Which law requires real estate contracts to be in writing to be enforceable?

  1. The statute of frauds
  2. The Fair Housing Act
  3. The statute of limitations
  4. RESPA
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A. The statute of frauds — Short leases (usually one year or less) may be oral.

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