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Question 1
Lisa owns an apartment building. She orally leases an apartment to Tina "for 5 years, with rents to be paid on the first of every month." Is this lease enforceable under these terms?
Correct
Incorrect!
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Correct Under the Statute of Frauds, a transfer of an interest in real estate for more than one year must be in writing to be enforceable. In this case, the interest transferred is a term of years that is to last for five years. The fact the rent is due on the first of each month does not change this fact. Therefore, under the Statute of Frauds, this contract must be in writing to be enforceable.
Incorrect! Under the Statute of Frauds, a transfer of an interest in real estate for more than one year must be in writing to be enforceable. In this case, the interest transferred is a term of years that is to last for five years. The fact the rent is due on the first of each month does not change this fact. Therefore, under the Statute of Frauds, this contract must be in writing to be enforceable.
Correct
Incorrect!
Question 2
Lisa owns an apartment building. She and Tina agree that Tina will buy a specific apartment in the building for $50,000. They commit the contract to writing, but the contract does not list the agreed on price. Both parties sign the agreement. Later, Tina changes her mind and refuses to pay for the apartment. Lisa wants to enforce the contract. Can she?
Correct Since real estate transfers fall under the common law Statute of Frauds, the writing must contain all material terms of the agreement for the contract to be enforceable. Price is definitely a material term in the contract.
Incorrect! Since real estate transfers fall under the common law Statute of Frauds, the writing must contain all material terms of the agreement for the contract to be enforceable. Price is definitely a material term in the contract.
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Incorrect!
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Incorrect!
Correct
Incorrect!
Question 3
Homer orally agrees to sell Blackacre to Smithers for $500,000. Smithers pays Homer the $500,000 and then moves onto Blackacre. Two months later, Homer changes his mind and demands that Smithers move off of Blackacre and he offers Smithers his money back. Smithers refuses, saying that there was a valid contract for the transfer of Blackacre. Homer claims that the contract violates the Statute of Frauds and so he is entitled to take back Blackacre. Who will win?
Correct
Incorrect!
Correct
Incorrect!
Correct The Statute of Frauds can be satisfied by performance. In the context of real estate transfer contracts, the Statute of Frauds can be satisfied by possession by the buyer plus either payment or improvements made by the seller to the premises. In this case, Smithers satisfied the Statute of Frauds by performance because he took possession and paid for Blackacre.
Incorrect! The Statute of Frauds can be satisfied by performance. In the context of real estate transfer contracts, the Statute of Frauds can be satisfied by possession by the buyer plus either payment or improvements made by the seller to the premises. In this case, Smithers satisfied the Statute of Frauds by performance because he took possession and paid for Blackacre.
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Incorrect!
Question 4
Bart wants to sell his house. He hires Lisa to broker the sale of the house and he sets a purchase price for the house of $400,000. Lisa is to get a 6% commission. Lisa puts advertisements in the newspaper and uses other avenues to find a buyer. Eventually, Lisa puts Bart in contact with Apu, who contracts to buy Bart's house for $400,000. However, before the closing, Apu moves to India and fails to go through with the contract. Lisa sues Bart for $24,000. Under the traditional rule, can she recover?
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Incorrect!
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Correct The traditional rule was that the broker was entitled to his or her commission as soon as he or she presented the seller with a buyer that was ready, willing, and able to buy the property for the price set forth by the seller. This was true even if the deal fell through, as long as it was not the brokers fault that the deal fell through.
Incorrect! The traditional rule was that the broker was entitled to his or her commission as soon as he or she presented the seller with a buyer that was ready, willing, and able to buy the property for the price set forth by the seller. This was true even if the deal fell through, as long as it was not the brokers fault that the deal fell through.
Correct
Incorrect!
Question 5
Bart wants to sell his house. He hires Lisa to broker the sale of the house and he sets a purchase price for the house of $400,000. Lisa is to get a 6% commission. Lisa puts advertisements in the newspaper and uses other avenues to find a buyer. Eventually, Lisa puts Bart in contact with Apu, who contracts to buy Bart's house for $400,000. However, before the closing, Bart backs out and refuses to go through with the contract. Lisa sues Bart for $24,000. Under the "modern" (minority) rule, can she recover?
Correct
Incorrect!
Correct
Incorrect!
Correct The modern rule (still a minority rule though) says that the broker is only entitled to his or her commission if and when the buyer actually completes the transaction by paying the purchase price. However, even according to this rule, if the agreement falls through because the seller backs out of the deal, the seller is liable to the broker for the broker's commission. In this case, it was Bart's fault that the deal fell through. He is therefore liable to Lisa for her commission.
Incorrect! The modern rule (still a minority rule though) says that the broker is only entitled to his or her commission if and when the buyer actually completes the transaction by paying the purchase price. However, even according to this rule, if the agreement falls through because the seller backs out of the deal, the seller is liable to the broker for the broker's commission. In this case, it was Bart's fault that the deal fell through. He is therefore liable to Lisa for her commission.
Correct
Incorrect!
Question 6
Al contracts to sell Blackacre to Brenda for $200,000. At closing time, Brenda announces that she will not go through with the purchase because she did a title search and did not find Al's name anywhere in the records of the history of Blackacre. Al claims that the reason for this is that he acquired Blackacre through adverse possession. Brenda says that this is not good enough. Al sues Brenda for breach of contract. Who will win?
Correct
Incorrect!
Correct Under a real estate sales contract, the seller has an implied duty to convey marketable title. Title acquired by adverse possession is generally not considered to be marketable because there is no hard proof of the acquisition in the property records. However, proof of acquisition by adverse possession in the form of a court decision stating that the possessor owns the property is sufficient to make the seller's title marketable.
Incorrect! Under a real estate sales contract, the seller has an implied duty to convey marketable title. Title acquired by adverse possession is generally not considered to be marketable because there is no hard proof of the acquisition in the property records. However, proof of acquisition by adverse possession in the form of a court decision stating that the possessor owns the property is sufficient to make the seller's title marketable.
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Incorrect!
Correct
Incorrect!
Question 7
Al contracts to sell Blackacre to Brenda for $200,000. The contract is signed on January 1 and the closing is set for April 1. On March 1, who owns Blackacre?
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Incorrect!
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Incorrect!
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Correct Under the doctrine of equitable conversion, the equitable title goes from the seller to the buyer as soon as the contract is signed. The legal title to the property on the other hand, does not pass to the buyer until possession of the property is actually handed over to the buyer at the closing.
Incorrect! Under the doctrine of equitable conversion, the equitable title goes from the seller to the buyer as soon as the contract is signed. The legal title to the property on the other hand, does not pass to the buyer until possession of the property is actually handed over to the buyer at the closing.
Question 8
Al contracts to sell Blackacre to Brenda for $200,000. The contract is signed on January 1 and the closing is set for April 1. On March 1, a hurricane destroys a structure on Blackacre and reduces its fair market value to $100,000. At the closing, Brenda claims that she should only have to pay $100,000. Is she correct?
Correct
Incorrect!
Correct
Incorrect!
Correct Under the traditional doctrine of equitable conversion, because equitable title to the property passes at the time of the signing of the sales contract, the risk of loss also passes from the seller to the buyer at the time of the signing of the sales contract. This remains the law in most states. Some jurisdictions have changed this rule, however, and in those jurisdictions, risk of loss resides with the party in possession. Before the closing, it is generally the seller who is in possession of the property. Therefore, on March 1, the risk of loss would still be with Al.
Incorrect! Under the traditional doctrine of equitable conversion, because equitable title to the property passes at the time of the signing of the sales contract, the risk of loss also passes from the seller to the buyer at the time of the signing of the sales contract. This remains the law in most states. Some jurisdictions have changed this rule, however, and in those jurisdictions, risk of loss resides with the party in possession. Before the closing, it is generally the seller who is in possession of the property. Therefore, on March 1, the risk of loss would still be with Al.
Question 9
Al contracts to sell Blackacre to Brenda for $200,000. The contract is signed on January 1 and the closing is set for April 1. In March, the price of real estate shoots up and Blackacre is now worth $300,000. On April 1, Al refuses to turn over Blackacre to Brenda. Brenda sues Al for breach of contract. What will be the most likely result?
Correct Al is clearly liable for breach of contract. Although courts do not generally force parties to actually perform their end of a contract (monetary damages is the preferred remedy for a breach of contract), land is an exception. Since a parcel of land is considered unique from every other parcel of land, the common law considers monetary damages inadequate to compensate an aggrieved buyer. Therefore, if a seller breaches a land sale contract, the court can force the seller to turn over the land to the buyer for the purchase price.
Incorrect! Al is clearly liable for breach of contract. Although courts do not generally force parties to actually perform their end of a contract (monetary damages is the preferred remedy for a breach of contract), land is an exception. Since a parcel of land is considered unique from every other parcel of land, the common law considers monetary damages inadequate to compensate an aggrieved buyer. Therefore, if a seller breaches a land sale contract, the court can force the seller to turn over the land to the buyer for the purchase price.