STATE: Contracts

Question 1

Listing Agreement Must Include:

Answer 1

• writing
• specific termination date
• and not include and automatic extension clause.

Question 2

What MUST a Listing Agreement need to include?

Answer 2

• a fair housing statement,
• the duration of the listing, and t
• he proposed gross sale price of the property.
  *

Question 3

What does a Listing Agreement need to include?

Answer 3

• Needs only to be informal address, such as street address or an assessor’s parcel number, to identify the property subject to the listing agreement.
  
  • The listing agreement must include a fair housing statemetn, the duration of the listing, and the proposed gross sale price of the property.
    *

Question 4

Terminate Contract

Cancelation of a Purchase of a Lot

Answer 4

• The purchaser may cancel the transaction within five (5) calendar daysafter signing the contract.
  
  • This cancellation right exists for subdivided land sales as well as time-share sal es.

Question 5

When must an advance fee be accounted for to a client?

Answer 5

• An advanced fee must be accounted for to the client within three (3) months of receiving the fee.

Question 6

Consulting Fee from a Developer re new Subdivision - When must accounting of Advance fee be given to developer?

Answer 6

• An advanced fee must be accounted for to the client within three months of receiving the fee.

Question 7

Are comission rates negotiable?

Answer 7

• Yes
• Example: allowed to agree with seller to accept a listing for more than the normal commission rate.

Question 8

Public Offering Statement

Answer 8

• A public offering statement must be stamped “PROSPECTIVE PURCHASER SHOULD READ THIS REPORT BEFORE SIGNING ANY PAPER .” It is a good idea to see the parcel and to seek competent advice if the buyer does not understand any portion of the report, but these are not required disclosures. Although the buyer has a resciss i on right, the statement is not required on the front of the report.

Question 9

How many days do you have to recind a contract for the purchase of land?

Answer 9

• before the close of escrow
• within 5 days for any reason

Question 10

Can you recind a contract for the purchase of Land?

Answer 10

• Yes
• within 5 days for any reason

Question 11

Advance fee Rental Agency Policy Must inlcude

Answer 11

• Refund policy
• They may not advertise properties without the owner’s approval, t
• hey must have a definite term for services; and
• the fees may not be altered during the term of the cont ract .

Question 12

Real Property Disclosure Form

How many days does the buyer have to recind after receiving?

Answer 12

• The buyer has four working days to rescind the purchase contract based on the Seller’s Real Property Disclosure Form.

Question 13

What is an Executory Contract?

Answer 13

• is one that has been formed, but the agreed upon acts have not been performed.

Question 14

Duties of an escrow agent

Answer 14

1. Closing for calculating the proration’s between the buyer and sell
2. ordering a preliminary title report
3. preparing the purchase money mortgage note and trust deed.

Question 15

When does a licensee (Sales Person) turn over Earnest Money Deposit

Answer 15

Nevada statutes require that a salesperson promptly tum earnest money deposits over to his/ h er broker or deposit into escrow CD upon acce pt ance .

Question 16

Liquidated damages

Answer 16

• is the acceptance by the seller of the earnest money deposit for damages, as specified in the contract, when the buyer defaults.
• When a K details what money would be levied against a property that refuses to perform, the amount specified.

Question 17

Does Subordination Clause allow builders to obtain a Construction Loan?

Answer 17

• Yes
• Construction lenders generally demand to be in first position, so the builder would require the seller of the lot to include a subordination clause in the lot purchase financing.

Question 18

What is a Subordination Clause?

Answer 18

• A contract that gives a mortgage recorded at a later date priority over an earlier recorded mortgage.
  
  • Construction lenders generally demand to be in first position, so the builder would require the seller of the lot to include a subordination clause in the lot purchase financing.

Question 19

What is a general provision in a Multiple LIsting Service Agreement

Answer 19

• Comission Sharing where the listing broker agrees to pay the selling broker a portion of the total commission for bring a buyer.
  
  • The brokers in this type of arrangement are known as cooperating brokers.

Question 20

Do you include Earnest Money Deposit in a Purchase Contract?

Answer 20

• Yes, The form of the earnest money deposit MUST be included in a Real Estate Purchase Contract.

Question 21

equitable title.

Answer 21

The seller agrees to deliver ownership of the real estate and the buyer’s interest is that the condition of title will be the same as when the contract is formed. The buyer’s interest is known as

Question 22

Can you enforce a Contract after Statute of Limitations has run?

Answer 22

• if the statute of limitations has run on a valid contract and a party attempts to enforce its terms the court action will not be allowed.

Question 23

What is required for a contract to be valid?

Answer 23

• Contractual capacity,
• consideration and
• legal purpose must be present for a contract to be valid.

However, if the statute of limitations has run on a valid contract and a party attempts to enforce its terms the court action will not be allowed.

Question 24

Notification to the Purchaser fo the Seller’s acceptance

Answer 24

There must be notification to the purchaser of the sell er’s acceptance of the offer in order to have a valid contract. Meeting of the minds.

Question 25

Covenant of Good Faith

Answer 25

In Nevada, all contracts are assumed to have an implied covenant of good faith. Frantz v. Johnson, 116 Nev. 455,465, n.4 (2000)

Question 26

What is the Broker reguired to do when providing an offer?

Answer 26

Broker is required to make sure offer has clear and definite terms

Question 27

Valid Contract

Answer 27

Both parites must agree to all the terms of the offer - there must be a "meeting of the minds." McCall v. Carrlson

Question 28

Delivery

Answer 28

NAC 645.630  Prompt tender of offers. (NRS 645.050, 645.190)  A licensee shall promptly deliver: 1.   To the seller, every bona fide offer, complete with all terms and conditions of purchase, which he or she obtains. 2.   To the purchaser and seller, copies of each acceptance of an offer or counteroffer. [Real Estate Adv. Comm’n, § VII, subsecs. 4 & 6, eff. 10-31-75]

Question 29

Rejected Offer

Answer 29

IF it is rejected, the licensee is responsible for obtaining a written notice of the rejection from the client, and providing that notice to the offeror within a reasonable time. NAC 645.632

Question 30

Non Client:

Answer 30

if a listing agent is request by a non rep party to write a bona fide offer, he or she must do so; however, drafting an offer does not automatically make the listing broker the buyer’s agent, nor does it create multiple representation necessitating the use of a consent to act form

Question 31

Present all offers to client soon as practicable NRS 645.254(4) Listing broker is further required to present all written bona fide offers to the seller. Nrs 645.635 (8)

Question 32

Delivery

Answer 32

Is the act of presenting to the other party of offeree's acceptance, rejection, or counteroffer. Delivery is important because it gives notice. The offeror cannot be cound by a contract until the accepted contract has been deliverd to him or her. Delivery to the other party's agent, is considered dlelivery to the principal.

Question 33

“Acceleration” Clauses (not what you think!) –

Answer 33

* The Division has stated it is a violation of fair dealing to insert what it identifies as an “acceleration” clause. This is not the “acceleration clause” found in general contract or financing law.20 According to the Division, an acceleration clause is a clause in which the offeror promises to pay a certain set amount above the highest offered sale price and usually provides for a maximum or cap amount. The Division’s example is, “I will pay $2,000 over the highest offer up to $300,000.”21 This type of clause automatically gives one offeror a stated advantage over other offerors and may not allow fair dealing for the other offerors.

Question 34

Does drafting an offer for a non represented party make you an agent?

Answer 34

* If a listing broker is requested by a non-represented party to write an bona fide offer, he or she must do so; however, drafting an offer does not automatically make the listing broker the buyer’s agent, nor does it create multiple representation necessitating the use of a Consent to Act form. *

Question 35

Giving Multiple Offers

Question 36

Waiver for presenting offers

Answer 36

[http://red.nv.gov/uploadedFiles/rednvgov/Content/Forms/636.pdf](http://red.nv.gov/uploadedFiles/rednvgov/Content/Forms/636.pdf) NAX 645.254

Question 37

Excluive Right to Sell

Answer 37

Under an exclusive right-to-sell agreement, the listing firm is offered compensation in the event of a sale regardless of who procured the eventual purchaser.

Question 38

Exclusive Agency

Answer 38

* under an exclusive agency agreement, the seller only offers the listing firm compensation if the purchaser is procured through the firm's efforts or the efforts of other real estate firms. * This means that in certain situations the listing firm may not receive compensation if the property is sold. * In the exclusive agency agreement, the listing firm or another firm working with the listing firm must procure the purchaser in order to have a claim on compensation.

Question 39

Difference between a listing Agreeement and Brokerage Agreement

Answer 39

* A listing agreement enables the broker to act as the owner’s agent in the sale of the property. * A buyer’s broker agreement is where all the terms of a listing agreement apply but also a client can cancel for non-performance, or any special circumstances or conditions as stated in the agreement.

Question 40

# Brokerage Agreement What is a Brokerage Ageement?

Answer 40

* is an employment contract * wherein the broker agrees to provide real estate related services for valuable consideration or compensation. * It may be either oral or written. 1. Though the brokerage agreement is an employment contract, without some type of alternative agreement, a real estate broker is an independent contractor and not the employee of the client

Question 41

# Brokerage Agreement What rights Extend past termination

Answer 41

1. Some of those rights, such as the licensee’s duty of confidentiality, are statutorily identified as extending past the revocation or termination of the brokerage agreement - in the case of confidentiality it is one year NRS 645.254(2).

Question 42

# Brokerage Agreement Who can terminate a Brokerage Agreement?

Answer 42

1. 2. Unless there is an agreement to the contrary, a brokerage agreement may be terminated by either party 1. **A client can refuse to be represented by, or work with, a broker-salesman or salesman; however, the brokerage agreement continues in force as the agency is with the broker not the salesperson.** 2. **The fact that a client does not want to continue being represented by a certain licensee does not automatically release the client from an obligation to pay compensation under the brokerage agreement.** 3. **Nevertheless, the broker may still have rights under the original brokerage agreement for the collection of compensation NRS 148.420 and NRS 148.330.**

Question 43

# Brokerage Agreement What is the difference between a Listing Contract and a Brokers Agreement?

Answer 43

1. A listing contract is a seller’s brokerage agreement; a buyer’s brokerage agreement is with a buyer. 1. Specialized brokerage agreements such as commercial, advance fee, manufactured home, and listing with option to purchase, as well as property management agreements, are discussed in their own sections.

Question 44

# Brokerage Agreement What Parties are involved in a Brokerage Agreement?

Answer 44

* There are only two parties to a brokerage agreement, the client and the broker

Question 45

# Brokerage Agreement Is a Brokerage Agreement an Employment Contract?

Answer 45

* Brokerage Agreements are employment contracts and like other contracts, they have the same formation requirements. * Brokerage agreements may be oral or written.NRS 645.005

Question 46

# Brokerage Agreement Is a Brokerage Agreement an Employment Contract?

Answer 46

1. 2. Brokerage Agreements are employment contracts and like other contracts, they have the same formation requirements. 1. Brokerage agreements may be oral or written.NRS 645.005

Question 47

# Brokerage Agreement Is there a Brokerage Agreement Form?

Answer 47

1. Nevada has no mandatory brokerage agreement form. Though there is no required form, Nevada’s Attorney General has stated the Real Estate Division is within its authority to adopt regulations governing the content of brokerage agreements 1. Oral Contracts: Oral brokerage agreements are legal contracts in which a broker agrees to represent a client with the intention or expectation of compensation and there is no written contract. No oral brokerage agreement may be exclusive. NRS 645.320 2. Written Contracts: Though it is legal to have oral brokerage agreements, all exclusive agency brokerage agreements must be in writing. Under Nevada law, written brokerage contracts have certain statutory requirements regarding terms, form, and distribution NRS 645.320**.**

Question 48

# Brokerage Agreement Oral Contract/Written Contracts and Brokerage Agreement

Answer 48

1. Oral Contracts: 1. Oral brokerage agreements are legal contracts in which a broker agrees to represent a client with the intention or expectation of compensation and there is no written contract. No oral brokerage agreement may be exclusive. NRS 645.320 2. Written Contracts: 1. Though it is legal to have oral brokerage agreements, all exclusive agency brokerage agreements must be in writing. Under Nevada law, written brokerage contracts have certain statutory requirements regarding terms, form, and distribution NRS 645.320.

Question 49

Procuring

Answer 49

* With an oral listing contract, the seller is only obligated to compensate the broker if the broker’s services were the procuring cause of a successful transaction.1 * As with most oral agreements, should a dispute arise the broker would have to satisfactorily establish to the court the existence and terms of the contract. Additionally, in order to collect a commission, the broker will have to prove he or she was the procuring cause of the transaction.

Question 50

Who do RE licensee use to close transactions?

Answer 50

* In Nevada, the majority of licensees and clients use escrow companies to coordinate and close the transaction. *

Question 51

Do all RE transactions invovle escrow?

Answer 51

* even in Nevada, not all real estate transactions involve escrow companies. * **Because a closing may not occur in an escrow office, the licensee has a duty to ensure that within 10 business days after the transaction has closed, a complete, detailed closing statement is delivered to the principals. The seller’s closing statement must show all the receipts and disbursements made by the broker for the seller. The buyer’s closing statement must show all money received in the transaction, how and for what it was disbursed. A true copy of the closing statements must be kept in the broker’s file.113 The licensee is relieved of this duty if an escrow holder furnishes those statements.**

Question 52

Do all RE transactions invovle escrow?

Answer 52

* even in Nevada, not all real estate transactions involve escrow companies.