Chapter014 - Chapter 14 Contracts for Sale and Closing Test Problems 1 If a buyer defaults on a contract to purchase real property which of the

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Chapter 14 Contracts for Sale and Closing Test Problems 1. If a buyer defaults on a contract to purchase real property, which of the following is not a remedy the seller can pursue? c. Sue for assignment. 2. When contracts for the sale of real property are placed with a disinterested third party for executing and closing, they are said to be placed in: d. Escrow. 3. Which of the following conditions would be a defect to mutual assent in a contract for the sale of real property? a. One party attempts to perpetrate fraud on the other. 4. Oral evidence in contract disputes is prohibited by: e. The parol evidence rule. 5. Which of the following is one of the terms of a real estate contract? c. Price to be paid. 6. Real estate transactions do not close when the contract for sale is signed by both parties because: e. All of the above. 7. An earnest money deposit is: c. A payment of money by a buyer to evidence good faith. 8. In most straightforward transactions involving houses or other relatively small properties, the contract is: d. A form, with blanks filled in by the broker. 9. Equitable title to real estate is: e. The right to obtain legal title conveyed by the contract for sale. 10. The purpose of a closing statement is to: e. All but a above.
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Study Questions 1. If a closing occurs on September 1 of a 365-day year, how will the year’s property tax of $900 be prorated? ( Note : The taxes will be due on January 2 of the following year and the day of closing “belongs” to the buyer.) Solution : Property taxes are assessed for the calendar year, and paid in arrears. Therefore, the seller owes from January 1 through the day before closing, a total of 243 days. The buyer owes for the remainder of the year, a total of 122 days. Distributing the tax bill in proportion to the days of ownership results in the following allocation: Seller’s portion: (243/365) x $900 = .666 x $900 = $599.40 Buyer’s portion: (122/365) x $900 = .334 x $900 = $300.60 Since the buyer will pay the seller’s share of the taxes, in the closing statement the buyer is credited with $599.40 while the seller is charged that amount. Use the following information to answer questions 2–5. Rosie Malone sold her house to D.M. Band. The contract was signed June 1, 2004, and closing was set for June 25, 2004. Rosie had prepaid her three-year hazard insurance policy in the amount of $425.00 on April 1, 2003, and D.M. agreed to assume it at closing. Water and sewer are paid the first of each month for the previous month. They are estimated to total $100 for June. D.M. also agrees to assume Rosie’s mortgage, which will have a balance of $85,385 on date of closing. Monthly payments are $817.83 payable on the first of the month for the previous month. The seller is responsible for
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This note was uploaded on 03/31/2008 for the course REAL 3000 taught by Professor Peng,liang during the Spring '08 term at Colorado.

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Chapter014 - Chapter 14 Contracts for Sale and Closing Test Problems 1 If a buyer defaults on a contract to purchase real property which of the

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