Free Alabama Contracts Practice Test — LicenseIQ

Question 1

Under an open listing, the seller owes a commission to:

Accepted Answer

Open listings are non-exclusive; only the procuring broker is paid, and the owner owes nothing for a self-sale.

Question 2

An owner tells a broker, "Get me $200,000 net and keep anything above that." Accepting this arrangement is

Accepted Answer

§34-27-36(b)(19) prohibits accepting a net listing, in which the owner receives a stated net price and the broker keeps the excess.

Question 3

How long must a qualifying broker keep copies of contracts, leases and listings?

Accepted Answer

§34-27-36(b)(30) requires qualifying brokers to keep these records for three years, and trust-fund records must also be kept at least three years under (b)(8).

Question 4

A buyer wants to tour a home with a licensee but will not sign any agreement. Under Alabama law the licensee

Accepted Answer

§34-27-82(e) provides that a consumer cannot be required to sign a written agreement as a condition of being shown property. The disclosure form must still be provided before the showing.

Question 5

A property manager authorized to collect rents, sign leases, hire contractors and run the owner's buildings on an ongoing basis is typically a:

Accepted Answer

A general agent handles a range of matters in a continuing relationship (typical of property management). A listing agent is a special (limited) agent for one transaction.

Question 6

Absent a written agency agreement, an Alabama licensee working with a consumer is considered

Accepted Answer

§34-27-82(b) provides that at initial contact and until a written agency agreement is signed, the licensee is a transaction facilitator and not an agent.

Question 7

A party making an offer to buy is the ____, and the party receiving it is the ____.

Accepted Answer

The offeror makes the offer; the offeree receives it. When a counteroffer is made, the roles swap.

Question 8

A licensee prepares a second, higher-priced contract for the lender while the parties' real deal is lower. This violates the provision against

Accepted Answer

§34-27-36(b)(20) prohibits misrepresenting or failing to disclose the true terms of a sale to a lender, guaranty agency or other interested party.

Question 9

A licensee representing the seller who learns the buyer will pay more than the offer must:

Accepted Answer

Loyalty and disclosure require the seller's agent to share material information that benefits the client. The agent owes the buyer-customer no confidentiality.

Question 10

A sales contract provides that if the buyer defaults, the seller keeps the earnest money as the full measure of damages. This is a:

Accepted Answer

Liquidated damages are a sum agreed in advance as compensation for breach - often the earnest money deposit.

Question 11

A licensee persuades a buyer under contract on another firm's listing to cancel so the buyer can purchase the licensee's own listing. This is

Accepted Answer

§34-27-36(b)(13) prohibits inducing a party to break a contract to substitute a new one when the substitution is motivated by the licensee's personal gain.

Question 12

Every Alabama offer to purchase must prominently display

Accepted Answer

§34-27-82(i) requires a representation disclosure clause in every offer, marked by the listing and selling licensees to show their roles.

Question 13

Which is NOT an essential element of a valid contract?

Accepted Answer

The essential elements are offer and acceptance (mutual consent), consideration, competent parties and legal purpose. Notarization is not required for a contract to be valid.

Question 14

A contract signed by a 17-year-old buyer is generally:

Accepted Answer

Contracts with minors are voidable at the minor's option; the adult party remains bound. A contract with someone adjudged insane is void.

Question 15

In an option to purchase, the seller who grants the option is the ____ and the option holder is the ____.

Accepted Answer

The seller (optionor) gives the option; the buyer (optionee) holds it. Only the optionor is bound during the option period, making it unilateral.

Question 16

A property-management agreement terminates effective June 1. The broker must give the owner or new manager an accounting and the funds within

Accepted Answer

Rule 790-X-3-.03 requires the accounting and payment within seven business days of the termination's effective date. Sixty days relates to security-deposit returns.

Question 17

Which listing provision is prohibited in Alabama?

Accepted Answer

Rule 790-X-3-.05 bars automatic extension provisions, and §34-27-36(b)(24) requires a fixed expiration date.

Question 18

A buyer offers $300,000. The seller counters at $315,000. The buyer rejects the counter and then tries to accept the original $300,000 offer terms. Is there a contract?

Accepted Answer

A counteroffer is a rejection and a new offer; the original offer cannot be revived by the buyer.

Question 19

A written listing agreement must

Accepted Answer

§34-27-36(b)(24) makes it a violation to omit a fixed expiration date from a written listing or to fail to give the principal a copy.

Question 20

A zero-down-payment government loan program aimed at low- and moderate-income buyers in eligible rural areas is offered through the:

Accepted Answer

USDA Rural Development loans serve eligible rural buyers who meet income limits, often with no down payment.

Question 21

A contract that is missing an essential element, such as consideration, is:

Accepted Answer

Missing an essential element makes a contract void from the start. A voidable contract appears valid but may be canceled by one party.

Question 22

A buyer contracts to buy a home for $300,000, but it appraises at $290,000. The lender offers 75% LTV. What is the maximum loan?

Accepted Answer

LTV is applied to the LESSER of price or appraised value: $290,000 x 0.75 = $217,500. Using the $300,000 price ($225,000) is the common mistake.

Question 23

A contract that has all legal elements but where one party may cancel is:

Accepted Answer

A voidable contract is valid but one party may rescind it (e.g., a minor, or a party induced by misrepresentation or duress). A void contract lacks an essential element and has no legal effect.

Question 24

The federal law that prohibits price fixing, group boycotts, market allocation and tie-in agreements is the:

Accepted Answer

The Sherman Antitrust Act of 1890 prohibits conspiracies in restraint of trade, including these practices.

Question 25

A mortgage lender offers a salesperson $200 for every client referred. Under RESPA this is:

Accepted Answer

RESPA prohibits kickbacks and unearned referral fees between settlement service providers and real estate licensees, even if disclosed.

Alabama real estate contracts practice test

1. Under an open listing, the seller owes a commission to:

2. An owner tells a broker, "Get me $200,000 net and keep anything above that." Accepting this arrangement is

3. How long must a qualifying broker keep copies of contracts, leases and listings?

4. A buyer wants to tour a home with a licensee but will not sign any agreement. Under Alabama law the licensee

5. A property manager authorized to collect rents, sign leases, hire contractors and run the owner's buildings on an ongoing basis is typically a:

6. Absent a written agency agreement, an Alabama licensee working with a consumer is considered

7. A party making an offer to buy is the , and the party receiving it is the .

8. A licensee prepares a second, higher-priced contract for the lender while the parties' real deal is lower. This violates the provision against

9. A licensee representing the seller who learns the buyer will pay more than the offer must:

10. A sales contract provides that if the buyer defaults, the seller keeps the earnest money as the full measure of damages. This is a:

11. A licensee persuades a buyer under contract on another firm's listing to cancel so the buyer can purchase the licensee's own listing. This is

12. Every Alabama offer to purchase must prominently display

13. Which is NOT an essential element of a valid contract?

14. A contract signed by a 17-year-old buyer is generally:

15. In an option to purchase, the seller who grants the option is the and the option holder is the .

16. A property-management agreement terminates effective June 1. The broker must give the owner or new manager an accounting and the funds within

17. Which listing provision is prohibited in Alabama?

18. A buyer offers $300,000. The seller counters at $315,000. The buyer rejects the counter and then tries to accept the original $300,000 offer terms. Is there a contract?

19. A written listing agreement must

20. A zero-down-payment government loan program aimed at low- and moderate-income buyers in eligible rural areas is offered through the:

21. A contract that is missing an essential element, such as consideration, is:

22. A buyer contracts to buy a home for $300,000, but it appraises at $290,000. The lender offers 75% LTV. What is the maximum loan?

23. A contract that has all legal elements but where one party may cancel is:

24. The federal law that prohibits price fixing, group boycotts, market allocation and tie-in agreements is the:

25. A mortgage lender offers a salesperson $200 for every client referred. Under RESPA this is:

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