Free Illinois Contracts Practice Test — LicenseIQ

Question 1

A cooperating broker shows an MLS-listed home to a buyer with whom she has no written agreement. Whom does she represent?

Accepted Answer

Section 15-10 makes the licensee the designated agent of the consumer she works with, Section 15-55 says MLS participation does not create subagency, and Section 15-40 says payment of compensation does not determine agency.

Question 2

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 3

A contract allows the broker to release earnest money on termination under its terms. Before disbursing under that provision, the broker must give the parties written notice at least:

Accepted Answer

1450.750(g) requires written notice at least 14 days before a contract-based disbursement, stating how funds will be disbursed and the deadline for written objection.

Question 4

A seller refuses to close on a valid contract. Because each parcel of real estate is unique, the buyer may sue to force the sale through:

Accepted Answer

Specific performance compels the breaching party to perform; it is available because land is unique. The buyer could alternatively seek monetary damages.

Question 5

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 6

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.

Question 7

A seller first discloses a known material defect after both parties have signed the contract. The buyer may terminate the contract:

Accepted Answer

Section 40 permits the buyer to terminate within 5 business days after receipt of a report that discloses a material defect after the contract was signed. The right ends at conveyance.

Question 8

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 9

A seller agrees with a broker that the seller will receive $200,000 and the broker keeps anything above that. The home sells for $240,000. This arrangement is a:

Accepted Answer

In a net listing the broker's fee is the excess over a set net ($40,000 here). It encourages the broker to underprice and is illegal in many states, including NJ.

Question 10

A contract clause stating that 'time is of the essence' means:

Accepted Answer

'Time is of the essence' makes performance by the stated dates essential; missing a deadline can be a breach.

Question 11

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 12

After the buyer and seller sign a sales contract but before closing, the contract is:

Accepted Answer

A contract is executory while obligations remain to be performed; it becomes executed when fully performed (at closing).

Question 13

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 14

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 15

In Illinois, unless there is a written agreement providing otherwise, a licensee working with a consumer is considered to be:

Accepted Answer

Section 15-10 provides that a licensee is considered to be representing the consumer they are working with as a designated agent unless a written agreement provides otherwise.

Question 16

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 17

Adding a new financing contingency to an existing sales contract is done by a(n) ____, while changing the existing closing date is done by a(n) ____.

Accepted Answer

An addendum ADDs new terms; an amendment changes existing terms. Both require agreement of both parties.

Question 18

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 19

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 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

An Illinois sponsoring broker receives earnest money on an accepted contract. Absent other contract terms, when must it be deposited in the escrow account?

Accepted Answer

68 Ill. Adm. Code 1450.750(d) requires escrow moneys to be deposited by the next business day following the transaction or receipt, as the contract provides.

Question 22

An offer or counteroffer becomes a binding contract when:

Accepted Answer

Acceptance must be unconditional and communicated back to the offeror; any change creates a counteroffer instead.

Question 23

A brokerage agreement runs for 18 months. To be valid in Illinois, it must:

Accepted Answer

Section 10-25 requires every brokerage agreement to expire within a definite period or, if longer than one year, to permit the client to terminate annually on no more than 30 days' written notice. Otherwise it is void.

Question 24

Under Illinois law, an exclusive brokerage agreement:

Accepted Answer

Section 15-75 requires exclusive brokerage agreements to be in writing. Non-exclusive brokerage agreements may be oral.

Question 25

Which service must an Illinois exclusive brokerage agreement require the broker to provide, at a minimum?

Accepted Answer

Section 15-75 requires, at minimum, accepting and presenting offers, assisting in developing, communicating, negotiating and presenting offers and notices until contingencies are satisfied or waived, and answering the client's questions. Marketing extras are negotiable.

Illinois real estate contracts practice test

1. A cooperating broker shows an MLS-listed home to a buyer with whom she has no written agreement. Whom does she represent?

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

3. A contract allows the broker to release earnest money on termination under its terms. Before disbursing under that provision, the broker must give the parties written notice at least:

4. A seller refuses to close on a valid contract. Because each parcel of real estate is unique, the buyer may sue to force the sale through:

5. 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?

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

7. A seller first discloses a known material defect after both parties have signed the contract. The buyer may terminate the contract:

8. 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?

9. A seller agrees with a broker that the seller will receive $200,000 and the broker keeps anything above that. The home sells for $240,000. This arrangement is a:

10. A contract clause stating that 'time is of the essence' means:

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

12. After the buyer and seller sign a sales contract but before closing, the contract is:

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

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

15. In Illinois, unless there is a written agreement providing otherwise, a licensee working with a consumer is considered to be:

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

17. Adding a new financing contingency to an existing sales contract is done by a(n) , while changing the existing closing date is done by a(n) .

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

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

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

21. An Illinois sponsoring broker receives earnest money on an accepted contract. Absent other contract terms, when must it be deposited in the escrow account?

22. An offer or counteroffer becomes a binding contract when:

23. A brokerage agreement runs for 18 months. To be valid in Illinois, it must:

24. Under Illinois law, an exclusive brokerage agreement:

25. Which service must an Illinois exclusive brokerage agreement require the broker to provide, at a minimum?

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