Free Indiana Contracts Practice Test — LicenseIQ

Question 1

Within what time must the owner receive a copy of a signed listing agreement?

Accepted Answer

IC 25-34.1-12-1 and 876 IAC 8-2-1(a) require delivery of one copy to the owner within three business days of signing.

Question 2

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 3

Where must the original of a signed buyer agency agreement be kept?

Accepted Answer

IC 25-34.1-12-2 requires the original and all electronic files to be kept in the office of the selling broker, which is the statute's term for the buyer-side firm.

Question 4

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 5

Under 876 IAC 8-2-7, offering a rebate to a buyer to induce a sale is

Accepted Answer

The rule lists undisclosed inducements as incompetent practice. Full written disclosure to all parties makes the rebate permissible.

Question 6

A buyer pays $10,000 for a 12-month option to buy a house for $250,000. During the option period:

Accepted Answer

The option binds only the optionor. The optionee may exercise or let it lapse (forfeiting the option money).

Question 7

A broker signs a listing agreement on Thursday. With no holidays, what is the latest day the broker may deliver the owner's copy and still comply?

Accepted Answer

Three business days after Thursday: Friday (1), Monday (2), Tuesday (3). Weekend days are not business days, so Saturday and Sunday are not counted.

Question 8

A written agreement states that a licensee will not represent a party. Under IC 25-34.1-10-9.5(b), the licensee must still

Accepted Answer

Even without agency, the statute requires receiving and presenting offers, assisting with negotiations, forms, and communications, and responding promptly to questions.

Question 9

A lender offers a 95% LTV loan. The buyer has $18,000 for the down payment. What is the maximum purchase price?

Accepted Answer

At 95% LTV the down payment is 5% of price. Price = $18,000 / 0.05 = $360,000; loan = $342,000.

Question 10

Since July 1, 2024, Indiana law requires that an agreement to represent a buyer or tenant

Accepted Answer

IC 25-34.1-12-2 (P.L. 47-2024) applies the writing, expiration-date, three-business-day copy, and retention rules to buyer and tenant representation. Nothing is filed with the Commission.

Question 11

A listing company offers a cooperative commission. To whom must it be paid?

Accepted Answer

876 IAC 8-1-9 requires the offered share to be paid to the selling broker and never directly to a broker associated with that selling broker.

Question 12

With the beneficiary's written agreement, interest earned on earnest money held in trust may be transferred to

Accepted Answer

876 IAC 8-2-2(c) allows voluntary transfer of interest to an Indiana affordable housing fund meeting IRC 501(c)(3) with the beneficiary's written agreement.

Question 13

Which is the most common and desirable way a real estate sales contract terminates?

Accepted Answer

Contracts ideally end by performance. They can also end by mutual agreement, impossibility, operation of law, or breach.

Question 14

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 15

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 16

Unless a written contract provides otherwise, an Indiana broker's association with a broker company is

Accepted Answer

IC 25-34.1-4-4 makes independent contractor status the default unless a written contract provides otherwise.

Question 17

When the sole proprietor of a broker company dies, previously associated brokers may complete existing contracted business for up to

Accepted Answer

IC 25-34.1-4-6 allows up to 90 days to complete business contracted before death. A trust account is required, and no new business may be taken until the brokers join another company.

Question 18

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 19

A licensee never signs a buyer agreement but repeatedly gives a buyer negotiating advice and acts on his behalf. An agency relationship may have been created by:

Accepted Answer

Implied agency arises from conduct; the agent then owes full fiduciary duties. Express agency is created by stated agreement, ideally in writing.

Question 20

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 21

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 22

A seller says, 'I will pay any broker a 5% commission if they bring me a buyer.' This promise creates a(n):

Accepted Answer

In a unilateral contract only one party is bound (to pay if the act is performed); the other party has no obligation to act. Most real estate contracts are bilateral.

Question 23

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 24

A seller has already accepted an offer, and another buyer submits a higher offer. The listing agent should:

Accepted Answer

Listing agents must present all offers through closing, but should not give legal advice about the seller's obligations under the existing contract.

Question 25

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.

Indiana real estate contracts practice test

1. Within what time must the owner receive a copy of a signed listing agreement?

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

3. Where must the original of a signed buyer agency agreement be kept?

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

5. Under 876 IAC 8-2-7, offering a rebate to a buyer to induce a sale is

6. A buyer pays $10,000 for a 12-month option to buy a house for $250,000. During the option period:

7. A broker signs a listing agreement on Thursday. With no holidays, what is the latest day the broker may deliver the owner's copy and still comply?

8. A written agreement states that a licensee will not represent a party. Under IC 25-34.1-10-9.5(b), the licensee must still

9. A lender offers a 95% LTV loan. The buyer has $18,000 for the down payment. What is the maximum purchase price?

10. Since July 1, 2024, Indiana law requires that an agreement to represent a buyer or tenant

11. A listing company offers a cooperative commission. To whom must it be paid?

12. With the beneficiary's written agreement, interest earned on earnest money held in trust may be transferred to

13. Which is the most common and desirable way a real estate sales contract terminates?

14. 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) .

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

16. Unless a written contract provides otherwise, an Indiana broker's association with a broker company is

17. When the sole proprietor of a broker company dies, previously associated brokers may complete existing contracted business for up to

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

19. A licensee never signs a buyer agreement but repeatedly gives a buyer negotiating advice and acts on his behalf. An agency relationship may have been created by:

20. 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:

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

22. A seller says, 'I will pay any broker a 5% commission if they bring me a buyer.' This promise creates a(n):

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

24. A seller has already accepted an offer, and another buyer submits a higher offer. The listing agent should:

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

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