Free Michigan Contracts Practice Test — LicenseIQ

Question 1

Every Michigan listing (service provision) agreement must:

Accepted Answer

R 339.22131 requires a definite expiration date and prohibits requiring the client to give notice of intent to cancel on or after expiration. Commissions are negotiable, not state-set.

Question 2

When a seller changes a term of the buyer's offer and returns it, this creates a:

Accepted Answer

Altering any term rejects the original offer and creates a counteroffer, which the buyer may accept or reject.

Question 3

Under Michigan's Seller Disclosure Act, when must a seller deliver the disclosure in an installment land contract sale with no separate purchase agreement?

Accepted Answer

MCL 565.954(1) requires delivery before the transferor executes the installment sales contract when there is no binding purchase agreement.

Question 4

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 5

A disclosure statement is hand-delivered to the buyer after the seller signed the purchase agreement. The buyer may terminate by written notice within:

Accepted Answer

MCL 565.954(3) gives 72 hours after in-person delivery and 120 hours after delivery by registered mail. The 120-hour figure applies to registered mail, not personal delivery.

Question 6

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 7

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 8

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 9

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 10

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 11

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 12

An offer is accepted on a Thursday and the broker learns of it that day. Monday is a federal holiday. By the end of which day must the broker deposit the earnest money?

Accepted Answer

Count 2 banking days after acceptance: Friday is day 1; Saturday, Sunday, and the Monday holiday are not banking days; Tuesday is day 2.

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

A financing contingency in a purchase agreement protects the:

Accepted Answer

A financing (mortgage) contingency lets the buyer cancel without penalty if unable to secure the specified loan by the deadline.

Question 15

As part of Michigan's minimum services, when an offer to purchase is signed, the licensee must recommend that the buyer:

Accepted Answer

MCL 339.2512d(3)(b) requires recommending that the buyer require the seller to provide a fee title policy in the amount of the purchase price, issued or certified close to closing.

Question 16

A listing contains a clause stating it renews for another 90 days unless the seller gives written notice of cancellation after the expiration date. Under Michigan rules this clause is:

Accepted Answer

R 339.22131 provides that a service provision agreement shall not require the signer to give notice of intent to cancel on or after the expiration date.

Question 17

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 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

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 20

A salesperson receives an earnest money check with a buyer's offer. The salesperson must:

Accepted Answer

MCL 339.2512(1)(k)(ii) requires a salesperson to deliver any deposit to the broker upon receipt.

Question 21

The purchase agreement names a title company as escrowee for the earnest money. The licensee holding the check must deliver it to the title company within:

Accepted Answer

MCL 339.2512(1)(k)(vii) requires delivery to a non-broker escrowee within 2 banking days after learning of acceptance.

Question 22

Under Michigan's statute of frauds, an agreement to pay a real estate commission:

Accepted Answer

MCL 566.132(1)(e) expressly lists agreements to pay a commission for the sale of an interest in real estate among those that must be in writing and signed.

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 buyer signs a purchase agreement for a new unit from a condominium developer and receives the required documents. Under the Michigan Condominium Act, the buyer may withdraw without cause or penalty within:

Accepted Answer

MCL 559.184 allows withdrawal before conveyance and within 9 business days after receipt of the required documents. Three business days is the deadline for returning the buyer's escrowed money after withdrawal.

Question 25

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.

Michigan real estate contracts practice test

1. Every Michigan listing (service provision) agreement must:

2. When a seller changes a term of the buyer's offer and returns it, this creates a:

3. Under Michigan's Seller Disclosure Act, when must a seller deliver the disclosure in an installment land contract sale with no separate purchase agreement?

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

5. A disclosure statement is hand-delivered to the buyer after the seller signed the purchase agreement. The buyer may terminate by written notice within:

6. 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:

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

8. 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:

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

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

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

12. An offer is accepted on a Thursday and the broker learns of it that day. Monday is a federal holiday. By the end of which day must the broker deposit the earnest money?

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

14. A financing contingency in a purchase agreement protects the:

15. As part of Michigan's minimum services, when an offer to purchase is signed, the licensee must recommend that the buyer:

16. A listing contains a clause stating it renews for another 90 days unless the seller gives written notice of cancellation after the expiration date. Under Michigan rules this clause is:

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

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

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

20. A salesperson receives an earnest money check with a buyer's offer. The salesperson must:

21. The purchase agreement names a title company as escrowee for the earnest money. The licensee holding the check must deliver it to the title company within:

22. Under Michigan's statute of frauds, an agreement to pay a real estate commission:

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

24. A buyer signs a purchase agreement for a new unit from a condominium developer and receives the required documents. Under the Michigan Condominium Act, the buyer may withdraw without cause or penalty within:

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

Sources