Free New Jersey Contracts Practice Test — LicenseIQ

Question 1

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 2

Which event terminates a listing agreement by operation (force) of law?

Accepted Answer

Agency ends by performance, expiration, mutual agreement, or situationally by force of law (bankruptcy, condemnation), death or incapacity, destruction of the property, or breach.

Question 3

An agreement that prevents the seller of a business from opening a competing business within a certain area and time is a:

Accepted Answer

A non-compete protects the buyer from competition by the seller. An NDA protects confidential information during marketing.

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

Before an out-of-state subdivision can be offered for sale in New Jersey, it must be registered with the:

Accepted Answer

The Bureau of Subdivided Land Sales Control, under the Real Estate Commission, administers the Real Estate Sales Full Disclosure Act and registers out-of-state properties offered in NJ.

Question 6

Under NJ law, a broker who brings the parties together in a transaction is entitled to which security interest for the commission?

Accepted Answer

The NJ contract notes that brokers are entitled to an equitable lien for their commission.

Question 7

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 8

The NJ New Residential Construction Off-Site Conditions Disclosure Act requires:

Accepted Answer

Municipal clerks keep lists of off-site conditions (e.g., landfills, highways); licensee-prepared contracts must include the notice urging buyers to check them.

Question 9

Under N.J.S.A. 45:15-16b, a NJ salesperson may form an LLC to:

Accepted Answer

Salespersons and broker-salespersons may form an LLC or other entity to receive compensation, but only from their employing broker.

Question 10

Under the NJ Fair Chance in Housing Act, which may NEVER be considered by a housing provider, even after a conditional offer?

Accepted Answer

Arrests without conviction, expunged or pardoned convictions, juvenile adjudications and sealed records may never be considered. Lifetime registration, arson and recent first-degree offenses may be.

Question 11

A buyer's deposit accompanies an offer that the seller rejects within three business days. Under NJ rules, the broker:

Accepted Answer

If an offer is withdrawn or rejected within five business days, the deposit need not be put in escrow and may be returned to the offeror.

Question 12

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 13

Under NJ rules, a licensee must present all written offers to the client within:

Accepted Answer

Written offers must be presented within 24 hours unless the seller has instructed otherwise in writing. Three business days is the attorney review period, not the offer-presentation rule.

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

NJ law requires a landlord to install and maintain window guards when requested if a child of what age or younger lives in the unit?

Accepted Answer

Window guards are required when a child age ten or under will reside in the unit; the lease must include the window guard notification.

Question 16

Once a contract or other instrument has been executed, a NJ licensee must deliver a duplicate original to:

Accepted Answer

NJ rules require a duplicate original of all executed instruments to be delivered to all parties immediately.

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 NJ broker's records of offers that were NOT accepted, and of listings that expired without a sale, must be kept for:

Accepted Answer

Rejected offers and expired listings must be kept six months from the offer date or listing end. Executed contracts and related records are kept six years.

Question 19

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 20

During the NJ attorney review period, a second offer arrives on the property. The listing agent must:

Accepted Answer

During attorney review the contract is not yet binding, so all new offers must be presented to the seller; they are not merely backup offers.

Question 21

Under N.J.A.C. 11:5-6.2, a NJ listing agreement:

Accepted Answer

Commission rates may not be preprinted (not even a preprinted % sign). The agreement must disclose in larger print that commissions are negotiable and must state a definite end date.

Question 22

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 23

Which is a valid term for a NJ buyer agency agreement?

Accepted Answer

Buyer agreements, like listings, must have an end date and negotiated compensation; commissions are never set by law.

Question 24

Under the 'adjustments at closing' clause of the standard NJ sales contract, which cost is the BUYER's responsibility?

Accepted Answer

The buyer pays title insurance, title searches and other conveyance expenses; the seller pays deed preparation, the realty transfer fee and lien discharge fees.

Question 25

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.

New Jersey real estate contracts practice test

1. 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?

2. Which event terminates a listing agreement by operation (force) of law?

3. An agreement that prevents the seller of a business from opening a competing business within a certain area and time is a:

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

5. Before an out-of-state subdivision can be offered for sale in New Jersey, it must be registered with the:

6. Under NJ law, a broker who brings the parties together in a transaction is entitled to which security interest for the commission?

7. 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) .

8. The NJ New Residential Construction Off-Site Conditions Disclosure Act requires:

9. Under N.J.S.A. 45:15-16b, a NJ salesperson may form an LLC to:

10. Under the NJ Fair Chance in Housing Act, which may NEVER be considered by a housing provider, even after a conditional offer?

11. A buyer's deposit accompanies an offer that the seller rejects within three business days. Under NJ rules, the broker:

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

13. Under NJ rules, a licensee must present all written offers to the client within:

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. NJ law requires a landlord to install and maintain window guards when requested if a child of what age or younger lives in the unit?

16. Once a contract or other instrument has been executed, a NJ licensee must deliver a duplicate original to:

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

18. A NJ broker's records of offers that were NOT accepted, and of listings that expired without a sale, must be kept for:

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

20. During the NJ attorney review period, a second offer arrives on the property. The listing agent must:

21. Under N.J.A.C. 11:5-6.2, a NJ listing agreement:

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

23. Which is a valid term for a NJ buyer agency agreement?

24. Under the 'adjustments at closing' clause of the standard NJ sales contract, which cost is the BUYER's responsibility?

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

Sources