Free New Mexico Contracts Practice Test — LicenseIQ

Question 1

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 2

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 3

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 4

A seller agrees in writing that her broker will not help with offers or closing tasks. What else must happen?

Accepted Answer

16.61.19.8(B)(1) NMAC requires written disclosure to other brokers when a party agrees in writing that the broker will not provide assistance.

Question 5

Under the statute of frauds, a real estate sales contract must be:

Accepted Answer

The statute of frauds requires real estate sales contracts to be in writing and signed to be enforceable.

Question 6

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 7

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 8

Which item must a New Mexico property management agreement include?

Accepted Answer

16.61.24.13(B) NMAC requires the duties, all fees charged to the owner, all tenant fees the brokerage retains, and a question about foreclosure or other financial situations affecting occupancy.

Question 9

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 10

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 11

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 12

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 13

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 14

An original contractor must record a mechanic's lien claim within how many days after completion of the contract?

Accepted Answer

48-2-6 gives an original contractor 120 days after completion. Subcontractors and suppliers have 90 days after completion of the improvement.

Question 15

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 16

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 17

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 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

Before accepting an offer on residential property, the seller or seller's broker must:

Accepted Answer

47-13-4 requires the seller or seller's broker to request the levy estimate, using the list price, before accepting an offer. The buyer acknowledges receipt in writing.

Question 20

A listing broker has a written agreement with a transaction coordinator for a particular deal. What does the rule require?

Accepted Answer

16.61.19.8(A)(4)(c) NMAC lists written agreements with a transaction coordinator as a conflict requiring written disclosure.

Question 21

A consumer signs a written agreement for transaction broker services. That consumer is:

Accepted Answer

A client is anyone with an express written agreement with a brokerage. The rules allow a client relationship without agency.

Question 22

Unless the agreement says otherwise, how often must a property manager give the owner a report of receipts and disbursements?

Accepted Answer

16.61.24.12(A) NMAC requires a monthly report, or as the management agreement requires.

Question 23

After a management agreement terminates, the brokerage must give the owner a final accounting of trust funds within:

Accepted Answer

16.61.24.12(D) NMAC requires the final accounting within 60 days of the effective date of termination.

Question 24

Before offering property management services, a brokerage must:

Accepted Answer

16.61.24.9 and 16.61.23.12 NMAC require a declaration of intent on the Commission's form. New Mexico has no separate manager license or bond.

Question 25

A grateful buyer offers associate broker Mia a $300 gift card for her work on a closed deal. Under the rules, Mia may accept compensation only from:

Accepted Answer

16.61.17.9(J) NMAC limits associate compensation to the QB the associate was affiliated with when the deal went under contract, or persons that QB authorized in writing.

New Mexico real estate contracts practice test

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

2. 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) .

3. 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:

4. A seller agrees in writing that her broker will not help with offers or closing tasks. What else must happen?

5. Under the statute of frauds, a real estate sales contract must be:

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

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

8. Which item must a New Mexico property management agreement include?

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

10. 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?

11. 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:

12. 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?

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

14. An original contractor must record a mechanic's lien claim within how many days after completion of the contract?

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

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

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

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

19. Before accepting an offer on residential property, the seller or seller's broker must:

20. A listing broker has a written agreement with a transaction coordinator for a particular deal. What does the rule require?

21. A consumer signs a written agreement for transaction broker services. That consumer is:

22. Unless the agreement says otherwise, how often must a property manager give the owner a report of receipts and disbursements?

23. After a management agreement terminates, the brokerage must give the owner a final accounting of trust funds within:

24. Before offering property management services, a brokerage must:

25. A grateful buyer offers associate broker Mia a $300 gift card for her work on a closed deal. Under the rules, Mia may accept compensation only from:

Sources