Free Rhode Island Contracts Practice Test — LicenseIQ

Question 1

A seller is scheduled to sign a P&S at noon. At 10 a.m. a second written offer arrives. What must the listing licensee do?

Accepted Answer

Licensees must present all written offers to the owner before the owner signs a purchase and sale agreement.

Question 2

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 3

A brokerage offers entry into a drawing for a free car to anyone who signs a purchase agreement. What does Rhode Island law say?

Accepted Answer

The use of free lots, lotteries, contests, or prizes to influence a purchaser is a ground for discipline.

Question 4

A resale buyer receives the resale certificate on April 8, with closing set for May 15. Until when may the buyer void the contract?

Accepted Answer

The contract is voidable until the certificate is provided and for five days afterward, or until conveyance, whichever comes first: April 8 + 5 = April 13.

Question 5

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 6

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 7

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 8

After dual facilitation begins, the seller asks the licensee to prepare a new CMA to help evaluate the buyer's offer. What should the licensee do?

Accepted Answer

Once dual facilitation arises, the licensee may not prepare a CMA for either party. A CMA prepared earlier for one party may be shared with the other only with that party's consent.

Question 9

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 10

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 11

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 12

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.

Question 13

A listing agreement in which the broker earns a commission regardless of who sells the property is a(n):

Accepted Answer

In an exclusive right-to-sell listing, the listing broker earns a commission no matter who procures the buyer, even the owner. (Reclassified to section 6 / CORE.)

Question 14

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 15

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 16

Absent a written agreement otherwise, who pays for private well water testing under §5-20.8-12?

Accepted Answer

The purchaser pays for sampling, analysis, and the potability opinion unless the parties agree otherwise in writing.

Question 17

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 18

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 19

Absent an agreement to the contrary, to whom does interest on a Rhode Island escrow account accrue?

Accepted Answer

Rule 2.18 provides that interest accrues to the licensee unless the parties agree otherwise. Many candidates assume it goes to the buyer.

Question 20

Under a land contract (contract for deed), during the payment period the buyer holds:

Accepted Answer

In an installment/land contract the buyer has equitable title and possession; the seller keeps legal title until the final payment.

Question 21

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 22

A listing agent receives an offer from buyers who have not yet received the seller's disclosure. What should the agent do?

Accepted Answer

The agent may not communicate the buyer's offer until the buyer has received the disclosure and signed a receipt.

Question 23

How long does a Rhode Island purchase contract have to give a buyer to test a private well, unless the parties agree otherwise?

Accepted Answer

Section 5-20.8-12 requires a ten-day testing period, which the parties may change by mutual agreement.

Question 24

Absent an agreement otherwise, who pays the Rhode Island realty conveyance tax?

Accepted Answer

The tax is paid by the grantor, assignor, or transferor unless the parties agree otherwise.

Question 25

Absent a written agreement to the contrary, how soon must a principal broker pay a commission owed to an affiliated licensee after receiving it?

Accepted Answer

Rule 2.21 requires payment within ten calendar days of the principal broker's receipt, unless otherwise agreed in writing. Thirty days is the deadline for a termination accounting.

Rhode Island real estate contracts practice test

1. A seller is scheduled to sign a P&S at noon. At 10 a.m. a second written offer arrives. What must the listing licensee do?

2. 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?

3. A brokerage offers entry into a drawing for a free car to anyone who signs a purchase agreement. What does Rhode Island law say?

4. A resale buyer receives the resale certificate on April 8, with closing set for May 15. Until when may the buyer void the contract?

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

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

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

8. After dual facilitation begins, the seller asks the licensee to prepare a new CMA to help evaluate the buyer's offer. What should the licensee do?

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

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

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

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

13. A listing agreement in which the broker earns a commission regardless of who sells the property is a(n):

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

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

16. Absent a written agreement otherwise, who pays for private well water testing under §5-20.8-12?

17. 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:

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

19. Absent an agreement to the contrary, to whom does interest on a Rhode Island escrow account accrue?

20. Under a land contract (contract for deed), during the payment period the buyer holds:

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

22. A listing agent receives an offer from buyers who have not yet received the seller's disclosure. What should the agent do?

23. How long does a Rhode Island purchase contract have to give a buyer to test a private well, unless the parties agree otherwise?

24. Absent an agreement otherwise, who pays the Rhode Island realty conveyance tax?

25. Absent a written agreement to the contrary, how soon must a principal broker pay a commission owed to an affiliated licensee after receiving it?

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