Free South Carolina Contracts Practice Test — LicenseIQ

Question 1

A licensee releases earnest money to the seller in a way the contract does not authorize. Under §40-57-136 this is considered:

Accepted Answer

Section 40-57-136 treats disbursing trust funds contrary to the contract as incompetence. Being right about the outcome does not cure acting without authority.

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

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 4

Absent a contract provision allocating it, who is primarily liable for South Carolina's deed recording fee?

Accepted Answer

Section 12-24-20 makes the grantor primarily liable and the grantee secondarily liable, with exceptions such as deeds from a master-in-equity or a government.

Question 5

When a seller rejects an offer, the licensee must deliver a Commission-promulgated rejection form to the offeror within:

Accepted Answer

Section 40-57-135(I)(5) requires the rejection form within 48 hours of the rejection.

Question 6

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 7

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 8

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 9

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 10

Buyer and seller each demand the earnest money after a failed contract. The BIC must hold the funds until the dispute is resolved by any of the following EXCEPT:

Accepted Answer

Section 40-57-136(E) lists a written agreement, interpleader, court order, or voluntary mediation. A licensee's own determination is not a way to release disputed funds.

Question 11

A firm asks homeowners to sign a 25-year residential agreement that runs with the land and creates a lien on the property. Under South Carolina law, the agreement is:

Accepted Answer

Section 40-57-135(I)(9) makes residential agreements longer than one year that run with the land, allow assignment without notice, or create liens unenforceable and bad faith. A 2025 case involving a 40-year listing contract ended in permanent revocation.

Question 12

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 13

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 14

The sales contract names the closing attorney as the escrow agent for the earnest money. The buyer gives the check to the associate. Which statement is correct?

Accepted Answer

Section 40-57-136(H) keeps the licensee responsible for timely, proper delivery to the trust fund agent named in the contract when funds are held outside the firm.

Question 15

An associate is selling his own house without listing it. On the purchase contract, his license status must appear:

Accepted Answer

Section 40-57-135(F)(1) requires disclosure of license status on the first page of the contract in bold, underlined capital letters, as well as at first substantive contact and in advertising.

Question 16

How long must a South Carolina brokerage keep listing agreements, sales contracts, and residential disclosure forms?

Accepted Answer

Section 40-57-135(D) requires these records to be kept for five years. Electronic storage is permitted with an off-site backup.

Question 17

An owner fails to deliver the disclosure statement before contract. Under §27-50-50(B), the failure:

Accepted Answer

Section 27-50-50(B) says failure to deliver does not invalidate the agreement, create a title defect, or delay closing. The buyer's remedy for a knowing violation is damages under §27-50-65.

Question 18

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 19

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 20

Under §40-57-370(B), every South Carolina sales contract must:

Accepted Answer

Section 40-57-370(B) requires the sales contract to record whether each party received customer or client services, and agency agreements must acknowledge receipt of the disclosure.

Question 21

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 22

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 23

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 24

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 25

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.

South Carolina real estate contracts practice test

1. A licensee releases earnest money to the seller in a way the contract does not authorize. Under §40-57-136 this is considered:

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

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

4. Absent a contract provision allocating it, who is primarily liable for South Carolina's deed recording fee?

5. When a seller rejects an offer, the licensee must deliver a Commission-promulgated rejection form to the offeror within:

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

7. 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?

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

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

10. Buyer and seller each demand the earnest money after a failed contract. The BIC must hold the funds until the dispute is resolved by any of the following EXCEPT:

11. A firm asks homeowners to sign a 25-year residential agreement that runs with the land and creates a lien on the property. Under South Carolina law, the agreement is:

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

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

14. The sales contract names the closing attorney as the escrow agent for the earnest money. The buyer gives the check to the associate. Which statement is correct?

15. An associate is selling his own house without listing it. On the purchase contract, his license status must appear:

16. How long must a South Carolina brokerage keep listing agreements, sales contracts, and residential disclosure forms?

17. An owner fails to deliver the disclosure statement before contract. Under §27-50-50(B), the failure:

18. 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) .

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

20. Under §40-57-370(B), every South Carolina sales contract must:

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

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

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

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

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

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