Free Vermont Contracts Practice Test — LicenseIQ

Question 1

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 2

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 3

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 4

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 5

A licensee offers an unlicensed friend $300 for each listing lead the friend negotiates. Under Rule 4.13, this is:

Accepted Answer

Rule 4.13(a) bars paying unlicensed persons, directly or indirectly, for brokerage services. Written referral agreements apply only to referrals to and from licensed firms.

Question 6

A landlord with no written rental agreement has contracted to sell the building. What minimum notice may the landlord give a tenant to terminate?

Accepted Answer

Section 4467 allows at least 30 days' notice when there is no written agreement and the landlord has contracted to sell the building. Without the sale, a no-cause termination would require 60 or 90 days.

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

Under 27 V.S.A. §380, which item must a seller disclose to a buyer before or as part of the sale contract?

Accepted Answer

Section 380 requires the FEMA flood map (or notice that none exists), flooding or flood damage during the seller's ownership, and whether the seller carries or is required to carry flood insurance. It does not require town-wide history or an engineer's certificate.

Question 9

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 10

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 11

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 12

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 13

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 14

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 15

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 16

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 17

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 18

A deposit sits in an individual interest-bearing account and the buyer defaults. Absent a different written agreement, who receives the interest?

Accepted Answer

Section 2214(b) gives interest to the buyer if the sale closes or the deposit is returned, and to the seller if the buyer defaults, unless the parties agree otherwise in writing. VHFA receives only pooled-account interest.

Question 19

Under a cooperation agreement between a listing firm and another firm, the cooperating firm is the agent of:

Accepted Answer

Rule 4.11(b) states that the cooperating firm is the agent of the principal firm, not of the buyer or seller, which is called broker agency. MLS participation agreements count as cooperation agreements (Rule 4.11(e)).

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

Under which seller agreement does the owner owe the firm a commission even if the owner finds the buyer?

Accepted Answer

Rule 1.8(l) defines the exclusive right to market agreement as the one where the owner owes compensation even on the owner's own sale. Under the exclusive agency marketing agreement, the owner keeps the right to sell commission-free.

Question 22

Before a Vermont firm provides brokerage services to a seller client, it must have:

Accepted Answer

Rule 4.8(a) requires a written seller service, buyer service or cooperation agreement before any brokerage services. The Mandatory Consumer Disclosure does not create agency.

Question 23

A listing agreement states that it renews automatically for another year unless the seller cancels in writing. This clause is:

Accepted Answer

Rule 4.8(b) prohibits automatic extensions or renewals of brokerage service agreements. Bold type does not cure a prohibited term.

Question 24

A buyer signs an agreement to use only one firm but keeps the right to buy a property found on her own without owing a fee. This is:

Accepted Answer

Rule 1.8(k) describes the exclusive buyer agency agreement: one firm only, but no fee if the buyer buys on her own. Under the exclusive right to represent buyer agreement, the fee is owed even if the buyer finds the property herself.

Question 25

What is the longest term a Vermont brokerage service agreement may have?

Accepted Answer

Rule 4.8(b) requires a specific expiration date no more than one year from the effective date. Longer terms require a new signed agreement.

Vermont real estate contracts practice test

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

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

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

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

5. A licensee offers an unlicensed friend $300 for each listing lead the friend negotiates. Under Rule 4.13, this is:

6. A landlord with no written rental agreement has contracted to sell the building. What minimum notice may the landlord give a tenant to terminate?

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

8. Under 27 V.S.A. §380, which item must a seller disclose to a buyer before or as part of the sale contract?

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

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

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

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

13. 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) .

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

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

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

17. 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:

18. A deposit sits in an individual interest-bearing account and the buyer defaults. Absent a different written agreement, who receives the interest?

19. Under a cooperation agreement between a listing firm and another firm, the cooperating firm is the agent of:

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

21. Under which seller agreement does the owner owe the firm a commission even if the owner finds the buyer?

22. Before a Vermont firm provides brokerage services to a seller client, it must have:

23. A listing agreement states that it renews automatically for another year unless the seller cancels in writing. This clause is:

24. A buyer signs an agreement to use only one firm but keeps the right to buy a property found on her own without owing a fee. This is:

25. What is the longest term a Vermont brokerage service agreement may have?

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