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CT Real Estate practice questions

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Question 1Agency, Fiduciary Duties, and Brokerage Relationships

Which of these is a fiduciary duty that a Connecticut real estate agent owes to a client?

  1. Guaranteeing that the property will appraise at the contract price
  2. Obtaining a mortgage commitment for the client
  3. Setting a price the client must accept
  4. Loyalty Correct answer.

Explanation

Connecticut law identifies the duties an agent owes a client as loyalty, obedience, disclosure, confidentiality, reasonable care and diligence, and accounting. An agent must exercise skill and care but does not guarantee results such as appraisal value or loan approval.

Question 2Agency, Fiduciary Duties, and Brokerage Relationships

Under Connecticut's agency disclosure requirements, when should a licensee give the written agency disclosure notice to a prospective buyer or seller?

  1. At the first meeting, before private information is shared Correct answer.
  2. At the closing table, before the deed is recorded
  3. Only after the consumer signs a listing or buyer agency agreement
  4. Within thirty days after the first showing of a property

Explanation

Connecticut requires the agency disclosure notice to be delivered early, at the first meeting, so the consumer understands whom the licensee represents before revealing financial or personal details. The consumer's acknowledgment of the notice is obtained in writing.

Question 3Agency, Fiduciary Duties, and Brokerage Relationships

A licensee wants to act as a dual agent for both the buyer and the seller in the same transaction. What does Connecticut law require?

  1. Consent from the seller only, since the seller pays the commission
  2. A separate escrow account for each party's funds
  3. The informed written consent of both the buyer and the seller Correct answer.
  4. Approval from the Connecticut Real Estate Commission

Explanation

Dual agency limits what the agent can do for each client, so both parties must knowingly consent in writing before the relationship is formed. Without that consent the licensee may not represent both sides.

Question 4Agency, Fiduciary Duties, and Brokerage Relationships

A salesperson affiliated with a brokerage closes a transaction, and the buyer writes the commission check to the salesperson personally. Who is legally entitled to that commission?

  1. The seller, who may direct the payment as she chooses
  2. The buyer's lender, which must approve all disbursements
  3. The salesperson, because she performed the work
  4. The broker with whom the salesperson is affiliated Correct answer.

Explanation

A salesperson is licensed under a broker and may not accept compensation for brokerage services directly from a member of the public. Commissions are earned by and payable to the broker, who then compensates the salesperson under their arrangement.

Question 5Agency, Fiduciary Duties, and Brokerage Relationships

A seller tells her listing agent that she is being transferred out of state and must sell quickly, and she asks him not to repeat this. How should the agent treat this information?

  1. He may share it with the buyer's agent but not with the buyer
  2. He should keep it confidential as the seller's bargaining position Correct answer.
  3. He must tell any buyer who asks why the seller is moving
  4. He must put it in the property condition disclosure report

Explanation

A client's motivation, financial situation, and bargaining position are confidential information that the agent may not reveal without the client's permission. Only material facts about the physical condition of the property fall outside that protection.

Question 6Agency, Fiduciary Duties, and Brokerage Relationships

A firm that has a listing agreement with a seller also agrees to represent a buyer in the same transaction. The broker assigns one salesperson to work only for the seller and another to work only for the buyer. This arrangement is:

  1. Designated agency, permitted in Connecticut with written consent Correct answer.
  2. Prohibited, because one firm may never serve both sides of a transaction
  3. Subagency, because the buyer's salesperson works for the seller's broker
  4. A transaction brokerage, because no agency relationship exists

Explanation

Designated agency lets a single firm serve both sides while each individual licensee owes full duties to only one client. The parties must consent in writing for the arrangement to be lawful.

Question 7Agency, Fiduciary Duties, and Brokerage Relationships

A buyer calls the listing agent directly and asks for a private showing of the agent's listing. No written agreement has been signed. Whose agent is the licensee in this situation?

  1. The buyer's, because the licensee is providing a service to the buyer
  2. The seller's, because of the firm's listing agreement Correct answer.
  3. Both parties', because the licensee is dealing with each of them
  4. Neither party's, until a purchase contract is signed

Explanation

The agency relationship follows the listing agreement, so the licensee represents the seller. The unrepresented buyer is a customer who is owed honesty and fair dealing but not the full fiduciary duties owed to a client.

Question 8Agency, Fiduciary Duties, and Brokerage Relationships

An unrepresented buyer is shown a home by the seller's agent. In Connecticut, the buyer is best described as:

  1. A subagent of the brokerage
  2. A customer of the brokerage Correct answer.
  3. A principal of the brokerage
  4. A client of the brokerage

Explanation

A consumer who is not represented by the brokerage is a customer. The licensee owes the customer honesty and fair dealing but not the fiduciary duties of loyalty, obedience, and confidentiality owed to a client.

Question 9Agency, Fiduciary Duties, and Brokerage Relationships

A salesperson would like to buy a property that is listed by her own brokerage. Under the duty of loyalty, she may purchase it only if she:

  1. pays at least the price shown in the listing
  2. asks a licensee at another firm to write the offer
  3. waits until the listing agreement has expired, with no other steps
  4. discloses her interest and gets the client's written consent Correct answer.

Explanation

An agent may not buy the client's property or otherwise acquire a personal interest in it without full disclosure and the client's informed consent. Paying list price or using another firm does not cure the undisclosed conflict of interest.

Question 10Agency, Fiduciary Duties, and Brokerage Relationships

A buyer hands her salesperson a $5,000 earnest money check payable to the listing broker. What should the salesperson do?

  1. Hold the check in the office file until the closing date
  2. Endorse the check over to the seller when the offer is accepted
  3. Deposit the check into her personal business account for safekeeping
  4. Give the check to her broker for deposit in escrow Correct answer.

Explanation

Earnest money belongs to others and must be turned over to the broker for deposit into the broker's escrow or trust account as the contract directs. Commingling trust funds with personal funds is prohibited.

Question 11Agency, Fiduciary Duties, and Brokerage Relationships

The seller's agent knows the roof has leaked for two years. A buyer touring the home asks the agent point-blank whether the roof leaks. What should the agent do?

  1. Say the roof is fine, because the agent's duty of loyalty requires protecting the seller's position
  2. Decline to answer and tell the buyer to rely on an inspection
  3. Answer honestly, because physical defects are not confidential Correct answer.
  4. Refer the buyer's question to the seller's attorney and say nothing further

Explanation

Material facts about the physical condition of the property are not confidential information, so the agent may not conceal them or give a false answer. Loyalty to the seller never authorizes misrepresentation to a buyer.

Question 12Agency, Fiduciary Duties, and Brokerage Relationships

A buyer's agent intends to accept a commission paid by the seller through the listing broker. In Connecticut, this is:

  1. Permitted only if the buyer's agent also represents the seller
  2. Prohibited, because a buyer's agent may only be paid by the buyer
  3. Permitted, if the buyer is informed and agrees to it Correct answer.
  4. Prohibited unless the two brokers work for the same firm

Explanation

Compensation may come from either side of the transaction as long as the buyer's agent discloses the arrangement and the buyer consents. The source of payment does not by itself change whom the agent represents.

Question 13Agency, Fiduciary Duties, and Brokerage Relationships

How is the commission a Connecticut broker charges for listing a home determined?

  1. It is set by the Connecticut Real Estate Commission
  2. It is set by the local board of REALTORS®
  3. It is negotiated between the broker and the client Correct answer.
  4. It is fixed by state statute at six percent

Explanation

Commission rates are negotiable between the broker and the client and must be stated in the listing agreement. Neither the state nor any trade association sets brokerage fees.

Question 14Agency, Fiduciary Duties, and Brokerage Relationships

A licensee hands a brochure to an unrepresented buyer, answers general questions about a listing, and arranges a showing. What effect do these acts have on the agency relationship?

  1. They create dual agency, because the licensee also represents the seller
  2. They create an implied buyer agency that lasts through closing
  3. They create a subagency relationship with the listing broker
  4. They do not by themselves create an agency with the buyer Correct answer.

Explanation

Routine services such as providing information, answering questions, and arranging showings are ministerial acts. They do not establish an agency relationship, which requires the parties' agreement to representation.

Question 15Agency, Fiduciary Duties, and Brokerage Relationships

A written listing agreement states that it ends on December 31. What happens to the agency relationship on that date?

  1. It terminates according to the terms of the agreement Correct answer.
  2. It continues automatically for another year unless the seller objects
  3. It converts into an exclusive agency agreement
  4. It continues until the property is sold or the seller dies

Explanation

An agency created for a definite term ends when that term expires, unless the parties agree in writing to extend it. Expiration by its own terms is one of the standard ways an agency relationship terminates.

Question 16Agency, Fiduciary Duties, and Brokerage Relationships

Which action by a dual agent would breach the duty owed to both clients?

  1. Telling the buyer the lowest price the seller would accept Correct answer.
  2. Explaining the terms of the buyer's offer to the seller
  3. Delivering each party's offer to the other party promptly
  4. Giving the seller's property condition disclosure report to the buyer

Explanation

A dual agent may not use one client's confidential bargaining position to advantage the other. Activities that merely transmit or explain information between the parties are proper.

Question 17Agency, Fiduciary Duties, and Brokerage Relationships

A licensee who has a listing agreement privately agrees to represent the buyer in the same transaction but tells neither party. What is the legal effect?

  1. The licensee's only obligation is to notify the broker at closing
  2. There is no violation as long as the licensee does not take a fee from the buyer
  3. The licensee has violated the disclosure law and the duty of loyalty Correct answer.
  4. The licensee has created a valid designated agency by law

Explanation

Undisclosed dual agency violates the statutory disclosure requirement and the fiduciary duty of loyalty, because neither client can give informed consent to the conflicting representation. It is grounds for disciplinary action and can jeopardize the commission.

Question 18Agency, Fiduciary Duties, and Brokerage Relationships

A seller signs an exclusive right-to-sell listing. During the listing period the seller personally finds a buyer without any help from the broker. What is the seller's obligation?

  1. The broker is owed the agreed commission under the listing Correct answer.
  2. Nothing is owed, because the broker did not procure the buyer
  3. Half the commission is owed, because the broker and seller share credit
  4. Only a small administrative fee is owed

Explanation

Under an exclusive right to sell, the broker earns the commission if the property sells during the listing term, no matter who produced the buyer, including the seller. An exclusive agency listing is the form that would excuse a seller-produced sale.

Question 19Agency, Fiduciary Duties, and Brokerage Relationships

Two brokers claim the commission on the same sale. A court will most likely award it to the broker who:

  1. showed the property first in chronological order
  2. prepared the most marketing material for the property
  3. was the procuring cause of the sale Correct answer.
  4. has held a license for the longer period of time

Explanation

When brokers compete for a commission, courts apply the procuring cause doctrine and look for the broker whose efforts, through an unbroken chain of events, brought about the sale. Being first to show or producing the most marketing is not the test.

Question 20Agency, Fiduciary Duties, and Brokerage Relationships

A buyer agency agreement ended two months ago. A lender now calls the former agent and asks whether the buyer had been preapproved and for how much. What should the agent do?

  1. Answer fully, because the agency relationship has been terminated
  2. Decline to answer, because confidentiality survives termination Correct answer.
  3. Answer only if the buyer is no longer shopping for a home
  4. Answer only if the lender agrees to pay a referral fee

Explanation

The duty of confidentiality continues after the agency relationship ends, so information obtained during the representation remains protected. Disclosure requires the former client's authorization.

Question 21Agency, Fiduciary Duties, and Brokerage Relationships

A Connecticut licensee wants to pay part of her commission to someone who referred a buyer to her. To whom may she legally pay it?

  1. The buyer's employer, as a thank-you for the referral
  2. Another person who holds a real estate broker's license Correct answer.
  3. An unlicensed friend who made the introduction
  4. The buyer's mortgage loan officer

Explanation

Licensees may share commissions only with other properly licensed real estate brokers, and payments to unlicensed persons for brokerage activity are prohibited. Sharing compensation with an unlicensed referral source can result in discipline.

Question 22Agency, Fiduciary Duties, and Brokerage Relationships

Which statement best describes an agent's duty of obedience?

  1. The agent must follow directions given by the buyer during showings
  2. The agent must carry out every instruction the client gives, including unlawful ones
  3. The agent must follow the client's lawful instructions about the sale Correct answer.
  4. The agent must obey the instructions of any cooperating broker

Explanation

Obedience requires the agent to follow the client's lawful instructions concerning the property and the transaction. An agent may not follow instructions to do anything illegal or unethical.

Question 23Agency, Fiduciary Duties, and Brokerage Relationships

A listing agent receives a full-price offer with an unusual financing contingency and a second, lower offer with conventional financing. What must the agent do?

  1. Present the stronger offer and set the other aside
  2. Reject the lower offer without showing it to the seller
  3. Hold both offers until a better one arrives
  4. Present both offers promptly and let the seller decide Correct answer.

Explanation

The agent's duty is to transmit all offers promptly and accurately so the client can decide which to accept, counter, or reject. The agent may offer advice but may not screen out offers the seller has not seen.

Question 24Agency, Fiduciary Duties, and Brokerage Relationships

Which situation creates a dual agency relationship?

  1. Two separate firms each represent one party to the transaction
  2. A salesperson shows a home listed by a different firm
  3. A broker refers a buyer to another brokerage for a referral fee
  4. One licensee represents both the buyer and the seller Correct answer.

Explanation

Dual agency arises when the same licensee or brokerage represents both sides of the same transaction, creating a conflict that requires informed written consent from both parties. Merely referring a buyer or showing another firm's listing does not create that conflict.

Question 25Agency, Fiduciary Duties, and Brokerage Relationships

While touring a listing, a buyer tells the seller's agent, "I would pay well above the asking price for this house." What may the agent do with that information?

  1. Keep it secret, because anything a buyer says to a licensee is confidential
  2. Repeat it to the seller, because the buyer is a customer, not a client Correct answer.
  3. Repeat it only if the buyer signs a buyer agency agreement
  4. Repeat it only after the buyer's written offer is submitted

Explanation

Confidentiality is a fiduciary duty owed to clients, and the buyer here is only a customer of the seller's agent. Information a customer volunteers is not protected, and the agent owes the seller full disclosure of material information affecting the transaction.

Question 26Agency, Fiduciary Duties, and Brokerage Relationships

Which action creates an agency relationship between a Connecticut broker and a seller?

  1. The broker hosts an open house at the property for the public.
  2. The broker mails the seller a copy of the agency disclosure notice.
  3. The broker advertises the property on the MLS.
  4. The broker and seller sign a written listing agreement. Correct answer.

Explanation

Agency arises from a mutual agreement - express or implied - that the broker will act on the principal's behalf. Connecticut also requires listing agreements to be in writing and signed before a broker may collect compensation. Advertising, mailing a disclosure form, or holding an open house does not by itself create the relationship.

Question 27Agency, Fiduciary Duties, and Brokerage Relationships

When must a Connecticut licensee deliver the agency disclosure notice to a prospective buyer or seller?

  1. Only when a written representation agreement is signed.
  2. At the time an offer is presented to the seller.
  3. At the closing, as part of the settlement documents.
  4. At the first personal contact, before substantive discussion of the transaction. Correct answer.

Explanation

Connecticut requires the agency disclosure notice at the first personal contact so consumers know whom the licensee represents before they share confidential information. The notice explains brokerage relationships; it is not itself a contract of representation.

Question 28Agency, Fiduciary Duties, and Brokerage Relationships

A broker receives a buyer's deposit check on a sale scheduled to close in 60 days. Where should the funds be held?

  1. In a separate escrow or trust account maintained for client funds. Correct answer.
  2. In the salesperson's personal account until closing.
  3. In the broker's general business operating account.
  4. With the seller's attorney, because the seller will receive them at closing.

Explanation

The fiduciary duty of accounting requires a broker to hold client money in a dedicated escrow or trust account and to keep records of it. Commingling client funds with the broker's own business money is prohibited.

Question 29Agency, Fiduciary Duties, and Brokerage Relationships

During a listing appointment, a seller tells her agent, "Between us, I would accept $25,000 below list if a solid offer comes in soon." A buyer later asks the agent whether the seller is flexible. What should the agent do?

  1. Keep it confidential unless the seller permits disclosure. Correct answer.
  2. Tell the buyer only after the seller rejects a full-price offer.
  3. Tell the buyer the exact figure so the transaction can move forward.
  4. Tell the buyer only that the seller is flexible, without giving numbers.

Explanation

Information a client discloses about negotiating position is confidential, and the duty of loyalty bars the agent from using it against the client. The agent may not reveal it to a buyer, or hint at it, without the seller's authorization.

Question 30Agency, Fiduciary Duties, and Brokerage Relationships

A buyer signs an exclusive buyer representation agreement running through June 30. In May she buys a for-sale-by-owner home without involving her agent. What is the likely result?

  1. The broker may collect compensation only from the seller.
  2. The agreement is void because the seller was unrepresented.
  3. She owes nothing because the agent did not find the property.
  4. She may still owe the broker the agreed compensation. Correct answer.

Explanation

Under an exclusive buyer representation agreement, the buyer owes the broker the agreed compensation for a covered purchase made during the term, even if the broker did not locate the property. Whether the seller is represented has no bearing on the buyer's contractual obligation.

Question 31Agency, Fiduciary Duties, and Brokerage Relationships

A seller instructs his listing agent not to show the home to buyers with young children. How should the agent respond?

  1. Follow the instruction because obedience requires carrying out all client directions.
  2. Follow it but note the instruction in the private listing remarks.
  3. Refer the matter to the buyer's agent to resolve.
  4. Refuse, because the duty of obedience extends only to lawful instructions. Correct answer.

Explanation

The duty of obedience obligates an agent to follow a client's lawful directions, but never requires conduct that violates the law. Excluding buyers because of familial status violates fair housing law, so the agent must decline and should advise the seller of the legal exposure.

Question 32Agency, Fiduciary Duties, and Brokerage Relationships

A brokerage holds a listing on Elm Street and also signs a written buyer representation agreement with a buyer who wants that same home, with both parties' written informed consent. The broker assigns one salesperson to the seller and a different salesperson to the buyer. Which statement is accurate?

  1. Both salespersons become dual agents and must remain neutral with both parties.
  2. The buyer's agent must disclose the buyer's top price to the seller to keep the deal fair.
  3. Each salesperson may advocate for her own client; the broker is a dual agent. Correct answer.
  4. No agency relationship exists with either party once the same firm represents both.

Explanation

With informed written consent, the brokerage becomes a dual agent while each assigned salesperson functions as a designated agent owing full fiduciary duties to only one client. Designated agency preserves advocacy for each client even though the firm itself is neutral.

Question 33Agency, Fiduciary Duties, and Brokerage Relationships

A homeowner with an active exclusive listing dies unexpectedly. What happens to the listing agreement?

  1. It continues until the stated expiration date, but only for cash offers.
  2. It terminates by operation of law, and the broker's authority ends. Correct answer.
  3. It converts automatically to an open listing held by the estate.
  4. It continues in force and binds the heirs to complete the sale.

Explanation

Agency relationships terminate by operation of law when the principal dies or becomes incapacitated, so the broker's authority to act for the seller ends. The estate or heirs must enter a new agreement before the broker can continue marketing the property.

Question 34Agency, Fiduciary Duties, and Brokerage Relationships

A Connecticut salesperson closes a sale, and the seller wants to hand the commission check directly to the salesperson. How must the compensation be handled?

  1. It must be paid to and through the salesperson's employing broker. Correct answer.
  2. It must be paid to the salesperson's team leader, who then pays the broker.
  3. It may be paid partly to the salesperson and partly to the broker, at the seller's choice.
  4. It may be paid directly to the salesperson if the seller signs a receipt.

Explanation

A salesperson is licensed under a broker and may not accept compensation directly from a client for brokerage activity. The commission is paid to the employing broker, who then pays the salesperson under their independent contractor agreement.

Question 35Contracts and Contract Law

A buyer and seller orally agree on a price for a Connecticut house. Which requirement must an enforceable sale contract satisfy?

  1. It must be notarized before either party signs it.
  2. It must be written and signed by the party to be charged. Correct answer.
  3. It must be recorded in the town land records to be valid.
  4. It must include a lawyer's written approval of the price.

Explanation

Connecticut's Statute of Frauds requires a contract for the sale of land to be in writing and signed by the party against whom enforcement is sought. Notarization, recording, and attorney approval are not general validity requirements for the sale contract itself.

Question 36Contracts and Contract Law

Which set of terms is generally required to form a valid real estate contract?

  1. A price, a title search, and a closing date
  2. An offer, an acceptance, and consideration Correct answer.
  3. A survey, an appraisal, and a lender commitment
  4. A listing agreement, a deposit, and a deed

Explanation

A valid contract generally requires mutual assent, usually shown by offer and acceptance, plus consideration. Surveys, appraisals, title searches, and lender commitments are performance or financing steps, not universal formation elements.

Question 37Contracts and Contract Law

A seller receives a buyer's offer and responds with a higher price and a later closing date. What is the legal effect of the seller's response?

  1. It is a counteroffer that terminates the buyer's original offer. Correct answer.
  2. It creates a binding contract unless the buyer objects within three days.
  3. It is an invitation to negotiate that leaves the original offer open.
  4. It accepts the buyer's offer while changing only minor terms.

Explanation

A response that changes material terms such as price or closing date is not an acceptance; it is a counteroffer. A counteroffer generally operates as a rejection of the original offer.

Question 38Contracts and Contract Law

A 17-year-old signs a contract to buy a Connecticut condominium without a parent or guardian. What is the general contract-law result?

  1. The contract is fully enforceable against the minor like an adult contract.
  2. The contract becomes enforceable only after the minor turns 18.
  3. The contract is void because minors cannot sign any real estate document.
  4. The contract is voidable by the minor in most circumstances. Correct answer.

Explanation

Minors generally lack contractual capacity, so a contract signed by a minor is usually voidable at the minor's election. It is not automatically void, and adulthood does not always ratify it without further action.

Question 39Contracts and Contract Law

A real estate contract contains an integration clause. What does that clause generally do?

  1. It automatically extends the financing contingency deadline.
  2. It states that the written contract is the complete agreement. Correct answer.
  3. It allows either party to cancel for any reason before closing.
  4. It requires the seller to provide a warranty deed at closing.

Explanation

An integration, or merger, clause says the written contract is the final and complete expression of the parties' agreement. It supports the parol evidence rule by limiting reliance on prior or contemporaneous oral terms.

Question 40Contracts and Contract Law

A purchase contract includes a financing contingency. What protection does it generally give the buyer?

  1. It transfers the seller's mortgage to the buyer at closing.
  2. It guarantees the buyer will receive a loan at the stated rate.
  3. It lets the buyer cancel and recover the deposit if financing is denied. Correct answer.
  4. It requires the seller to pay the buyer's loan fees.

Explanation

A financing contingency makes the buyer's obligation to close conditional on obtaining the specified financing. If the buyer cannot obtain financing despite reasonable efforts, the contingency may allow cancellation and return of the deposit.

Question 41Contracts and Contract Law

What is the usual effect of rescinding a real estate contract?

  1. The seller keeps all payments as liquidated damages.
  2. The contract is reformed to match the parties' oral understanding.
  3. The buyer keeps the property but pays no further consideration.
  4. The parties are returned to their positions before the contract. Correct answer.

Explanation

Rescission unwinds the contract and seeks to restore the parties to their pre-contract positions. It is different from reformation, which rewrites a contract to reflect the parties' actual agreement.

Question 42Contracts and Contract Law

Under Connecticut's electronic signature law, how is an electronic signature treated for most real estate contracts?

  1. It is invalid unless a paper copy is signed within 24 hours.
  2. It generally has the same effect as a handwritten signature. Correct answer.
  3. It is valid only for leases, not purchases.
  4. It is valid only if a notary witnesses the keystroke.

Explanation

Connecticut's Uniform Electronic Transactions Act generally gives electronic signatures the same legal effect as handwritten signatures for transactions within its scope. A separate paper copy or notarized keystroke is not generally required.

Question 43Contracts and Contract Law

A buyer mails a signed offer to purchase. The seller signs it but adds a handwritten term requiring the buyer to pay an extra $5,000 at closing. The buyer does not respond. What is the most likely result?

  1. A contract exists because the seller signed the original document.
  2. The buyer's silence accepts the seller's added term.
  3. The seller's response is a counteroffer, so no contract was formed. Correct answer.
  4. A contract exists because the added term is a minor detail.

Explanation

An acceptance must be unequivocal and must not impose new material terms. Adding a $5,000 payment obligation is a material change, so the seller's response is a counteroffer and the buyer's silence does not accept it.

Question 44Contracts and Contract Law

A seller signs a below-market contract after the buyer threatens to report the seller to immigration authorities unless the seller signs. What is the contract's status?

  1. It is enforceable because the seller signed voluntarily.
  2. It is voidable by the seller because of duress. Correct answer.
  3. It is void automatically and cannot be ratified.
  4. It is enforceable only if the buyer paid fair market value.

Explanation

A contract induced by an improper threat that leaves the party with no reasonable alternative is voidable by the victim because of duress. The victim may choose to rescind rather than be bound.

Question 45Contracts and Contract Law

A seller knowingly tells a buyer that the basement has never leaked, although the seller knows it floods. The buyer relies on this statement and buys the home. What remedy is most likely available?

  1. Rescission or damages for fraudulent misrepresentation. Correct answer.
  2. Specific performance forcing the buyer to complete the purchase.
  3. No remedy, because the buyer should have inspected the basement.
  4. A price reduction limited to the cost of a new sump pump.

Explanation

A knowing false statement of material fact that induces reliance can support a claim for fraudulent misrepresentation. The buyer may seek rescission or damages, depending on the circumstances.

Question 46Contracts and Contract Law

A contract states that closing occurs only after the buyer obtains a satisfactory home inspection. What is this provision?

  1. A covenant that requires the seller to repair all defects.
  2. A condition subsequent that ends an existing duty.
  3. A condition precedent to the buyer's duty to close. Correct answer.
  4. A warranty that the home is free of latent defects.

Explanation

A condition precedent is an event that must occur before a party's duty to perform becomes enforceable. Here, the satisfactory inspection must occur before the buyer is obligated to close.

Question 47Contracts and Contract Law

A contract says "time is of the essence" and sets a firm closing date. A buyer misses the date without a legal excuse. What is the likely consequence?

  1. The contract becomes unenforceable for indefiniteness.
  2. The seller must return the deposit regardless of the breach.
  3. The closing date is automatically extended by 30 days.
  4. The buyer may be in material breach of the contract. Correct answer.

Explanation

A time-is-of-the-essence clause makes the stated deadlines material, so an unexcused failure to close on time can be a material breach. The clause does not automatically extend the date or make the contract indefinite.

Question 48Contracts and Contract Law

In Connecticut, how must a real estate broker generally handle a buyer's earnest money deposit?

  1. Hold it in a designated trust or escrow account. Correct answer.
  2. Give it to the seller immediately upon acceptance.
  3. Deposit it into the broker's general business account.
  4. Use it to pay the broker's commission at signing.

Explanation

Connecticut law requires real estate brokers who receive funds such as earnest money deposits to hold them in a trust or escrow account. Commingling with the broker's general business funds is not permitted.

Question 49Contracts and Contract Law

A purchase contract says the buyer may assign the contract. The buyer assigns it to a third party before closing. What is the usual effect?

  1. The assignment is invalid unless the seller signs a new deed.
  2. The assignee steps into the buyer's rights, subject to contract terms. Correct answer.
  3. The original buyer is automatically released from all obligations.
  4. The seller may cancel the contract solely because of the assignment.

Explanation

An assignment transfers the assignor's rights under the contract to the assignee. The assignee takes those rights subject to the contract's terms, and the original buyer may remain liable unless a novation releases the buyer.

Question 50Contracts and Contract Law

A fully integrated written real estate contract is clear about the purchase price. One party later offers evidence of an earlier oral agreement for a lower price. What does the parol evidence rule generally do?

  1. It bars using the prior oral agreement to contradict the writing. Correct answer.
  2. It automatically voids the written contract.
  3. It allows oral evidence only if a broker witnessed it.
  4. It requires the court to consider all prior negotiations.

Explanation

When a written contract is intended as a complete integration, the parol evidence rule generally prevents a party from using prior or contemporaneous oral agreements to contradict its terms. The written price term controls over the conflicting oral term.