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HI Real Estate practice questions

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Question 1Hawaii Real Estate Law, Rules, and Commission Governance

The Hawaii Real Estate Commission is administratively attached to which state department?

  1. Department of Land and Natural Resources
  2. Department of Business, Economic Development, and Tourism
  3. Department of Commerce and Consumer Affairs Correct answer.
  4. Department of Taxation

Explanation

The Real Estate Commission is a professional licensing board placed within the Department of Commerce and Consumer Affairs for administrative purposes, and the Real Estate Branch operates under DCCA's Professional and Vocational Licensing Division.

Question 2Hawaii Real Estate Law, Rules, and Commission Governance

Which chapter of the Hawaii Revised Statutes contains the laws governing real estate brokers and salespersons?

  1. Chapter 436B
  2. Chapter 514B
  3. Chapter 521
  4. Chapter 467 Correct answer.

Explanation

HRS chapter 467 is the real estate license law, setting out licensing qualifications, regulation, and discipline of Hawaii brokers and salespersons.

Question 3Hawaii Real Estate Law, Rules, and Commission Governance

How often must a Hawaii real estate license be renewed?

  1. Every year
  2. Every two years Correct answer.
  3. Every four years
  4. Every three years

Explanation

Hawaii real estate licenses are issued for a two-year license period and must be renewed biennially to remain active.

Question 4Hawaii Real Estate Law, Rules, and Commission Governance

What is the minimum age to qualify for a Hawaii real estate salesperson license?

  1. 19
  2. 18 Correct answer.
  3. 20
  4. 21

Explanation

An applicant must have attained the age of majority, which in Hawaii is 18, before a real estate license may be issued.

Question 5Hawaii Real Estate Law, Rules, and Commission Governance

Who appoints the members of the Hawaii Real Estate Commission?

  1. The Commission chairperson
  2. The Director of Commerce and Consumer Affairs
  3. The Senate President
  4. The Governor Correct answer.

Explanation

Commission members are appointed by the Governor, subject to Senate confirmation, which keeps the board independent of the department that administers it.

Question 6Hawaii Real Estate Law, Rules, and Commission Governance

A Hawaii salesperson license must be associated with which of the following?

  1. The principal broker of the employing firm Correct answer.
  2. An escrow depository company
  3. Any broker licensed in Hawaii
  4. The Real Estate Commission directly

Explanation

A salesperson may act only as an employee or independent contractor of a principal broker, who is responsible for supervising the office and the salesperson's brokerage activity.

Question 7Hawaii Real Estate Law, Rules, and Commission Governance

Who may pay a Hawaii salesperson the salesperson's share of a real estate commission?

  1. The salesperson's principal broker Correct answer.
  2. The buyer directly
  3. The escrow officer at closing
  4. The seller directly

Explanation

A salesperson may be compensated only by the principal broker with whom the license is affiliated; paying or receiving a commission outside that channel is prohibited.

Question 8Hawaii Real Estate Law, Rules, and Commission Governance

Hawaii's mandatory seller disclosure law for residential real property is codified in which chapter of the Hawaii Revised Statutes?

  1. Chapter 521
  2. Chapter 467
  3. Chapter 514B
  4. Chapter 508D Correct answer.

Explanation

HRS chapter 508D requires sellers of most residential real property to deliver a written disclosure statement to the buyer in connection with the sale.

Question 9Hawaii Real Estate Law, Rules, and Commission Governance

In addition to licensed brokers or salespersons, the Hawaii Real Estate Commission must include which of the following?

  1. One representative from each county
  2. Representatives of the escrow industry
  3. Members of the general public Correct answer.
  4. At least one sitting circuit judge

Explanation

The Commission is a mixed board: most seats are held by licensees and the remaining seats are reserved for public members who are not licensed real estate practitioners.

Question 10Hawaii Real Estate Law, Rules, and Commission Governance

Under Hawaii law, a brokerage firm may act as a dual agent in a transaction only if:

  1. the buyer and seller are represented by different salespersons in the same firm
  2. the property is a commercial building
  3. the Commission approves the arrangement in advance
  4. all parties consent in writing Correct answer.

Explanation

Hawaii permits dual agency, but only with the informed written consent of all parties; without that consent the firm may represent only one side of the transaction.

Question 11Hawaii Real Estate Law, Rules, and Commission Governance

Under Hawaii's Residential Landlord-Tenant Code, the maximum security deposit a landlord may generally require for a residential unit is:

  1. Two months' rent
  2. One and one-half months' rent
  3. Three months' rent
  4. One month's rent Correct answer.

Explanation

HRS section 521-44 caps a residential security deposit at one month's rent, limiting the upfront cash a landlord may demand from a tenant.

Question 12Hawaii Real Estate Law, Rules, and Commission Governance

Escrow depositories operating in Hawaii are licensed and regulated by which body?

  1. The Real Estate Commission
  2. The Division of Financial Institutions Correct answer.
  3. The Bureau of Conveyances
  4. The Hawaii Housing Finance and Development Corporation

Explanation

Escrow is regulated as a financial institution activity under HRS chapter 449 by the Division of Financial Institutions within DCCA, not by the Real Estate Commission.

Question 13Hawaii Real Estate Law, Rules, and Commission Governance

A principal broker deposits a buyer's earnest money check into the firm's general operating account to cover payroll, intending to replace it before closing. This conduct is:

  1. acceptable if the broker records the deposit in the ledger
  2. prohibited conversion of trust funds Correct answer.
  3. acceptable if the funds are restored before closing
  4. permissible only for amounts under $1,000

Explanation

Client funds must be held in a trust account and may not be used for the broker's own purposes; using earnest money for operating expenses is conversion even if the broker later repays it.

Question 14Hawaii Real Estate Law, Rules, and Commission Governance

When a Hawaii salesperson advertises a listing, the advertisement must include:

  1. the listing agreement's expiration date
  2. the name of the employing brokerage Correct answer.
  3. the salesperson's home address
  4. the salesperson's personal license number

Explanation

Advertising by a salesperson must identify the brokerage firm so the public knows which principal broker stands behind the advertisement.

Question 15Hawaii Real Estate Law, Rules, and Commission Governance

In Hawaii, performing acts that require a real estate license without holding one is:

  1. an administrative rule violation only
  2. a purely civil matter
  3. a misdemeanor Correct answer.
  4. a class A felony

Explanation

Unlicensed brokerage is a criminal offense under HRS chapter 467, punishable as a misdemeanor by fine, imprisonment, or both, in addition to any administrative action.

Question 16Hawaii Real Estate Law, Rules, and Commission Governance

Operating a business that manages rental property for others for a fee in Hawaii requires:

  1. a real estate broker's license Correct answer.
  2. only a county business license
  3. a condominium managing agent certificate
  4. no license of any kind

Explanation

Renting, leasing, and managing property for others for compensation falls within the statutory definition of real estate brokerage, so the firm must hold a broker's license.

Question 17Hawaii Real Estate Law, Rules, and Commission Governance

A Hawaii listing agreement between a seller and a brokerage firm must:

  1. be oral when the term is under six months
  2. be filed with the Commission for approval
  3. renew automatically unless either party cancels
  4. be written with a fixed expiration date Correct answer.

Explanation

Hawaii requires listing agreements to be in writing and to contain a definite termination date; open-ended or self-renewing listings are not permitted.

Question 18Hawaii Real Estate Law, Rules, and Commission Governance

A Hawaii salesperson whose license has been placed on inactive status:

  1. may still write purchase contracts for the former broker
  2. may not engage in activity that requires a license Correct answer.
  3. may handle rentals but not sales
  4. must surrender the license permanently

Explanation

An inactive license stays on the rolls but confers no authority to perform brokerage acts until it is reactivated through affiliation with a principal broker.

Question 19Hawaii Real Estate Law, Rules, and Commission Governance

Which of the following may the Hawaii Real Estate Commission do to a licensee who violates the real estate license law?

  1. Suspend the license after an administrative hearing Correct answer.
  2. Record a lien on the licensee's real property
  3. Sentence the licensee to jail time
  4. Award punitive damages to the complaining client

Explanation

The Commission's authority is administrative: it may revoke, suspend, or refuse to renew a license, impose fines, and order remedial education, but it does not imprison parties or award damages.

Question 20Hawaii Real Estate Law, Rules, and Commission Governance

The Hawaii statute that governs condominium property regimes is:

  1. Chapter 508D
  2. Chapter 514B Correct answer.
  3. Chapter 201H
  4. Chapter 521

Explanation

HRS chapter 514B is the Condominium Property Act, which governs the creation, governance, and sale of condominium units in Hawaii.

Question 21Hawaii Real Estate Law, Rules, and Commission Governance

Continuing education for Hawaii real estate licensees must be completed:

  1. only after a disciplinary complaint
  2. within each two-year license period Correct answer.
  3. only by brokers, not salespersons
  4. once every four years

Explanation

Hawaii requires continuing education hours during each biennial license period as a condition of renewal, and the requirement applies to both brokers and salespersons.

Question 22Hawaii Real Estate Law, Rules, and Commission Governance

A Hawaii seller delivers the required residential disclosure statement only after the buyer's offer has been accepted. Under HRS chapter 508D, the buyer may:

  1. rescind the contract by written notice within the statutory period Correct answer.
  2. file a complaint with the Real Estate Commission to void the sale
  3. demand an automatic ten percent price reduction
  4. sue immediately for specific performance

Explanation

When the disclosure statement arrives after acceptance, 508D gives the buyer a limited window to cancel the contract by written notice to the seller; if the buyer does not act in time, the right is waived.

Question 23Hawaii Real Estate Law, Rules, and Commission Governance

A brokerage firm acting as a dual agent in a Hawaii transaction must:

  1. remain neutral and keep each party's confidences Correct answer.
  2. disclose each party's confidential information to the other side
  3. advocate for the party who pays the larger commission
  4. obtain court approval before closing

Explanation

A dual agent may not favor either client; it must treat both fairly and may not reveal one party's confidential information to the other without permission.

Question 24Hawaii Real Estate Law, Rules, and Commission Governance

A principal broker allows an unlicensed office assistant to negotiate the terms of a listing agreement with a seller. The broker is:

  1. not responsible if the broker was out of the office
  2. protected because the seller signed the agreement
  3. required only to pay a fine to the assistant
  4. subject to discipline for failing to supervise Correct answer.

Explanation

A principal broker is responsible for supervising all licensees and unlicensed staff in the office; permitting unlicensed persons to perform brokerage acts is a violation chargeable to the broker.

Question 25Hawaii Real Estate Law, Rules, and Commission Governance

A Hawaii salesperson who wants to open an independent brokerage must first:

  1. qualify for and obtain a broker's license Correct answer.
  2. complete a property management certificate program
  3. notify the Commission by letter of the new office
  4. register the business name with the Bureau of Conveyances

Explanation

Only a licensed broker may own or operate a brokerage firm; a salesperson must satisfy the broker experience and education requirements and pass the broker examination before opening an office.

Question 26Hawaii Real Estate Law, Rules, and Commission Governance

Which chapter of the Hawaii Revised Statutes is the primary statute licensing and regulating real estate brokers and salespersons?

  1. Chapter 467 Correct answer.
  2. Chapter 508D
  3. Chapter 521
  4. Chapter 514B

Explanation

HRS chapter 467, the real estate brokers and salespersons law, contains the licensing requirements, the Real Estate Commission's authority, and the disciplinary provisions. The condominium, seller disclosure, and landlord-tenant statutes are separate chapters and do not govern licensure.

Question 27Hawaii Real Estate Law, Rules, and Commission Governance

The Hawaii Real Estate Commission is administratively attached to which department of state government?

  1. Department of Commerce and Consumer Affairs Correct answer.
  2. Department of Land and Natural Resources
  3. Department of Taxation
  4. Department of Business, Economic Development, and Tourism

Explanation

The Real Estate Commission is part of the Department of Commerce and Consumer Affairs, which houses Hawaii's professional and vocational licensing programs. The Commission's administrative rules appear in title 16 of the Hawaii Administrative Rules.

Question 28Hawaii Real Estate Law, Rules, and Commission Governance

What is the purpose of Hawaii's Real Estate Recovery Fund?

  1. To fund continuing education for active licensees
  2. To provide free legal defense for licensees facing complaints
  3. To guarantee commissions when a seller refuses to pay
  4. To pay consumers holding uncollectible judgments against licensees Correct answer.

Explanation

The Real Estate Recovery Fund, administered by the Commission, reimburses members of the public who suffer a monetary loss from certain wrongful acts of a licensee and hold a court judgment they cannot collect. It is not insurance for licensees and does not pay commissions or defense costs.

Question 29Hawaii Real Estate Law, Rules, and Commission Governance

A Hawaii licensee wants to pay a $500 fee to an unlicensed friend who introduced a buyer to the licensee. Under the license law:

  1. It is permitted up to $500 as a thank-you gift
  2. It is permitted if the client approves the arrangement in writing
  3. It is prohibited as payment for acts requiring a license Correct answer.
  4. It is permitted if the friend signs a written referral agreement

Explanation

A licensee may not pay or split compensation with an unlicensed person for activity that requires a real estate license, such as procuring a buyer. A written agreement or the client's consent does not cure the prohibition.

Question 30Hawaii Real Estate Law, Rules, and Commission Governance

A licensed Hawaii salesperson wants to move from one brokerage firm to another. To lawfully begin working with the new firm, the salesperson must:

  1. Wait until the license's next scheduled renewal date before changing firms
  2. Terminate the current association and have the new principal broker file the change Correct answer.
  3. Retake the salesperson licensing examination
  4. Obtain the written consent of every client of the former brokerage firm before moving

Explanation

A salesperson license is tied to the principal broker with whom the salesperson is associated. To move, the salesperson ends the existing association and the new principal broker files the change with the Commission; the salesperson may not act for the new firm before the change takes effect.

Question 31Hawaii Real Estate Law, Rules, and Commission Governance

An associate licensee in a Hawaii brokerage firm mishandles a transaction. Under the license law, who bears the supervisory responsibility?

  1. The listing client, who selected the firm
  2. The firm's principal broker Correct answer.
  3. Only the individual licensee involved
  4. The Commission, which supervises licensees directly

Explanation

The principal broker holds the firm's broker license and is responsible for supervising the real estate activity of every licensee associated with the firm, including document review and handling of trust funds. The Commission regulates licensees but does not supervise individual transactions.

Question 32Hawaii Real Estate Law, Rules, and Commission Governance

Hawaii's time sharing plans law, which regulates the offering and sale of timeshare interests, is codified in which chapter of the Hawaii Revised Statutes?

  1. Chapter 514E Correct answer.
  2. Chapter 484
  3. Chapter 514A
  4. Chapter 421J

Explanation

HRS chapter 514E is the time sharing plans law governing registration and sale of timeshare interests in Hawaii. Chapter 421J covers planned community associations, chapter 514A is the older condominium statute, and chapter 484 is the Uniform Land Sales Practices Act.

Question 33Hawaii Real Estate Law, Rules, and Commission Governance

A homeowner files a complaint with the Real Estate Commission alleging a licensee violated the license law. Before imposing discipline, the Commission must give the licensee:

  1. A jury trial in circuit court
  2. Payment of the licensee's attorney's fees by the fund
  3. A private conference with the complainant without Commission involvement
  4. Written notice of the charges and a hearing Correct answer.

Explanation

Discipline of a professional license is handled as a contested case under HRS chapter 467 and the Hawaii Administrative Procedure Act in HRS chapter 91. The licensee is entitled to notice of the charges and an opportunity to be heard before a sanction is imposed.

Question 34Hawaii Real Estate Law, Rules, and Commission Governance

A Hawaii licensee wants to buy an investment property for the licensee's own account. Under HRS chapter 467, the licensee must:

  1. State in the purchase contract that the buyer is a licensee Correct answer.
  2. Obtain the Commission's prior written approval for the purchase
  3. Resign the license before signing the purchase contract
  4. Refer the purchase to another brokerage firm and take no ownership interest

Explanation

A licensee may acquire an interest in real estate for the licensee's own account, but the statute requires the licensee to disclose that status in the contract. The disclosure keeps the other party from assuming the licensee is acting purely as an agent.

Question 35Hawaii Real Estate Law, Rules, and Commission Governance

A buyer asks a Hawaii salesperson to prepare a purchase contract for a property the firm does not represent. The salesperson may:

  1. Complete standard preprinted contract forms approved for licensee use Correct answer.
  2. Represent the buyer in court if the contract is later disputed
  3. Draft original contract terms tailored to the buyer's situation
  4. Give legal advice about how the contract affects the buyer's rights

Explanation

Licensees may fill in standard preprinted real estate forms as part of brokerage services. Drafting original contract provisions or advising a party on legal rights and remedies is the unlicensed practice of law, and court representation is reserved to attorneys.

Question 36Hawaii Real Estate Law, Rules, and Commission Governance

Which of the following is a basic eligibility requirement for a Hawaii real estate salesperson license?

  1. Being a Hawaii resident for at least one year
  2. Holding a bachelor's degree in business or a related field
  3. Being at least 18 and of good reputation Correct answer.
  4. Having two years of prior sales experience

Explanation

Applicants must be at least 18 years old and honest, truthful, and of good reputation, in addition to completing the required pre-license education and passing the licensing examination. Hawaii does not impose a college degree, prior sales experience, or state residency requirement.

Question 37Hawaii Real Estate Law, Rules, and Commission Governance

A Hawaii brokerage firm opens a second office across town. Under the license law, the firm must:

  1. Operate the branch under the main office license without further filing
  2. Obtain a separate escrow depository license for the branch
  3. Staff the branch only with unlicensed assistants
  4. License the branch office and supervise it with a broker Correct answer.

Explanation

Every office of a brokerage firm, including each branch, must be separately licensed and placed under the supervision of a licensed broker. Real estate activity may not be conducted from an unlicensed location.

Question 38Hawaii Real Estate Law, Rules, and Commission Governance

A consumer won a civil judgment against a Hawaii licensee for fraud in a real estate transaction, and the licensee has no assets. To recover from the Real Estate Recovery Fund, the consumer generally must:

  1. Assign the judgment to the Commission before payment
  2. Show that execution on the judgment was returned unsatisfied Correct answer.
  3. Prove the licensee was unlicensed at the time of the act
  4. File a claim within 30 days of the underlying transaction

Explanation

Recovery from the fund requires a final judgment against a licensee for a covered act, exhaustion of reasonable collection efforts, usually shown by a return of execution unsatisfied, and a timely claim filed with the Commission. The fund reaches licensed conduct, not the acts of unlicensed persons.

Question 39Hawaii Real Estate Law, Rules, and Commission Governance

The principal broker of a Hawaii brokerage firm resigns. The firm must:

  1. Continue operating until a new principal broker is licensed within a year
  2. Transfer all pending listings to the departing broker's new firm
  3. Convert all salesperson licenses to inactive status permanently
  4. Notify the Commission and designate a new principal broker Correct answer.

Explanation

A brokerage firm must have a principal broker at all times because the firm's real estate license depends on that broker. When the principal broker leaves, the firm must notify the Commission and have another qualified broker assume the principal broker role before continuing to provide brokerage services.

Question 40Hawaii Real Estate Law, Rules, and Commission Governance

A Hawaii salesperson represents a buyer in a transaction that closes. With the seller's consent, the seller's broker sends the salesperson's share of the commission directly to the salesperson instead of to the salesperson's principal broker. Under Hawaii license law, what must the salesperson do with the payment?

  1. Keep it once the principal broker approves the arrangement in writing afterward.
  2. Refund it to the seller and ask that it be reissued to the brokerage firm.
  3. Keep it, because it was sent by a licensed broker.
  4. Turn the payment over to the principal broker. Correct answer.

Explanation

Under HRS chapter 467, a salesperson may provide real estate services only under the supervision of a principal broker, and compensation for the salesperson's work is paid to the principal broker, who then pays the salesperson. A salesperson may not accept real estate compensation directly from another broker or a client. The payment therefore belongs to the principal broker and must be delivered promptly.

Question 41Agency, Contracts, and Brokerage Practice

In Hawaii, a principal broker whose firm represents both the buyer and the seller in the same transaction must do which of the following before the firm may act for both sides?

  1. Notifying the Hawaii Real Estate Commission and waiting for its approval
  2. Nothing further, because the firm automatically becomes a neutral facilitator for both sides
  3. Obtaining verbal permission from both parties at the time the offer is made
  4. Disclosing the dual agency in writing and obtaining both parties' written consent Correct answer.

Explanation

Hawaii permits a firm to act as a dual agent only after the dual agency is disclosed in writing and all parties give informed written consent. Without that consent the firm may not represent both sides of the same transaction, and an undisclosed dual agency exposes the licensee to discipline.

Question 42Agency, Contracts, and Brokerage Practice

A Hawaii salesperson negotiates a sale for a client. How is the salesperson's share of the commission paid?

  1. Directly to the salesperson by the client named in the purchase contract
  2. By the cooperating broker, who collects the full commission from the buyer
  3. Directly to the salesperson by the escrow company at closing
  4. Through the principal broker who sponsors the salesperson's license Correct answer.

Explanation

A salesperson's license is registered with and sponsored by a principal broker, and the brokerage earns the commission. The broker then pays the salesperson's share under their employment or independent contractor arrangement.

Question 43Agency, Contracts, and Brokerage Practice

A contract for the sale of Hawaii real property is enforceable only if it is:

  1. acknowledged before a notary and recorded in the Bureau of Conveyances
  2. in writing and signed by the party charged Correct answer.
  3. approved in advance by the Hawaii Real Estate Commission
  4. witnessed by two disinterested adult witnesses

Explanation

Hawaii'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 regulatory approval affect other matters but are not what makes the promise enforceable between the parties.

Question 44Agency, Contracts, and Brokerage Practice

Under an exclusive right-to-sell listing, the broker is entitled to a commission when:

  1. the listing expires and the property remains unsold
  2. anyone, including the owner, produces a ready, willing and able buyer Correct answer.
  3. the broker personally, rather than another licensee, procures the buyer
  4. the owner and the buyer actually close escrow

Explanation

An exclusive right to sell entitles the broker to compensation whenever a ready, willing, and able buyer is produced during the listing term, no matter who procures the buyer, including the owner. The broker need not be the procuring cause and need not close the sale.

Question 45Agency, Contracts, and Brokerage Practice

An open listing entitles the broker to a commission:

  1. regardless of who found the buyer, as long as the sale closes
  2. only if the sale is closed through a multiple listing service
  3. only after the listing period expires and the property is still unsold
  4. only if the broker is the procuring cause of the sale Correct answer.

Explanation

Under an open listing the owner makes no exclusive commitment and pays only the broker whose efforts are the procuring cause of the sale. Several brokers may hold open listings at the same time, and the owner may sell without owing anyone.

Question 46Agency, Contracts, and Brokerage Practice

A buyer wants a court order forcing a seller to convey land as agreed. The remedy is:

  1. rescission of the contract
  2. reformation of the deed
  3. a mechanic's lien on the property
  4. specific performance Correct answer.

Explanation

Because every parcel of land is unique, courts will order a seller to convey it as agreed; that equitable remedy is specific performance. Money damages are considered inadequate for land.

Question 47Agency, Contracts, and Brokerage Practice

Which activity requires a Hawaii real estate license?

  1. A court-appointed receiver selling under a court order
  2. An owner selling the house she has owned and occupied for ten years
  3. An attorney preparing a purchase contract for a client
  4. A person who, for a fee, finds a buyer for a friend's condominium Correct answer.

Explanation

A license is required to negotiate or solicit a sale of real property for another person for compensation. Owners disposing of their own property, court-appointed receivers acting under court order, and attorneys performing legal services are among the statutory exceptions.

Question 48Agency, Contracts, and Brokerage Practice

Which event automatically terminates an agency relationship with a seller?

  1. The listing broker moves to a different firm
  2. The seller rejects an offer below the asking price
  3. The seller takes the home off the market for two weeks
  4. The seller dies Correct answer.

Explanation

Death of the principal terminates an agency relationship because the agent's authority derives from the principal. The listing cannot continue to bind the deceased seller's interests.

Question 49Agency, Contracts, and Brokerage Practice

A buyer's agent learns that the buyer would pay up to $40,000 over asking. The buyer later cancels the agreement without buying. When a different client asks the agent about that buyer's finances, the agent should:

  1. disclose the price ceiling but not the identity of the source
  2. decline to answer; the duty of confidentiality survives termination Correct answer.
  3. answer freely, because the agency relationship has already ended
  4. disclose it if the new client promises to keep the information private

Explanation

Confidential information acquired during an agency relationship remains protected after the relationship ends. The former client's negotiating limits and financial position cannot be shared with a new client.

Question 50Agency, Contracts, and Brokerage Practice

A seller receives a buyer's offer, crosses out the closing date, initials the change, and returns the document. The seller's response is:

  1. a rejection that leaves the original offer open until it expires
  2. an option contract giving the buyer time to decide
  3. a counteroffer that terminates the buyer's original offer Correct answer.
  4. an acceptance that creates a binding contract on the original terms

Explanation

A response that changes a term of the offer is a counteroffer rather than an acceptance. A counteroffer operates as a rejection and terminates the original offer, so the original offer can no longer be accepted.