Real Estate Law and Contracts
Core concepts
Understand the elements of a valid contract: offer, acceptance, consideration, capacity, and legality, plus the statute of frauds requiring written agreements for real property. Distinguish the types of listing agreements (exclusive right to sell, exclusive agency, open listing) and how commission is earned. Know agency duties - loyalty, disclosure, confidentiality, accounting, reasonable care - and the difference between a client and a customer. Grasp title concepts: deed types (general warranty, special warranty, quitclaim), title insurance, and recording acts. Understand easements (appurtenant vs. in gross, prescriptive), liens, and the priority of encumbrances.
Traps
Questions test whether a broker earns commission when the owner sells directly under an exclusive agency versus exclusive right to sell. Another trap: confusing a quitclaim deed (no warranty) with a warranty deed. Watch for earnest money and liquidated damages treatment, and for whether an oral agreement satisfies the statute of frauds. Don't assume recording validates a defective deed; it only gives notice.
Worked example
Seller lists under an exclusive right to sell. Even if the seller finds the buyer personally, the broker is owed the commission - unlike an exclusive agency, where a seller-originated sale avoids commission.
Rule of thumb
Exclusive right to sell = commission regardless of who procures the buyer; exclusive agency = no commission if the seller procures the buyer.