Frequently Asked Questions

Frequently asked questions and answers

Agency Law and Real Estate License Law Duties 

• What are the basic duties that an agent owes a principal under Agency Law? OLDCAR or LOADS – loyalty/confidentiality, obedience, accounting, disclosure, skill, care, and diligence. 
• What is the definition of a fiduciary relationship? A person who acts for another in a relationship of trust and who is obligated to act in the other’s best interests, placing the other’s interests before any self-interest. 
• Does violating Agency Law also violate Real Estate License Law? Yes
• What are some possible consequences of violating Agency Law? Revocation or suspension of real estate  license, civil liability, loss of commission 
• Can the Real Estate Commission fine a broker for violating Real Estate License Law? No 

Material Facts 

• What are the four categories of material facts? Give an example of each category.

1. Facts about the property itself (HVAC system does not work) 
2. Facts that relate directly to the property (state-approved plans for a four-lane bypass near the property) 
3. Facts directly affecting the principal’s ability to complete the transaction (seller is unable to convey clear  title) 
4. Facts that are known to be of special importance to a party (current zoning will not permit a buyer’s  intended use) 

Material fact? Yes or No

1. Death or murder of a previous tenant on the property? No
2. A convicted sex offender lives on a neighboring property? No
3. A gravesite located on a property? Yes
4. Property is believed to be haunted? No
5. Property is located on an airport approach flight path? Yes
6. Seller is behind on their mortgage payments? No

1. If a material fact is detrimental to the seller, can the listing broker withhold it from the buyer? No
2. Can a broker refuse to obey a seller’s client’s instruction to withhold a material fact about the property? Yes 
3. Can a broker advise a buyer on how to take title to the property? No
4. Can a listing broker disclose to a buyer how much the seller is willing to accept for the property? No 
5. Can a buyer agent withhold information from the seller about the buyer’s inability to obtain the funds necessary to purchase the property? No 
6. If the broker is acting as a buyer agent, does that relieve the broker from disclosing material facts to the seller? No 
7. If a material fact is a matter of public record, is the listing broker still required to tell the buyer or seller of that fact? Yes 
8. Does using a limited-service agreement remove the requirement of the broker to discover and disclose material facts? No 

Agency Disclosure 

• At what point is a broker required to discuss Agency Disclosure to a prospective client or customer? At first substantial contact (not initial contact) 
• What type of information determines when that point has been reached? Confidential information that would harm the individual in a negotiation. Financial information (ability to purchase), family information, job information, motivation for buying or selling, requirements to buy or sell, specific needs, etc. 
• What is the broker required to do when presenting the disclosure? Review, request signatures from the buyer or the seller, and provide a copy of the signed disclosure.
• What decision must be made after presenting the disclosure? Under what type of agency relationship will the broker and buyer or seller work together. 
• Can a broker work with a prospect if they refuse to sign the disclosure? Yes 
• When showing property at an open house, what information can be given to a prospective buyer before disclosure is required? Price or age of the property, detailed information about the features of the property,  and published information.
• Does the Agency Disclosure have to be reviewed with every prospective buyer that views a property at an open house? No 
• A broker should review the Agency Disclosure with a prospective buyer before doing what? Prior to providing any brokerage services to the buyer, such as showing the buyer a house for sale. 
• What option does the broker have when the buyer does not want to be represented by a broker? Work with the unrepresented buyer as a subagent of the seller (seller subagent) or transaction broker if allowed by company policy. 
• What should a seller subagent broker with Firm A do if the broker wants to be compensated if the buyer becomes interested in a listing offered by Firm B and Firm B is not offering compensation to seller subagents and the buyer wants to be unrepresented and is unwilling to pay a commission? Refer the buyer to a broker affiliated with the listing firm and request a referral fee. 

Do Not Call Registry 

• When prospecting for new buyers and sellers, who can a broker call? Persons NOT on the Do Not Call Registry and businesses. Persons with a prior established business relationship (up to 18 months). Consumers that make an inquiry (for up to three months). Persons that give express permission to be called. Persons with whom the broker has a personal relationship. 
• When prospecting for new buyers and sellers, who can’t a broker call? Persons listed on the Do Not Call  Registry or on the company’s do not call list. 
• When can a broker call or text a FSBO seller? When acting as a buyer’s agent to obtain property information for a  buyer even if the seller is on the Do Not Call Registry.  
• Bulk emails and other advertising emails are permitted as long as what is clearly offered? Prominent opt-out option. 
• How long can you call someone with whom you have a previous relationship to solicit new business, even if the previous client is listed on the Do Not Call Registry? 18 months 

Pre-listing  Meeting 

• What documents should the seller make available to the broker at the pre-listing meeting? Why are these documents important to review? Deed (to verify ownership and type of ownership interest and review legal description), survey (to check boundaries, verify acreage and identify encroachments), restrictive covenants and other HOA information (to be able to answer buyers’ questions about HOA, dues, assessments, etc.),  balance due on seller’s mortgage(s) and other liens (to verify mortgage (lien) status and balances to determine if short sale condition exists or potential foreclosure situation).
• Why is it necessary for the seller to make available the balances on existing mortgages? To determine if a potential short sale situation exists or imminent foreclosure. 
• Does the broker need a copy of the seller’s homeowners’ insurance policy? No 
• When preparing for a pre-listing meeting with a seller, the broker should provide the seller with what documentation? Listing agreement to review, Agency Disclosure, Property Disclosure (if applicable), Lead-Based Paint Disclosure (if applicable), property listing datasheet, sample purchase contract 
• Who should complete the Property Condition and Lead Based Paint Disclosures if required? The seller(s), an agent is not allowed to complete the forms.

Misrepresentation and Omission 

• What constitutes misrepresentation of a material fact? Communicating false or incorrect information either in writing or verbally. 
• What constitutes the omission of a material fact? Not disclosing information that should have been disclosed. 
• When is misrepresentation or omission willful? When it is intentional / on purpose. 
• When is misrepresentation or omission negligent? When it is unintentional / lack of discovery. 
• Communicating to the buyer unverified information that was provided by the seller may cause the listing agent to be guilty of what? Negligent Misrepresentation 

Property Disclosures 

• When reviewing the Property Conditions Disclosure with the seller, what is the listing agent required to do? Advise of the disclosure requirement, assist with understanding the disclosure, assist in keeping the disclosure accurate throughout the transaction, and assist with delivery of the disclosure. 
• What should they not do? Fill out or complete the disclosure for the seller. 
• Does the information the seller puts on the Property Disclosures eliminate the requirement of the listing and buyer agents to disclose material facts?  No 
• If the seller has disclosed to the listing agent a property defect but indicated otherwise on the disclosure forms, is the agent required not to disclose this information if the seller asks the agent not to do so?  The broker must disclose all material facts regardless of what the seller puts on the disclosure forms or whether the seller requests the agent to withhold the information from prospective buyers. 

Residential Square Footage 

• On a one-story home, what measurements do you use to obtain the square footage? Exterior
• How do you obtain the measurements top section of a two-story home? Measure inside the home by measuring wall to wall and adding 6” for each interior and exterior wall. 
• For which floor or floors is the area occupied by the stairs to be included? Include the area occupied by the stairs as part of the area for both the first floor and second floor. 
• What is the minimum wall height in a room with sloped ceilings? 5 feet 
• What are the requirements for a room to be included in the “Heated Square Footage” of a property? Heated,  finished, and accessible from other heated living areas. 

Lead-Based Paint 

• What is “target housing” for possible lead-based paint disclosure? The sale or lease of most residential housing built prior to 1978. 
• What are the basic disclosure requirements of the seller? Provide the EPA booklet, complete the Lead-Based  Paint Addendum signed by the seller and buyer or landlord and tenant, and permit the buyer to do a lead-based  paint risk assessment (the buyer can waive the requirement) 
• Must the seller certify to the buyer that the house is lead base paint free? No

CMA/BPO 

• Can any Salesperson be paid for a CMA/BPO?  Must be a full broker. Salespersons can complete a CMA/BPO but cannot be paid to do a  CMA/BPO. CMA and BPO are terms used interchangeably and mean comparative market analysis (CMA), and Broker Price Opinion (BPO).
• When performing a CMA/BPO for a fee, is the broker required to personally inspect the property? Yes, unless the requirement is waived by the client. 
• Can a CMA/BPO be used as a basis for making a mortgage loan? No 
• Can a CMA/BPO determine market value?  Can only determine probable selling or leasing price.
• Does the seller have a right to expect their broker to advise them on the probable selling price? Yes 
• Can a broker do an appraisal? No 
• Should the probable selling price be reported as a single figure or as a range? Can be provided as either a single figure or a range (as long as the high side of the range is not more than 10% higher than the low side) 
• Should the property be listed for the probable selling price indicated by the CMA?  It should be listed slightly higher. 
• How much higher should a home be listed above the probable selling price to allow for negotiation? The listing price should be slightly higher than the probable sales price to ensure the property is not underpriced and to allow room for some negotiation. 
• What form does the Real Estate Commission require a broker to use when providing a CMA/BPO? None specified but recommend that brokers follow license law and commission rules related to performing a  CMA/BPO for a fee. 
• Can a broker use the terms ‘value or worth’ in describing the results of a BPO/CMA? No
• What factors should be considered when selecting comparables for a property using the sales comparison approach to valuation? Date of sale, type of property, location, construction/design features, square footage, age, neighborhood, and acreage. 
• Should a property sold as a short sale be used as a comparable if other properties are available to use?  As long as the other comparables are recently sold similar properties near the subject property. 
• When choosing comparables, should a property that was sold quickly because the seller had to sell due to a  job transfer be used if better comps are available to use? No 
• Comparable properties should have sold within what time frame to use them as comps? Preferably within the last 6 months. Longer if no better comparable exist and they are adjusted for time.
• Can the seller’s agent show a buyer the data used to prepare the CMA/BPO to list the property? Yes, if the buyer is a client, the broker can share the data used to prepare the CMA/BPO with the buyer but should prepare a separate CMA/BPO for the buyer-client. If the buyer is an unrepresented customer, the broker can give the buyer unadjusted data on recent sales of comparable properties and tell the buyer that the broker represents the seller and cannot provide an opinion on the property’s market value or suggest an amount the buyer should offer. 
• What methodology is used in performing a CMA/BPO on a residential property or vacant lot? Sales Comparison Approach 
• What methodologies are used when performing a CMA/BPO on income-producing properties? Income  Capitalization Approach or Gross Rent Multiplier Approach 
• How do you determine the probable sales price of a property using the income capitalization method? Projected annual gross income minus vacancy and collection losses equal effective gross income minus operating expenses equals net operating income (NOI). NOI divided by the capitalization rate equals the probable sales price of the property. 
• How do you determine the probable sales price of a property using the gross rent multiplier method? Multiply the property’s gross income by the gross rent multiplier.

Income Capitalization Approach example: A 10-unit apartment building has 7 units that rent for $800 per month and 3 units that rent for $650 per month. Vacancy and collection losses for the past year have totaled 5% of gross potential income. Annual operating expenses are $51,000. An appraiser finds through market research that an appropriate capitalization rate is 10%. Using this information, the appraiser should find the estimate of value for the property to be:

Projected Gross Annual Income: [(7 x 800) + (3 x 650)] x 12 = 90,600

Vacancy and Collection Losses: 90,600 x .05 = – 4,530

Effective Gross Income: 86,070

Annual Operating Expenses: – 51,000

Net Operating Income: 35,070

Estimate of Value: 35,070 / .10 = 350,700

Listing Agreements 

• Can listing agreements be open-ended with no termination date? No 
• Do listing contracts have to be exclusive?  Open listing agreements are nonexclusive. Please note, Open listing agreements are not allowed to be input in MLS per MLS rules.
• Is a Broker-in-Charge required to sign the listing contract for a salesperson? No 
• Should listed property owned by a married person also be signed by the spouse? Yes 
• Who provides the pre-printed listing agreements for brokers’ use? State association of Realtors or local boards (not the State Real Estate Commission) 
• Who’s license number should be included in the listing agreement? The individual broker signs the agreement on behalf of the firm. 
• In an exclusive right-to-sell listing agreement, who can sell the property and not pay the listing firm a  commission? Nobody 
• Is it acceptable for a broker to put “TBD” in the listing price field and fill it in later after completing a CMA? No 
• Do limited-service listing agreements generally call for the broker to schedule and conduct showings?  Scheduling and conducting showings are generally done by the owner/seller. 
• Can a broker use a listing agreement to waive their statutory agency duties? For example, waiving responsibility to disclose material facts, waiving duty to deliver offers and contracts to parties to a transaction, and waiving responsibility for the accuracy of information provided by the seller. No

Multiple Listing Services 

• What type of listings are accepted by an MLS? Exclusive, Limited-Service 
• What types of listings would not be accepted? Non-exclusive (open listings) 
• Who is held responsible for incorrect property information entered into MLS by an unlicensed assistant? Broker 
• Can a listing broker avoid liability for the accuracy of information entered into MLS by including a disclaimer of liability? No 

Commissions 

• Who or what determines the amount of the commission charged on the sale of a property? The company or firm’s policy. 
• Are commissions negotiable? Yes, within the parameters set by the firm’s policy. 
• What response can you give to a prospective seller that questions the similarity of fees quoted by different real estate agencies? “That’s the listing rate my company charges.” 
• Is there any such thing as a market rate, customary fee, standard rate, etc.? No 

Regulation 

• What is a Trigger Term? Financing terms such as down payment amount, amount of any payment, number of payments or repayment period, and the finance charge.
• What type of statements would not require Reg Z disclosure? Seller-paid closing costs offered by the seller, HOA dues, and property taxes. 
• Trigger Term under Regulation Z? Yes or No

o Low Monthly Payments No 

o Payments under $800/month Yes 

o Only 5% down payment is needed Yes

o Up to 4% seller-paid closing costs No 

o Owner financing available No 

Working with an Unrepresented Seller (FSBO) 

• Is a selling agent representing a buyer-client required to provide the Agency Disclosure to an unrepresented seller?
• When should the broker provide and review the Agency Disclosure with the unrepresented FSBO seller? No later than the first substantial contact. 
• Should the Broker have a signed compensation agreement with the FSBO seller prior to showing the property? Yes
• Must a broker get a listing agreement signed by the unrepresented FSBO seller? No, use one party agreement.  
• What advice may the broker provide to the unrepresented FSBO seller? None 

Working with Buyers 

• When must the broker have a Buyer Agency Agreement with a buyer? Before showing the buyer property, the broker and the buyer should come to an agreement on how they are going to work together. Under a written exclusive buyer agency agreement or as an unrepresented buyer customer. 
• Are oral Buyer Agency Agreements exclusive or non-exclusive? Non-exclusive 
• When a listing agent is working with an unrepresented buyer, what can the listing agent say to and/or provide to the buyer regarding an appropriate offer price for the property? The broker can give the buyer unadjusted data on recent sales of comparable properties and tell the buyer that the broker represents the seller and cannot provide an opinion on the property’s market value or suggest an amount the buyer should offer. 
• Can Buyer Agency Agreements be open-ended with no termination date?No 
• Can Buyer Agency Agreements include an automatic renewal provision? No 

Practicing Law 

• Can a broker recommend how a buyer should take title to a property? No 
• Can a broker interpret what subdivision covenants will and will not allow? No 
• Can a broker select service providers for the buyer or seller? No 
• Can a broker recommend a buyer talk with their attorney after we have alerted them to a possible zoning issue? Yes 

Prequalifying the Buyer 

• What is included in housing expenses? Minimum required loan payment of principal and interest, projected costs for property taxes, insurance (hazard, flood, PMI), special assessments, and HOA dues if applicable. 
• What is included in recurring debt? Personal loans, credit cards, other mortgage loans, child and alimony support, student loans, and other similar installment debt. 
• What should not be included in recurring debit? Utilities, gasoline, groceries, phone bills, and medical and dental expenses.

A borrower wants to obtain a conventional loan in the amount of $236,000 with a monthly PITI of $2,650 per month.  The buyer’s homeowners’ association dues will be $80 per month. The buyer’s monthly car payment is $320, and other monthly recurring debt obligations total $350 per month. What is the minimum monthly income the buyer must be able to verify with the lender in order to qualify for the loan if the lender is using expense-to-income rations of 28%/36%?

2,650 + 80 = 2,730

2,730 / .28 = 9,750

2,730 + 320 + 350 = 3,400

3,400 / .36 = 9,444.44

Answer: 9,750

Dual Agency 

• What creates a dual agency situation? When a buyer-client wants to buy a property listed with the buyer agent’s company. The firm is the agent for the buyer and seller in the same transaction. It must be an in-house sale. 
• Can a Salesperson be a dual agent? Yes 
• What is required from the two parties before being represented by a single agent? Disclosure and consent 
• What situations create undisclosed dual agency?When an agent is brokering a transaction between two parties where the agent has both a listing agreement and a buyer’s agency agreement, but neither party has been informed of this and has not agreed to it. 
• What situations create an implied dual agency? When an agent for one party begins to act as if they are acting for the benefit of the other party.
• Can a buyer’s agent be compensated by the seller if acting as a dual agent in the transaction? Yes 
• Do dual agency disclosure rules apply to commercial transactions? Yes 

Designated Dual Agency 

• Is a designated dual agency automatically formed if a firm represents the buyer and seller in the same transaction? No 
• Can a Broker-in-Charge be a designated dual agent? Yes 
• Can a Broker-in-charge (BIC) designate a Salesperson/Provisional Broker to be the designated agent for the buyer of the home the BIC listed? No 
• Can a Salesperson/Provisional Broker be designated to represent the buyer opposite another Salesperson/Provisional Broker representing the seller? Yes 
• Who does the designated agent represent? The agent represents only the interests of his/her designated client. 

Property Management 

• What triggers the need for an Real Estate license to manage properties? Managing properties for others for  compensation (money or some other form of valuable consideration) 
• Can salaried, non-licensed persons show rental properties? Depends on the state, generally No. North Carolina – Yes, Michigan – No,  Kansas – Yes for Residential,
• What types of terms should clearly be included in a property management agreement? Scope of authority of the property manager, terms of the agreement, management fee, procedures for handling tenant security deposits, responsibilities of both the property manager and owner/landlord, etc. 
• What are some of the typical duties of a property manager? Preparing a management plan, preparing an operating budget, establishing rental schedules, collecting rents and security deposits, assisting with maintaining the property, marketing, enforcing rules and regulations, instituting legal actions on behalf of the owner, and maintaining records on the property, etc. 

Submitting Offers to Seller 

• When should offers be presented to the seller?  Forward email to client asap and send them a message that an offer has been emailed to them. 
• Is the existence of multiple offers a material fact that the listing agent must disclose to prospective buyers or buyer’s agents? No 
• What does the listing agent need to receive to share the existence of offers with other buyers or buyer’s agents? The seller’s permission. 
• How must concurrent multiple offers be presented to the seller? Present all offers to the seller immediately and in no certain order. There is no priority to offers. For example, the broker does not have to present the first offer received first. 

Sales Contracts and Practices 

• Can the Offer to Purchase and Contract be used as an offer to purchase by a buyer or an offer to sell by a  seller? Yes 
• Can a listing agent sign on behalf of their seller-client and accept an offer to purchase from a buyer?No
• Can a pre-printed sales contract provided by a broker include the brokerage fee split between cooperating real estate firms? No 
• When parties want to make changes to the pre-printed sales contract forms, what should a broker do? Refer the parties to an attorney to have the appropriate contract language drafted. Never advise the parties to draft their own language or documents, suggest language be changed or added, or tell the parties that the changes cannot be done. 
• Is the agency disclosure date required in any offer and sales contract form? No 
• Can the Offer to Purchase and Contract be assigned? Only with the written mutual consent of all the parties.
• Can a property description be too vague to be enforced?  Example: Seller’s house on Route 17 between the Ohio border and the Michigan border. If the seller owns more than one house, that would be too vague. 

RESPA and TRID 

• To what types of loans does RESPA apply? Applies to most (NOT ALL) residential (1-4 unit) transactions involving a  federally related mortgage loan. 
• To what types of loans does RESPA NOT apply? Mortgage loans for commercial, business, or agriculture purposes. 
• What are the consumer protections required under RESPA? (1) Disclosure and borrower credit for “yield spread premiums.” (2) Loan servicing disclosure. (3) Escrow account restrictions. (4) Prohibits kickbacks or referral fees between settlement service providers. (5) Disclosure of Affiliated Business Arrangements. (6) Required special information booklet for borrowers. (7) Written estimate of settlement service charges 
• What limitations does RESPA place on loan escrow amounts? Limits the amount that lenders/servicers may collect from a borrower and maintain in the borrower’s escrow account. The maximum amount collected monthly by the lender is 1/12  of annual tax and insurance disbursement. The lender may escrow a cushion amount not to exceed 1/6 of annual tax and insurance disbursement (2 months). 
• Does the RESPA restriction on kickbacks apply to referral fees between real estate brokers? No
• How many days does a lender have to provide a written estimate of settlement charges to the borrower? The lender must provide within three business days of the loan application. 
• What are the penalties for violating RESPA? Imprisonment for up to one year. Criminal fines up to $10,000 per violation. 
• Under the TRID rules, what changes require a new Closing Disclosure (CD) and a new three-day waiting period before closing? An increase of more than 1/8 of a percent in the quoted initially APR for a fixed-rate loan (1/4 of a percent for a  variable rate loan), a change in the loan product, or the addition of a prepayment penalty. 

Settlement Meeting Procedures 

• Who may not attend the settlement meeting? A Salesperson or broker with an expired or inactive license representing a party to the transaction. 
• Are the buyer and seller required to attend the settlement meeting in person? No 

Closing Disclosures 

• When should a broker review the Closing Disclosure prepared by the lender with their client? After expiration of the Due Diligence Period and immediately prior to settlement. 
• What are the broker’s obligations concerning the settlement statement? To deliver the closing statement to the broker’s client and review the statement for accuracy, and notify the parties of any inaccuracies discovered. 

Prorations and Other Closing Disclosure Charges 

• Are confirmed or proposed special assessments prorated? No, check purchase agreement for any special provisions.
• Who pays confirmed special assessments? The seller is responsible for all special assessments approved prior to settlement, unless otherwise noted on purchase agreement. 
• Who pays proposed special assessments? The buyer is responsible for all special assessments approved after settlement. 

Proration of rents 

• What are the entries made to the closing disclosure if the rent is in arrears at closing? Debit the buyer, credit the seller. 
• What are the entries made to the Closing Disclosure if the rent has been paid prior to closing? Debit the seller, credit the buyer. 

Installment Land Contract 

• Who retains legal title to the property in an installment land contract? The seller retains legal title until the loan is paid in full by the buyer. 
• What sales contract form is used for installment land contracts? There is none. Have one drawn up by an attorney. 

Option to Purchase 

• In an Option to Purchase is an option fee required?  Without one, it is not a binding contract. The option fee is part of the consideration paid to the seller. 
• How do negotiations impact the Option to Purchase? Optionee and owner are free to negotiate after an option to purchase has been created without impact on the option, unless otherwise noted in agreement. 
• What title or legal interest does an Option to Purchase give the optionee? Optionee has the exclusive right to exercise the option and purchase the property during the stated option period. 

Residential Lease with Option to Purchase 

• What pre-printed sales contract form should a broker use when assisting a buyer who wishes to lease a property before purchasing? There is none. Have an attorney draft a customized agreement. 
• Can a broker or buyer use or modify any pre-printed sales or lease contracts to create a residential lease with an option to purchase?  Neither a broker nor buyer can use a Standard Form with a Lease Agreement to complete these transactions. 

Contract Validity and Enforceability 

• What type of conditions or circumstances makes a contract valid? A valid contract satisfies all legal requirements for a contract and is enforceable by law. Essential elements of a valid contract are mutual assent (offer and acceptance),  consideration, legal contractual capacity, and lawful objective. The Statute of Frauds requires all contracts to convey real property to be in writing and signed by all parties to be enforceable in a court of law. 
• What type of conditions or circumstances make a contract void? A void contract is unenforceable in a court of law. Examples: (1) Contracts executed with a person declared mentally incompetent by a court of law. (2) Oral contract to sell real estate (can still be completed but no legal remedies). (3) Certain illegal contracts (all or only part of the contract can be unenforceable). 
• What type of conditions or circumstances makes a contract voidable? A voidable contract is one where performance can be avoided by one of the parties based on some legal principle. Examples: (1) Contract with a minor. (2) Contract with a  person mentally incompetent in fact but not declared so by a court of law. (3) Contract with a person under the influence of both legal and illegal narcotics or alcohol. 
• What are the three contract law categories of mentally incompetent persons? (1) Legally declared incompetent by a  court of law. (2) Incompetent in fact but not declared so by a court of law. (3) Under the influence of narcotics. 

Offer and Acceptance 

• When an offer has been made, what must take place to create a binding contract? It must be unconditionally accepted  (signed) by the offeree and the acceptance must be properly communicated back to the offeror or offeror’s agent.
• A buyer’s agent has received proper communication from a listing agent of acceptance of the buyer’s offer. The buyer has not been informed. Can the buyer still withdraw the offer?  Once communication of acceptance has occurred (the listing agent notifies the buyer’s agent of the seller’s acceptance), the buyer can not withdraw the offer even if the buyer has NOT  been informed of the seller’s acceptance. 
• Does the offeror or offeror’s agent have to receive a copy of the signed accepted contract from the buyer or buyer’s agent to create a valid contract? No, as long as proper communication of acceptance has occurred.
• Can an offer be made with a time limit for acceptance? Yes 
• Does an offer with a time limit require the offeror to leave the offer open for the entire time limit? No
• If an offer is withdrawn before the communication of acceptance occurs, what happens to the:
  • Earnest money? Returned to the buyer 
• Absent a specific method of notification, what method does the seller’s agent use to communicate acceptance to the buyer’s agent? Reasonable 
• What effect does a seller’s change to a buyer’s offer have on the offer? It is a rejection of the offer.

Electronic Transactions 

• Can a valid, enforceable contract between a buyer and seller be created via email without either party ever talking to each other? Yes, as long as there is an offer, acceptance of the offer (signing), and proper communication of acceptance back to the offeror. All can be accomplished via email according to the Uniform Electronic Transactions Act. 
• What is required for an offer and acceptance to take place electronically? Both parties must agree to do business electronically. 
• Is there a requirement to have original signatures on a single contract to make the electronic agreement enforceable? No 

Impossibility of Performance 

• Does the impossibility of performance discharge a contract? Generally, no. Performance is not excused by unforeseen difficulties, unusual and unexpected expenses, strikes, the difficulty of obtaining raw materials, fire, or accidents. 
• What must happen for the impossibility of performance to discharge a contract? Express language to that effect should be included in the contract. 
• Does the seller dying after contract formation but prior to closing void the contract?  The seller’s estate is obligated to complete performance under the contract terms. Death does not automatically terminate a contract. 

Names 

• How should parties to the transaction be identified in the sales contract? By their full legal names.
• What names cannot be used for buyers or sellers? Nicknames 

Disposition of Earnest Money Deposit 

• When can earnest money deposits be returned to the buyer? The buyer terminates the contract prior to the end of  the Due Diligence Period, the seller defaults, or the property is destroyed (or other contract condition is not met even after the end of the Due Diligence Period.) 
• If an Initial Earnest Money Deposit check is provided with the buyer’s offer and the offer is subsequently withdrawn by the buyer prior to receiving the seller’s acceptance, who gets the earnest money? The Earnest Money Deposit check will be returned to the buyer since no contract was created. 
• If, during the Due Diligence Period, the buyer decides to terminate the contract, who gets the Earnest Money Deposit? The buyer should receive a refund of the Earnest Money Deposit from the escrow agent. 
• If, after the Due Diligence Period but before closing, the property is destroyed and the buyer decides to withdraw from the contract, who gets the earnest money? The buyer 
• If, before closing, the property is destroyed, is the buyer required to withdraw from the contract? No
• If not, what are the buyer’s options? The buyer gets the insurance money.

Fixtures 

• What fixtures would not be included? Refrigerators (unless built-in), washers and dryers, Stoves, trees in movable containers, etc. Unless included in purchase agreement.

Lead-Based Paint 

• When must the Lead-Based Paint Addendum be attached to the Offer to Purchase and Contract? When the home was built prior to 1978. 
• Does the seller have to certify that the property is free of lead-based paint? No