Idaho Real Estate Broker Exam — All Questions

A buyer and seller both want out of a contract that is going badly, and neither wants to sue. Which document best ends the deal and settles the earnest money?

• a.A unilateral notice of termination from the buyer
• b.An addendum extending the closing date again
• c.A demand for specific performance by the seller
• d.A mutual release signed by both, directing the deposit✓

A mutual release, often titled a cancellation and release, is a signed agreement in which both parties end the contract, give up claims against each other, and instruct the broker how to disburse the earnest money. That is precisely what these parties want. A one-sided notice does not bind the other party and leaves the deposit in limbo. An addendum extending the closing date continues the transaction instead of ending it. And a demand for specific performance is litigation, the very outcome both sides are trying to avoid. Brokers should never disburse a deposit without written instructions.

At trial a buyer offers testimony about an oral promise made before signing that contradicts the final written contract. The court will most likely do what with it?

• a.Admit it, since oral evidence is always allowed
• b.Admit it to show the parties' true intentions
• c.Exclude it under the parol evidence rule✓
• d.Admit it only if the seller agrees to its use

The parol evidence rule bars prior or contemporaneous oral statements offered to contradict or vary the terms of a final, integrated written contract, so this testimony is excluded. Oral evidence is not always admissible, which is the entire point of the rule. Courts do not admit it merely to show intent when the writing appears complete, though narrow exceptions exist for fraud, ambiguity, or a later modification. And admissibility never depends on the opposing party consenting. This is why brokers insist that every promise a client is relying on be written into the contract itself.

A signed purchase contract declares that it is the entire agreement and supersedes all prior discussions. For these parties, that integration clause means that:

• a.The buyer's right to inspect the property is waived once the contract is signed
• b.Prior side promises not written in it drop out✓
• c.The contract may now be enforced orally
• d.Later written amendments to the agreement are barred by the clause

An integration or merger clause declares the signed document to be the complete agreement, so earlier promises, side deals, and negotiations that were never written into it fall away and generally cannot be enforced. It does not waive inspection rights, which come from the contract's own contingency provisions. It does not make anything enforceable orally, since it does the opposite by elevating the writing. And it does not bar later amendments, which the parties remain free to make in a signed writing. Agents must learn that a verbal side promise dies at signing unless it appears in the contract.

Both parties have already signed a purchase contract. They now agree to change the closing date. Which instrument correctly records that change to the existing agreement?

• a.A new listing agreement with the brokerage
• b.An addendum attached at the original signing
• c.A contingency removal form from the buyer
• d.An amendment signed by both of the parties✓

Changes to the terms of an already signed contract are made by amendment, executed by both parties. An addendum adds terms and is normally attached and made part of the agreement when it is first written, at or before signing, so it is not the tool for a later change. A contingency removal form waives or satisfies a condition and cannot move a closing date. And a listing agreement is the seller's contract with the brokerage, unrelated to modifying a purchase agreement. The vocabulary matters in file review, because a change documented on the wrong form invites disputes.

A buyer is satisfied with the inspection results and wants the seller to know that this contingency no longer applies. Which document should the buyer deliver?

• a.A contingency removal form for that item✓
• b.A rider adding new terms to the contract
• c.An amendment changing the purchase price
• d.A mutual release ending the transaction

A contingency removal form, sometimes called a notice of satisfaction or waiver, tells the seller that a specified condition has been met or waived, which is exactly what the buyer wants to communicate about the inspection. An amendment changes agreed terms such as price, which is not happening here. A rider adds new terms rather than clearing an existing condition. And a mutual release would end the transaction, the opposite result. Delivering the right form on time matters because contracts treat an unremoved contingency either as waived or as a ground to cancel, depending on the wording.

An affiliated licensee resigns and joins a competing firm while several listings she took still have months left to run. What becomes of those listing agreements?

• a.They follow the licensee to her new brokerage automatically
• b.They stay with her former firm, which reassigns servicing of them✓
• c.They terminate at once, freeing each seller to relist anywhere
• d.They convert to open listings until each seller signs a new one

The listing is a contract between the seller and the brokerage, so the firm keeps it when the individual who took it departs, and the broker assigns another licensee to service the property. Moving a listing to the new firm takes both the releasing broker's agreement and the client's, which is why departures are negotiated rather than assumed. A resignation does not terminate the seller's contract, so the seller is not free to relist elsewhere while the term runs. Nor does the agreement quietly become an open listing, because changing the type of listing requires a new agreement the seller signs. A written departure policy stating what an agent may take avoids most of these fights.

A seller revokes an exclusive right-to-sell listing halfway through the term, with no cause and while the broker is actively marketing. The seller's position is that:

• a.The agency ends, yet the seller may be liable for damages✓
• b.The revocation is ineffective and the listing stands
• c.The seller owes the full commission automatically
• d.Only the broker may terminate an exclusive listing

Agency is a personal relationship, so a principal always has the power to revoke it and the agency does end. But power is not the same as right: revoking without cause during the term can breach the listing contract and expose the seller to damages, often measured by the broker's proven expenses or lost commission. So the revocation is not ineffective and the listing does not simply continue. Whether the full commission is owed depends on the contract's wording and on proof, not on any automatic rule. And either party, not only the broker, can terminate.

A listing expires. Two weeks later the seller sells directly to a buyer the listing broker had introduced and named in writing. Which clause may still entitle the broker to a commission?

• a.The liquidated damages clause in the listing
• b.The broker protection carryover clause✓
• c.The contract's time is of the essence clause
• d.The alienation clause in the seller's mortgage

A broker protection clause, also called a safety or carryover clause, entitles the broker to a commission if the owner sells within a stated period after expiration to a buyer the broker introduced and, typically, identified in writing before the listing ended. A liquidated damages clause caps recovery when a purchase contract is breached. Time is of the essence makes contract deadlines strict. And an alienation clause is a loan provision letting a lender call the balance on transfer, which has nothing to do with commissions. Brokers must deliver the protected-buyer list on time or lose the protection.

Two cooperating agents each showed the same buyer the property, and both now claim the selling commission. Which concept determines which of them is entitled to be paid?

• a.The doctrine of equitable conversion at closing
• b.Procuring cause, an unbroken chain of events✓
• c.The parol evidence rule applied at arbitration
• d.The statute of frauds writing requirement

Procuring cause asks who started an uninterrupted chain of events that led to the sale, and it decides which cooperating broker earns the selling side, usually through arbitration rather than a courtroom. Equitable conversion concerns the buyer's equitable title after a contract is signed. The statute of frauds requires certain contracts to be in writing to be enforceable. And the parol evidence rule limits evidence of prior oral statements. None of those allocate a commission between competing brokers. Firms reduce these disputes by documenting first substantive contact, showings, and continuous involvement with the buyer.

A buyer signs an agreement letting the buyer work with several brokerages and pay only the firm that finds the home actually purchased. That agreement is:

• a.An exclusive right-to-represent agreement
• b.A non-exclusive buyer representation agreement✓
• c.An exclusive agency listing on the buyer's home
• d.An option contract supported by the retainer paid

An agreement that lets a buyer work with several firms and pay only the one producing the purchased property is non-exclusive, the buyer-side analogue of an open listing. An exclusive right-to-represent agreement pays the named brokerage no matter who finds the property. An exclusive agency listing concerns selling the buyer's own home, a different transaction entirely. And this is not an option, though many buyer agreements do include a retainer, which is a fee for services rather than consideration creating a right to buy. Note also that who pays a broker does not by itself establish who is represented.

During file review a broker finds a contract whose addendum sets a different closing date than the contract body, and one page is unsigned. The broker should:

• a.Close the file, since the parties signed elsewhere
• b.Have the parties resolve and initial the conflict promptly✓
• c.Direct the agent to pick the later of the two dates
• d.Void the contract and require an entirely fresh offer

An unsigned page and two conflicting closing dates make the file ambiguous, and ambiguity is what produces litigation later. The broker's job in file review is to have the parties resolve the conflict and initial or amend the correct document promptly, while everyone still agrees on what was intended. Closing the file because other pages were signed leaves the defect sitting there. Letting the agent choose which date governs substitutes a licensee's guess for the parties' actual agreement. And declaring the contract void exceeds the broker's authority and could needlessly cost the client the transaction.

A tenant signs an agreement that obligates the tenant to buy the property at the end of the lease term, rather than merely giving the tenant a choice. This is:

• a.A lease-purchase agreement✓
• b.A lease with an option to purchase
• c.An installment land contract
• d.A right of first refusal lease

A lease-purchase obligates the tenant to buy at the end of the term; the sale is already agreed, with the lease bridging the gap until closing. A lease with an option to purchase gives the tenant a choice exercisable during the option period, and the tenant may simply walk away. An installment land contract is a financed sale with possession and equitable title, not a lease. And a right of first refusal only lets the holder match an offer the owner receives. Brokers should be precise here, because obligating a client to buy is very different from giving a choice.

A buyer asks a broker to write a custom clause creating a seller-financed note with special default provisions. What is the broker's correct course of action?

• a.Draft the clause, since brokers prepare contracts
• b.Refuse and cancel the transaction entirely
• c.Fill in approved forms and refer the buyer to a lawyer✓
• d.Have the buyer write the clause and sign it

Drafting provisions that create new legal rights, such as a seller-financing note with special default terms, is the practice of law. A licensee may fill in the blanks on approved or commonly used preprinted forms but should send the client to an attorney for anything beyond that. Drafting it anyway risks an unauthorized practice claim plus liability if the clause fails. Refusing and canceling abandons the client when a lawyer could solve the problem. And telling the buyer to write the clause is the same legal problem in disguise, with the broker still recommending an untested provision.

A buyer and seller sign the same purchase agreement electronically, in separate counterparts, from different states. Under the federal E-SIGN Act and state UETA, the contract is:

• a.Invalid unless both signatures appear on one page
• b.Valid only for commercial, not residential, deals
• c.Valid only if a notary witnesses signing
• d.Enforceable despite the electronic signatures✓

The federal E-SIGN Act and state adoptions of UETA give electronic signatures and records the same legal effect as ink on paper when the parties have agreed to transact electronically, and a contract may be signed in counterparts that together form one agreement. So a single physical page bearing both signatures is unnecessary, and no notary is required for enforceability of the contract itself. These laws are not confined to commercial deals; residential contracts are routinely signed this way. Brokers should still document consent to electronic delivery and retain a complete audit trail of who signed what and when.