A licensee has an exclusive right-to-sell listing on Smith's store that entitles him to $4,000 in compensation when the store is sold. The licensee also has a similar type of listing on Jones's store that promises $5,000 in compensation when the store is sold. If the licensee arranges an exchange of the above two properties, with the informed consent of both parties, how much compensation, if any, will he receive?

Rationale

$9,000

In this scenario, the licensee receives compensation from both listings due to the exchange agreement, resulting in a total of $9,000 ($4,000 from Smith's store and $5,000 from Jones's store). Since both parties consented to the arrangement, the licensee is entitled to the full amount promised in each listing.

A ($4,000) YOUR ANSWER

This choice only reflects the compensation from the exclusive right-to-sell listing for Smith's store. Although this amount is correct for that particular property, it does not account for the compensation associated with Jones's store, resulting in an incomplete total.

B ($5,000) YOUR ANSWER

Similar to choice A, this option represents only the compensation from the listing on Jones's store. While accurate for that property, it fails to include the amount from Smith's store, thus underestimating the total compensation the licensee would receive.

C ($9,000) CORRECT

This is the correct total compensation the licensee receives from the exchange of both properties. Each listing’s compensation is honored because the exchange was consensually arranged, allowing the licensee to collect both amounts.

D (none, because the properties were exchanged, not sold) YOUR ANSWER

This choice incorrectly assumes that the nature of the transaction (exchange instead of sale) negates the licensee's right to compensation. However, since both parties agreed to the exchange, the licensee is still entitled to the compensation specified in each listing.

Conclusion

In real estate transactions, the terms of exclusive listings remain valid even in exchanges, provided there is informed consent from all parties involved. The licensee's rights to compensation from both Smith's and Jones's stores total $9,000, emphasizing the importance of understanding contractual obligations in property exchanges.

$9,000

Related Questions

Related Quizzes

How familiar were you with this question?

Report an Issue

Rate this Practice Test