50. A seller's property is appraised at $100,000. The seller and a prospective buyer agree to a sale price of $80,000. The buyer suggests writing a second contract to present to the lender showing a sale price of $100,000 with an $80,000 loan. This contract is legal
Answer: D
This contract is legal under no circumstances.
The scenario described involves a potential act of fraud, as creating a second contract to misrepresent the sale price to the lender is illegal. Therefore, this contract is not legal under any circumstances.
A) because of the appraised price.
This option is incorrect because the appraised price does not justify or legalize the act of creating a fraudulent contract. Even if the property is appraised at $100,000, falsely inflating the sale price in a contract is still illegal.
B) with the consent of the seller.
This option is also incorrect. Even if the seller agrees to the misrepresentation, it does not make the act legal. Engaging in fraud, regardless of consent, is against the law and can lead to legal consequences.
C) with the consent of the broker.
This option is incorrect as well. The consent of the broker does not legitimize the creation of a fraudulent second contract. Brokers are also bound by legal and ethical standards, and any involvement in fraud would be a violation of those standards.
D) under no circumstances.
This option is correct as it accurately reflects that there are no circumstances under which creating a fraudulent contract to misrepresent the sale price is legal. Such actions violate legal statutes and ethical norms in real estate transactions.
Conclusion
The correct answer is that the contract is not legal under any circumstances. All other options fail to recognize that misrepresentation to a lender constitutes fraud, which is illegal regardless of consent from any party involved. The integrity of real estate practices relies on accurate and honest representations, and engaging in fraudulent behavior undermines this principle.