Ch 8 - Contracts

Question 1

An agreement formed by the receipt of an earnest money deposit as evidence of the buyers good faith and intent

Answer 1

Binder or deposit receipt

Question 2

An interest in the property acquired once the parties have signed the purchase agreement

Answer 2

Equitable title

Question 3

an act or the promise thereof, which is offered by one party to induce another to enter into a contract

Answer 3

Consideration

Question 4

Rights, privileges, and improvements that are transferred with the property, but are not part of the actual property

Answer 4

Appurtenances

Question 5

An item that was once personal property, but has been affixed to a property, becoming real property

Answer 5

Fixture

Question 6

A provision that prevents the contract, or any specific covenant in the contract, from merging with the deed

Answer 6

Survival clause

Question 7

An agreement used primarily for financing commercial properties

Answer 7

Sale-leaseback agreement

Question 8

The buyers initial deposit and serves as evidence of intent to fulfill his obligations under the contract

Answer 8

Earnest money

Question 9

What type of contract is a lease?

Answer 9

Bilateral

Question 10

What type of lease is an option?

Answer 10

Unilateral

Question 11

True or False:

Option money purchases “time” and does not provide the optionee with an interest in the property

Answer 11

True

Question 12

True or false:

In a purchase agreement, the parties must fully perform their obligations at the time the agreement is signed

Answer 12

False - The parties do not fully perform their obligations at the time the agreement is signed

Question 13

True or false:

A contract is still valid if no closing date is specified

Answer 13

True

Question 14

True or False:

The brokers responsibilities are not ended when the agreement is signed

Answer 14

True

Question 15

True or False:

The type of deed the seller agrees to deliver at closing should be specified in the contract

Answer 15

True

Question 16

A _________ is a bilateral contract involving two parties: the _______ and the ________

Answer 16

Lease
Lessor (usually the landlord)
Lessee (usually the tenant)

Question 17

What type of contract is usually used when sufficient financing is not available to the buyer from a lending institution?

Answer 17

A land contract, also known as an installment contract, conditional sales contract or contract for deed

Question 18

What document typically has these provisions: date, parties, mutual agreement, legal description, price and terms, earnest money, type of deed, marketable title, distraction to the premises, possession, closing date, brokers commission, signatures?

Answer 18

Form contract

Question 19

What are the two most commonly found contingencies in sales contracts?

Answer 19

1. Contingent upon the sale of the purchasers present home

2. Contingent upon satisfactory home inspection

Question 20

At closing, the ______ Merges with the deed as title passes to the buyer

Answer 20

Sales contract

Question 21

In the event of destruction or substantial damage, other states have enacted the _______ Which places the risk of loss on the seller (vendor) until the buyer is given possession of the property

Answer 21

Uniform vendor and purchaser risk act

Question 22

In order to ensure that a date is faithfully observed, what phrase must be included?

Answer 22

Time is of the essence

Question 23

If the type of deed is not specified, the seller would be allowed to use which deed types, depending on the particular state?

Answer 23

A special warranty deed or a quit claim deed, depending on the particular state