Real Estate Contracts

Question 1

a voluntary agreement based on the consent of the parties to the agreement.

Answer 1

Valid contract

Question 2

(having obligations on both sides)

Answer 2

Bilateral contract

Question 3

a promise by one side that can be accepted by performance of the other side

Answer 3

unilateral contract

Question 4

(all parties have fulfilled their promises)

Answer 4

Executed contract

Question 5

(one or both parties still have an act to perform).

Answer 5

Executory contract

Question 6

may be rescinded or disaffirmed by one or both parties

Answer 6

voidable

Question 7

one of the essential elements is missing. If a mistake, misrepresentation, fraud, undue influence, or duress occurs, there is no mutual consent or meeting of the minds, which means that an essential element of the contract is missing and the contract is void.

Answer 7

void

Question 8

when an existing contract or legal obligation is replaced with a new one of equal or proximate value.

Answer 8

Novation

Question 9

written agreements most often used in residential real estate transactions by real estate professionals

Answer 9

client representation agreements, 
sales contracts, 
options, 
escrow agreements, 
property management agreements, 
leases,
owner financing agreements,

Question 10

A real estate sales contract is usually accompanied by an

Answer 10

earnest money deposit

Question 11

contract for deed, bond for title, installment contract, land sales contract, or articles of agreement for warranty deed

Answer 11

land contract

Question 12

the buyer receives title to the property immediately but places a security interest on the property in favor of the seller.

Answer 12

purchase money mortgage

Question 13

A transfer of rights or duties under a contract is

Answer 13

an assignment

Question 14

A contract is said to be bilateral if

Answer 14

both parties to the contract exchange binding promises.

Question 15

In the period after an offer to purchase real estate is accepted and the sale is closed, the buyer acquires an interest in the property that is called

Answer 15

equitable title.

Question 16

A deposit provided when making an offer to purchase real estate is known as

Answer 16

earnest money.

Question 17

may become the seller’s if the buyer defaults.

Answer 17

earnest money

Question 18

the dissolution of a contract with the return of all funds or things of value to both sides.

Answer 18

Mutual Rescission

Question 19

A seller accepted money from a buyer in exchange for the buyer’s unrestricted right to cancel the purchase transaction (option to terminate) within 10 days of the executed date of the sales contract. This agreement is

Answer 19

Unilateral contract

Question 20

If a seller allows a buyer to back out of a contract, returns the earnest money, and both are back to the positions they held before the contract, the contract has been

Answer 20

rescinded

Question 21

The earnest money a seller may be entitled to retain after the buyer breaches is called

Answer 21

Liquidated damages

Question 22

Mutual agreement to the terms of a real estate contract is indicated by

Answer 22

signatures

Question 23

Which of the following describes an executed contract?

Answer 23

All obligations under the agreement have been performed

Question 24

Mutual agreement to the terms of a real estate contract is indicated by

Answer 24

offer and acceptance.

Question 25

A promise for a promise is one way to describe

Answer 25

bilateral contract

Question 26

Earnest money checks should be deposited

Answer 26

when an accepted offer becomes a contract.

Question 27

In states that have adopted it, the Uniform Vendor and Purchaser Risk Act will come into play if

Answer 27

damage occurs to the property between the time a contract is entered into and the buyer takes possession.

Question 28

A buyer and a seller sign a contract to purchase. The seller backs out, and the buyer sues for specific performance. What is the buyer seeking in this lawsuit?

Answer 28

Transfer of the property

Question 29

The buyer and the seller are negotiating an offer. During the final stages of negotiations, the buyer crosses out part of paragraph 19 that states the seller has the right to continue to show the property and receive, negotiate, and accept back up offers and the seller agrees. What are the implications?

Answer 29

The change should be initialed in the margin by the buyer before presentation to the seller.

Question 30

An option to purchase binds which parties?

Answer 30

seller only

Question 31

In a preprinted sales contract, several words were crossed out or inserted by the parties. To eliminate future controversy as to whether the changes were made before or after the contract was signed, the usual procedure is to

Answer 31

have both parties initial or sign in the margin near each change.

Question 32

Creating a new contract to discharge the old obligation is called

Answer 32

novation

Question 33

What is minimum consideration in a valid contract?

Answer 33

Anything the parties agree is good and valuable

Question 34

The period during which the parties to a contract may begin legal action to enforce their rights is determined by a state's

Answer 34

Statute of limitations

Question 35

Words of conveyance are required in

Answer 35

deeds

Question 36

essential elements of a contract

Answer 36

lawful objective. mutual agreement. consideration.

Question 37

Whose signature is necessary for a signed offer to purchase real estate to become a contract?

Answer 37

buyer and seller

Question 38

When a seller deliberately deceives a buyer about the condition of real property, their contract of sale would be considered

Answer 38

voidable

Question 39

During the period after a real estate sales contract is signed, but before title actually passes, the status of the contract is

Answer 39

executory

Question 40

The listing broker and the seller know that the foundation of the seller's house is unsafe. If they do not inform the buyer of this condition, the contract to purchase the property would be

Answer 40

voidable by the buyer

Question 41

never legally enforceable

Answer 41

void contract