Contract Review & Risk Management Flashcards

While reviewing a fully executed purchase agreement, a transaction coordinator notices the buyer initialed every page except the page containing the financing contingency. What is the best next step?

Answer: Notify the agent so the missing initials can be obtained from the buyer

A TC flags missing initials to the responsible agent and never signs or initials for a party.

A contract states the inspection period is '10 days after acceptance,' but the acceptance date field is blank. What risk does this create?

Answer: The inspection deadline cannot be calculated with certainty

Without a documented acceptance date, every deadline keyed to acceptance is ambiguous and open to dispute.

Which situation is the clearest example of a TC crossing into the unauthorized practice of law?

Answer: Drafting custom contract language that changes the parties' legal rights

Writing new legal terms that alter rights is legal drafting reserved for attorneys, not TCs.

The buyer's agent emails the TC new wire instructions 'from the title company' that differ from the instructions received at opening. What should the TC do?

Answer: Verify the change by calling the title company at a known, independently verified number

Changed wiring instructions are a classic fraud red flag and must be verified by phone using a trusted number.

A counteroffer changes the purchase price but the buyer signs it two days after the stated expiration time. What is the status of the counteroffer?

Answer: It expired, so the seller would need to re-accept or issue a new counter for a contract to form

An offer or counteroffer that lapses before acceptance cannot be accepted unless the offeror revives it.

Which clause typically makes deadlines in a purchase contract strictly enforceable with no grace period?

Answer: Time is of the essence clause

A time-is-of-the-essence clause means missing a deadline can be treated as a material breach.

A TC discovers the property address in the contract lists the wrong unit number for a condo. What is the proper way to correct it?

Answer: Have the parties sign a written amendment or addendum correcting the address

Changes to executed contract terms must be made in writing and signed by all parties.