Contract Review & Risk Management Flashcards

For a home built in 1972, which federal disclosure must be delivered before the buyer is obligated under the contract?

Answer: Lead-based paint disclosure

Federal law requires a lead-based paint disclosure and pamphlet for most housing built before 1978.

Under federal lead-based paint rules, how long is the buyer generally given to conduct a lead risk assessment unless the parties agree otherwise or the buyer waives it?

Answer: 10 days

Buyers receive a 10-day opportunity to conduct a lead inspection unless waived or modified in writing.

Both parties dispute who is entitled to the earnest money after a failed deal. What generally must happen before the escrow holder releases the funds?

Answer: Both parties sign a mutual release or a court/arbitration order directs release

Escrow holders typically need mutual written instructions or a legal order to release disputed deposits.

A seller is listed in the contract as an individual, but the title commitment shows the property is vested in a revocable living trust. What should the TC flag?

Answer: That the trustee should sign in the trustee capacity and trust documentation may be required

The party with title authority must sign properly, so trust ownership requires trustee signatures and often a certification of trust.

The buyer's loan Closing Disclosure must generally be received at least how many business days before consummation under TRID?

Answer: 3 business days

TRID requires the borrower to receive the Closing Disclosure at least three business days before closing.

A TC notices the financing contingency deadline falls two days before the lender's expected loan approval date. What is the best risk-management action?

Answer: Alert the agent so the parties can consider a written extension before the deadline passes

Proactively flagging a likely missed contingency lets the agent seek a signed extension and protect the client's deposit.

Which document best protects a TC and brokerage if a party later claims a disclosure was never provided?

Answer: A signed and dated acknowledgment of receipt from the party

Signed, dated receipts create a clear audit trail proving delivery.