CTC Contract Review & Risk Management 4

Question 1

A buyer submits an offer with an escalation clause. Which supporting item is most commonly required to verify the competing offer that triggers escalation?

Accepted Answer

A copy of the competing offer, often redacted

Answer

Escalation clauses commonly require proof of the bona fide competing offer before the price escalates.

Question 2

What is the primary purpose of a kick-out clause in a contract contingent on the sale of the buyer's home?

Accepted Answer

To let the seller keep marketing and require the buyer to remove the contingency or release the contract if a better offer arrives

Answer

A kick-out clause protects the seller by allowing continued marketing while the home-sale contingency is pending.

Question 3

The seller is a foreign person under FIRPTA and no exemption applies. What is the general withholding rate on the amount realized?

Accepted Answer

15%

Answer

FIRPTA generally requires the buyer to withhold 15% of the amount realized when the seller is a foreign person.

Question 4

In a short sale, which contract term is most important for the TC to track?

Accepted Answer

The contingency for written short sale approval from the seller's lender(s)

Answer

A short sale cannot close without written lienholder approval, so that contingency drives the timeline.

Question 5

A buyer selects 'as-is' purchase terms. Which statement is most accurate?

Accepted Answer

The buyer generally may still inspect, and the seller typically must still disclose known material defects as required by law

Answer

'As-is' usually means no repairs, not freedom from disclosure laws or loss of inspection rights.

CTC - Certified Transaction Coordinator Practice Test

CTC - Certified Transaction Coordinator Practice Test

CTC Contract Review & Risk Management 4