CTC Timeline Management & Deadline Tracking 2 — Questions and Answers
Question 1: A Notice to Perform (NTP) is typically sent when a party:
- Has successfully completed a contingency
- Has failed to meet a contractual deadline (Correct answer)
- Requests a price reduction
- Submits the earnest money deposit
Correct answer: Has failed to meet a contractual deadline
A Notice to Perform is sent to a party who has not met a contractual obligation or deadline, giving them a final opportunity to perform before the other party can cancel.
Question 2: What is the standard time frame for a seller to respond to a Notice to Perform in California?
- 24 hours
- 2 business days (Correct answer)
- 5 calendar days
- 10 days
Correct answer: 2 business days
Under standard California contracts, a party receiving a Notice to Perform has 2 business days to comply before the other party may exercise their right to cancel.
Question 3: Which of the following best describes a 'contingency removal' in a real estate transaction?
- The buyer cancels the contract and requests a refund
- The buyer formally waives their right to cancel based on a specific condition (Correct answer)
- The seller agrees to make repairs
- The lender issues final loan approval
Correct answer: The buyer formally waives their right to cancel based on a specific condition
A contingency removal is the buyer's written acknowledgment that a specific condition has been satisfied and they are waiving their right to cancel under that contingency.
Question 4: A transaction coordinator should log a deadline reminder how far in advance to allow adequate response time?
- The day before the deadline
- At least 2–3 business days before the deadline (Correct answer)
- One week after the contract is signed
- Only after receiving a reminder from the agent
Correct answer: At least 2–3 business days before the deadline
Setting reminders 2–3 business days before a deadline gives all parties sufficient time to act, gather documents, or negotiate extensions without breaching the contract.
Question 5: What is the purpose of the 'appraisal contingency' deadline in a purchase agreement timeline?
- To allow the buyer to back out if the home appraises above list price
- To allow the buyer to cancel or renegotiate if the property appraises below the purchase price (Correct answer)
- To require the seller to reduce the price to appraised value
- To lock in the buyer's interest rate
Correct answer: To allow the buyer to cancel or renegotiate if the property appraises below the purchase price
The appraisal contingency protects the buyer by allowing them to cancel or renegotiate the purchase price if the property appraises for less than the agreed purchase price.
Question 6: When a buyer removes all contingencies in writing, what is the buyer's earnest money deposit status?
- It is returned to the buyer immediately
- It becomes non-refundable and at risk if the buyer cancels (Correct answer)
- It is transferred to the seller automatically
- It remains refundable for another 30 days
Correct answer: It becomes non-refundable and at risk if the buyer cancels
Once all contingencies are removed, the earnest money deposit is generally at risk, meaning the seller may be entitled to it if the buyer cancels without a valid contractual reason.
Question 7: What is 'time is of the essence' language in a real estate contract?
- A clause that allows flexible deadlines
- A provision requiring strict compliance with all specified dates and deadlines (Correct answer)
- A statement that the deal must close within 30 days
- A requirement that all communications be made in writing
Correct answer: A provision requiring strict compliance with all specified dates and deadlines
'Time is of the essence' is a legal clause requiring that all deadlines in the contract be met exactly as specified, with failure to do so constituting a material breach.
CTC Timeline Management & Deadline Tracking 2
A Notice to Perform (NTP) is typically sent when a party: