Real Estate Contracts & Agency 2

Question 1

A financing contingency in a purchase agreement protects the buyer if:

Accepted Answer

The buyer cannot obtain mortgage financing

Answer

A financing contingency allows the buyer to cancel the contract and recover their earnest money if they cannot secure a loan as specified in the agreement.

Question 2

Specific performance as a remedy in real estate means:

Accepted Answer

The court orders the breaching party to complete the transaction

Answer

Specific performance is a legal remedy requiring the defaulting party to fulfill their contractual obligations since real estate is considered unique.

Question 3

An option contract in real estate gives the optionee the:

Accepted Answer

Right but not the obligation to purchase within a set period

Answer

An option contract provides the buyer the right to purchase the property at an agreed price within a specified timeframe, but they are not required to do so.

Question 4

The Statute of Frauds requires that real estate contracts must be:

Accepted Answer

In writing and signed to be enforceable

Answer

The Statute of Frauds requires contracts for the sale of real estate to be in writing and signed by the party to be charged to be legally enforceable.

Question 5

When a seller responds to a buyer's offer by changing the price, this creates a:

Accepted Answer

Counteroffer that voids the original offer

Answer

A counteroffer legally rejects the original offer and substitutes a new offer, giving the original offeror the right to accept, reject, or counter again.

Real Estate Practice Test

Real Estate Practice Test

Real Estate Contracts & Agency 2