Real Estate Contracts & Agency 3

Question 1

A purchase and sale agreement becomes binding when:

Accepted Answer

Both parties sign and communication of acceptance is received

Answer

A contract is formed upon mutual assent, meaning both parties must sign and acceptance must be communicated back to the offeror.

Question 2

'Time is of the essence' in a real estate contract means:

Accepted Answer

All deadlines in the contract are strictly binding

Answer

A 'time is of the essence' clause makes all dates and deadlines in the contract strictly enforceable; missing a deadline constitutes a material breach.

Question 3

A right of first refusal gives a party the:

Accepted Answer

Opportunity to match any offer before the property is sold to another

Answer

A right of first refusal requires the owner to offer the property to the holder of the right before accepting any third-party offer.

Question 4

Assignment of a real estate contract transfers the:

Accepted Answer

Contractual rights and obligations to a third party

Answer

Assignment allows the original contracting party to transfer their rights under the contract to a third party, though the assignor may remain liable.

Question 5

A bilateral contract in real estate is one where:

Accepted Answer

Both parties make promises to each other

Answer

A bilateral contract involves mutual promises — both parties are legally obligated to perform, as in a typical purchase and sale agreement.

Real Estate Practice Test

Real Estate Practice Test

Real Estate Contracts & Agency 3