Real Estate License Contracts 3

Question 1

Liquidated damages in a purchase contract typically refer to:

Accepted Answer

A predetermined sum agreed to in advance

Answer

Liquidated damages are a sum the parties agree in advance to be paid if one party breaches.

Question 2

If a seller breaches a real estate sales contract, the buyer may seek 'specific performance,' which means:

Accepted Answer

A court order forcing the seller to convey the property

Answer

Specific performance is an equitable remedy compelling the breaching party to complete the agreed sale.

Question 3

An 'option contract' gives the holder the right to:

Accepted Answer

Purchase property within a set time for a set price

Answer

An option contract grants the right, but not the obligation, to buy at a fixed price within a time period.

Question 4

A contingency in a purchase agreement is best described as:

Accepted Answer

A condition that must be met for the contract to proceed

Answer

A contingency is a condition (such as financing or inspection) that must be satisfied for the contract to close.

Question 5

Time is of the essence in a contract means:

Accepted Answer

Parties must perform exactly by the stated dates

Answer

This clause makes the stated deadlines strict, and failure to perform on time is a breach.

Real Estate License Practice Test