Real Estate License Contracts 5

Question 1

A land contract (contract for deed) is one in which:

Accepted Answer

The seller retains title until the buyer pays in full

Answer

In a land contract, the seller keeps legal title while the buyer makes installment payments until paid off.

Question 2

Which clause allows a buyer to back out if they cannot obtain a mortgage?

Accepted Answer

Financing contingency

Answer

A financing contingency lets the buyer cancel without penalty if loan approval is not obtained.

Question 3

Fraud in a contract makes the agreement:

Accepted Answer

Voidable by the injured party

Answer

Fraud makes a contract voidable at the option of the party who was deceived.

Question 4

An executory contract is one in which:

Accepted Answer

Something remains to be performed by one or both parties

Answer

An executory contract still has obligations remaining to be performed, such as a signed sale before closing.

Question 5

Which of the following best describes 'duress' in contract formation?

Accepted Answer

Unlawful pressure forcing a party to agree

Answer

Duress is unlawful coercion or threat that forces a party into a contract, making it voidable.

Real Estate License Practice Test