Real Estate Sales Exam FREE Real Estate Sales Real Estate Contracts Questions and Answers 2 — Questions and Answers
Question 1: A buyer signs a purchase agreement but the seller never signs it. What is the status of this transaction?
- The contract is fully executed
- The contract is voidable by the buyer
- No valid contract exists (Correct answer)
- The buyer can enforce the contract through specific performance
Correct answer: No valid contract exists
A contract requires acceptance by all parties, and without the seller's signature there is no mutual agreement.
Question 2: Which clause in a real estate contract allows a buyer to cancel if they cannot secure financing by a specified date?
- Escalation clause
- Financing contingency (Correct answer)
- Habendum clause
- Acceleration clause
Correct answer: Financing contingency
A financing contingency protects the buyer by allowing contract termination if they fail to obtain a mortgage commitment by the deadline.
Question 3: What is the legal effect of an 'as-is' clause in a residential purchase contract?
- The seller is exempt from all disclosure requirements
- The buyer waives the right to a home inspection
- The seller will not make repairs but must still disclose known defects (Correct answer)
- The property is sold without any warranties including title
Correct answer: The seller will not make repairs but must still disclose known defects
An as-is clause means the seller will not make repairs, but most states still require disclosure of known material defects.
Question 4: In a land contract (contract for deed), when does the buyer typically receive legal title?
- At the time of signing the contract
- After the first payment is made
- When all payments under the contract are completed (Correct answer)
- When the buyer takes physical possession
Correct answer: When all payments under the contract are completed
In a contract for deed, the seller retains legal title until the buyer fulfills all payment obligations under the agreement.
Question 5: Which of the following would make a real estate contract voidable rather than void?
- A contract signed by a person declared legally incompetent by a court
- A contract for the sale of a property that has been condemned
- A contract signed by a 17-year-old (Correct answer)
- A contract with an illegal purpose
Correct answer: A contract signed by a 17-year-old
A contract signed by a minor is voidable because the minor may choose to disaffirm or ratify it upon reaching the age of majority.
Question 6: What does the 'time is of the essence' clause establish in a real estate purchase contract?
- The closing must occur within 30 days
- Deadlines in the contract are strictly enforceable and failure to meet them is a material breach (Correct answer)
- The seller must vacate the property immediately after closing
- The buyer must complete inspections before making an offer
Correct answer: Deadlines in the contract are strictly enforceable and failure to meet them is a material breach
A time is of the essence clause makes all stated deadlines firm, and missing them constitutes a breach that may allow the other party to terminate.
Real Estate Sales Exam FREE Real Estate Sales Real Estate Contracts Questions and Answers 2
A buyer signs a purchase agreement but the seller never signs it.
What is the status of this transaction?