Deck 7: Preparation and Review of a Real Estate Contract

Question 1

Money paid by the purchaser at the time the contract is signed is called earnest money.

Answer 1

True

Question 2

Cash equivalents are certified funds, cashier's check, or treasurer's check.

Answer 2

True

Question 3

The date the purchaser takes possession of the property is known as the closing date of the contract.

Answer 3

False

Question 4

The closing costs of the sale are always paid by the purchaser.

Question 5

The date on which the parties agree to perform all their promises under the contract is known as the closing date.

Question 6

The seller should be identified in a contract in exactly the way the seller holds title to the real property.

Question 7

A personal check is deemed a cash equivalent under a contract.

Question 8

Marketable title and insurable title are the same thing.

Question 9

It is not necessary for a contract to state consideration flowing from one party to another.

Question 10

The contract should state the purchase price of the property.

Question 11

Title that a prudent purchaser with full knowledge of all the facts would accept is known as insurable title.

Question 12

It is not necessary for a contract to state the purchase price of the property.

Question 13

Title that a prudent purchaser with full knowledge of all the facts would accept is known as marketable title.

Question 14

Property taxes for the current year are generally prorated under a contract.

Question 15

The closing costs of the sale are always paid by the seller.

Question 16

Absent a provision to the contrary in the contract, the risk of loss for destruction to the property passes to the purchaser at the time the contract is signed.

Question 17

A purchaser usually takes possession of the property at the time the contract is signed.

Question 18

A purchaser usually takes possession of the property at the time of the closing of the contract.

Question 19

Earnest money under a contract is always the down payment of the purchase price.

Question 20

All of the promises, conditions, and covenants contained in a contract are merged into the deed of conveyance at time of closing and do not survive the closing of the sale.

Question 21

A sworn statement of fact regarding a lease is known as a tenant estoppel letter.

Question 22

The failure to meet a condition precedent makes a contract unenforceable.

Question 23

An option to purchase property without payment of consideration by the optionee is not valid.

Question 24

The purchaser's right to terminate the contract in the event the improvements are damaged before closing is known as a "free look."

Question 25

The doctrine of caveat emptor requires that a buyer bear the burden of examining and finding any defects in the condition of improvements on real estate that he or she purchases.

Question 26

If time is not of the essence, a party has a reasonable period of time after a date specified in a contract to perform.

Question 27

Generally, contracts are freely assignable by purchaser and seller.

Question 28

The law of the state where a contract is signed generally controls enforcement of a contract for real property.

Question 29

An optionee of an option to purchase property is required to purchase the property described in the option.

Question 30

Some states require the seller of residential property to make a full disclosure about the condition of the property to the buyer.

Question 31

Estoppel letters benefit the sellers of real property.

Question 32

It is not necessary for real estate contracts to be witnessed, notarized, and recorded.

Question 33

A purchaser's right to inspect the property prior to closing is known as a "free look."

Question 34

Free assignment of a real estate contract by purchaser and seller can be prohibited in the contract.

Question 35

Estoppel letters benefit purchasers of real property.

Question 36

It is necessary for real estate contracts to be witnessed, notarized, and recorded.

Question 37

"Time is of the essence" makes time limits set forth in a contract strictly enforceable.

Question 38

The common law doctrine of caveat emptor means "let the seller beware."

Question 39

The law in most states prohibits parties from orally testifying about a written contract.

Question 40

The law of the state where the real property is located generally controls enforcement of a contract for real property.

Question 41

Acme Investment has entered into a contract to purchase an office building from Good Office Corp. The sales price is all cash to the seller. Prior to the closing, Acme assigns its rights under the contract to Zebra Investments. Zebra shows up at the closing with the cash to buy the office building. Zebra is a competitor of Good Office and Good Office does not want to sell the office building to Zebra. Can Good Office refuse to sell to Zebra? What issues may affect your answer?

Question 42

Justin has entered into a contract to buy a home from Skylar. The contract contains no express warranties concerning the condition of the home. After Justin buys the home from Skylar, he discovers that the home's foundation is cracked and the structure is unsafe. It will be expensive to repair the problem. Can Justin make Skylar pay for the repairs? Explain your answer.

Question 43

Stefanie has entered into a contract to purchase a shopping center from Ryan. The contract requires that the closing take place on July 25. Stefanie encounters some problems with obtaining a mortgage loan and the transaction does not close on July 25. Is Stefanie in default on July 26? What issues may affect your answer?