Deck 7: The Basic Real Estate Contract

Question 1

Under common law, no party to a contract is entitled to attorney's fees unless the contract so provides.

Answer 1

True

Question 2

Under a contract for sale and purchase, if the buyer defaults:

A) the buyer will want to risk only the deposit paid
B) the seller will want to limit his or her damages to the return of the deposit
C) neither a nor b

Answer 2

A

Question 3

Under federal law, a sale is considered an installment sale if at least one payment under the contract is made after the close of the taxable year of sale.

Answer 3

True

Question 4

A lease of real property does not have to be in writing if the lease term is one year or less.

Question 5

A contract in which the seller gives a potential buyer the exclusive right within a specified, limited time to purchase real property is called ___.

Question 6

The following is not a boilerplate provision of a contract:

A) governing law provision
B) legal description provision
C) severability provision

Question 7

Explain the way an option contract works.

Question 8

The date upon which the contract becomes legally binding on all parties is called the ___.

Question 9

In a sale subject to an existing mortgage, the buyer becomes responsible for the seller's payments under the existing mortgage, and the buyer is primarily liable under the mortgage note.

Question 10

In drafting a contract for sale and purchase, what do most buyers want in the contract?

Question 11

The financing method in which the buyer assumes personal responsibility for payment of the seller's existing mortgage loan and in which the buyer is primarily liable for any deficiency judgments is called     .

Question 12

Explain the ways a purchase of real property may be financed.

Question 13

In drafting a contract for sale and purchase, what do most sellers want in the contract?

Question 14

In an option contract:

A) the money the potential buyer pays is considered a deposit
B) the money the potential buyer pays is not considered a deposit
C) the buyer is committing himself or herself to the purchase of the property

Question 15

The ___ is a state statute indication that contracts must be in writing and signed by the party to be charged in order to be legally enforceable.

Question 16

In order for any valid contract to exist, these elements must be present:

A) mutual assent, legal capacity of the parties, consideration, and a writing
B) mutual assent, a legal purpose, consideration, and a writing
C) mutual assent, legal capacity of the parties, consideration, and a legal purpose

Question 17

A purchase money mortgage:

A) is always a second mortgage
B) is of shorter duration than institutional mortgages
C) both a and b

Question 18

If the parties to a contract for sale and purchase are using a standard form contract and wish to modify it, what should they do?

Question 19

An escrow agent must open an individual account for each earnest money deposit.

Question 20

___is something of value that the parties exchange as part of their bargain.