Purchase Contracts

What is a financing contingency?

This is a section of the contract that makes the sale contingent on the buyer obtaining an adequate mortgage loan.

Jill is buying a house. The purchase contract states that earnest money will be disbursed to her if the seller defaults. What does that mean?

This means that the "good faith money" that Jill paid will get returned to her if the seller does not perform their contractual obligations.

Put these actions in the most likely chronological order.

an offer is made a counteroffer is made counteroffer is accepted acceptance of the counteroffer the contract forms - this is the effective date copies of all signed forms must be delivered to all parties the due diligence period starts

Modifications to a contract can occur:

at any time between contract date and closing

Why does the Uniform Commercial Code regulate loans for cooperative shares?

because cooperative shares are considered personal property

An addenda is added to a contract ______ it is signed. An amendment is added to a contract ________ it is signed

before, after

Which of these parties is advised to take precaution by caveat emptor?

buyer

All of these will most likely help give your client a better chance of securing a property in a competitive market EXCEPT:

including an appraisal contingency

In the lead-based paint clause of the contract, which box should be checked? Here is the text of the contract: 9. Lead-Based Paint. To the best of Seller's knowledge, the residential dwelling(s) on the Property (including any portion thereof or painted fixture therein):

was not built prior to 1978

Buyer Agent Ada needs to send a notice to her counterpart on the seller side. She emails the notice to the other agent. When is the notice considered delivered and received?

when she sends the email (per the timestamp on the transmission)

Which of the following is TRUE about counteroffers?

A counteroffer is considered a rejection of the original offer.

Manderlay Mansion was built in 1975. It is being sold to Rebecca. What is TRUE?

A lead-based paint disclosure should accompany the sales contract.

Charity is a listing agent in Georgia. She and her seller have received multiple offers on the seller's home. They decide to tell none of the buyer's agents that there are multiple offers. Evaluate this situation.

A listing agent and their seller can choose to tell none of the buyer's agents about the multiple offers.

In the Buyer's Acceptance and Contact Information blanks, how should the buyers' names appear?

Devon Jones and Christine Jones, a married couple

If a buyer is in the process of countering an offer, the seller cannot sell the property to anyone else.

FALSE

Which of these Georgia laws require that certain types of purchase contracts come with rescission rights for buyers? (Select All That Apply)

Georgia Condominium Act Georgia Land Sales Act Georgia Time-Share Act

What is the right of first refusal?

If the owner of the condominium decides to sell the unit, the association has the first chance to buy or lease the property.

A sales agreement states that if an agreement is terminated due to the buyer's default, and the earnest money is disbursed to the seller, this constitutes liquidated damages in full settlement of all claims of the seller against the buyer. Evaluate.

If the seller wants to reserve the right to sue the buyer for defaulting, they should not accept the earnest money.

What is the difference between a lease-option agreement and a lease-purchase agreement?

In a lease-option agreement, the renter has the choice to buy the property after a certain point. With a lease-purchase agreement, they are obligated.

What is a good practice in choosing the closing date?

It is important to make sure there is a proper amount of time allowed for performance.

What is the advantage of using a binder to submit an offer?

It simplifies the offer process, so a full contract doesn't need to be drawn up for every offer.

Jared signs a lease-option agreement for a small house. What does that mean?

Jared can rent the house for a period of time and then have the option to buy the property.

A buyer and a seller discuss the changes to the original offer they would both potentially agree to. They come to a verbal understanding, and the seller makes an official counteroffer. Is the buyer obligated to accept? Why or why not?

No, an offeree never has to accept an offer, even if they agreed to the terms verbally.

Seller Josephine receives an offer from buyer Asa for $225,000. She makes a counteroffer of $240,000. Asa rejects the counteroffer. Josephine hasn't gotten any more offers, so she goes back and signs the original $225,000 offer and returns it to Asa. Are they in contract? Why or why not?

No, because when Josephine counteroffered, she rejected the original offer. She can't go back and accept it, as it has been terminated.

Many years ago, Listing Agent Sara had a passionate affair with Jerry, a local shop owner. Now, she is representing him as a seller in a real estate transaction. Does she need to disclose their past relationship to the other parties?

Sara needs to disclose the material relationship between her and Jerry.

A real estate sales contract can include a provision that allows for the transfer of personal property.

TRUE

In Georgia, verbal offers have to be presented.

TRUE

What does it mean if an offer includes an escalation clause?

The buyer will automatically increase their offer price by a certain increment if the seller receives a better offer on the same property.

A hurricane destroys a large portion of a house prior to closing. The sales contract has a "risk of damage to property" clause. What can the buyer do?

The buyer, after receiving notice from seller of damage, can take the time specified in the contract to decide if they want to continue the purchase.

All of the following is TRUE about legal descriptions in a sales contract EXCEPT:

The contract can include language which puts off the legal description until closing.

What is the time limit of an offer?

The contract will have a time and date at which the offer expires. If the seller does not accept the offer before that, the contract is null and void.

Which of the following is the BEST description of a contract for deed?

Upon completion of the sale, the seller keeps the title; the buyer gets the title after making a certain amount of payments over a specified time period.

What is a "good and marketable" title?

a title that is free from significant encumbrances or defects that might prevent a purchaser from enjoying or eventually selling the property

Which of actions, if done by a licensee who is not a lawyer, would be considered the unlicensed practice of law in Georgia? (Select All That Apply)

charging a fee for completing a real estate form writing a contract from scratch giving legal advice conducting a closing

A binder can also be called a

letter of intent

Lisa is a buyer's agent. She and her buyer are in a multiple offer situation. She wants to help her buyer navigate this stressful time. She should do all of the below EXCEPT:

remind the listing agent that legal action can be taken if they don't disclose every detail of the multiple offers

In this portion of the contract, which box should be checked? b. Earnest money paid under this section ☐ shall ☐ shall not be applied towards funds due from Buyer at closing

the "shall" box

Agent Simone has a seller client who has asked her, in writing, to only present offers over $350,000. Simone gets three offers: one for $300,000, one for $355,000, and one for $360,000. Which ones should she present to the client?

the $355,000 offer and the $360,000 offer

Who makes the decision on whether or not to accept an offer from a buyer?

the seller

Why might a buyer deposit earnest money?

to show the seller that they are serious about an offer