Section 10, Unit 1: Sales Contracts and Purchase Agreements

Amendment

A buyer and a seller signed a sales contract with a definite closing date of May 15. If the buyer needs to move the closing date to June 15, what document would the buyer use to make.this change? Addendum Amendment Annotation Appendix

Amendment

A change to an existing document Amendment Addendum

Possession

Identifies the date by which the seller will turn over the property to the buyer. Possession Fixtures and personal property Earnest money

Fixtures and personal property

Identifies which items are to remain with the property. Possession Fixtures and personal property Earnest money

Insurance contingency

If the buyer is unable to obtain insurance for a specific amount, the buyer can terminate and receive a refund.

Appraisal contingency

If the property does not appraise at or more than the sales price, the buyer can terminate.

False

As long as a contingency is removed prior to closing, there is no requirement to document their removal in writing by a specified date. (T/F)

True

Buyers must act in good faith in the use of contingencies, or they may lose their right to receive a refund of their earnest money deposit in the event of termination. (T/F)

Buyer

In a real estate transaction, who decides how much earnest money to offer? Buyer Buyer's agent Seller Seller's agent

True

In an offer that's contingent on the sale of the buyer's current home, even if their home doesn't sell by the agreed-upon deadline, the buyer has the option to remove the contingency and proceed with the sale. (T/F)

addendum

May be added without changing the other terms already agreed to in the sales contract Amendment Addendum

True

Sellers are often reluctant to accept offers contingent on the sale of another property, and when they do, they usually reserve the right to market and show the property to other buyers. (T/F)

A deadline for the removal of the condition Who is responsible for the accompanying actions or costs involved The actions necessary to remove the condition

What three items does a contingency normally include? The name of a back-up for the responsible party A deadline for the removal of the condition Who is responsible for the accompanying actions or costs involved The actions necessary to remove the condition

To document the agreement between a buyer and seller in a real estate sales transaction

What's the purpose of a sales contract? To document the agreement between a buyer and seller in a real estate sales transaction To notify the public that an offer has been made on a specific property To serve as an agreement between the seller and the licensee that the seller intends to sell the house To verify that the seller has the legal right to sell the property

amendment

a modification made later to the terms of an already-accepted contract

addendum

a supplemental document that's attached to the original contract before contract acceptance

mortgage contingency, appraisal contingency, inspection contingency, sales contingency

common contingencies

contingencies

conditions that must be met before the agreement of sale is complete and enforceable

Identify the terms and conditions under which a seller will transfer a property to the buyer.

what's the purpose of the sales contract? Identify the terms and conditions under which a landlord will lease a property to a tenant. Identify the terms and conditions under which a seller will transfer a property to the buyer. Identify the terms under which a listing agent will help a seller sell his property. Identify the terms under which a buyer agent will help a buyer locate and purchase property.

contingencies

usually include the actions necessary to remove the condition, a deadline for its removal, and the party responsible for the accompanying actions or costs involved

Inspection contingency

Allows the buyer to terminate if an issue arises during the inspection that cannot be successfully negotiated.

addendum

An addition to an existing document Amendment Addendum

Review the contract for understanding of each section.

Before sitting down to write a purchase agreement, what should a licensee do? Determine whether the licensee should make a competing offer. Have the brokerage's standard form reviewed by an attorney. Review the contract for understanding of each section. Run a credit check on the buyer.

amendment

Changes the original terms of the sales contract Amendment Addendum

True

It is the buyer's and buyer's agent's responsibility to keep track of all contingency deadlines and ensure they are not missed. (T/F)

Sales contract

Offer to purchase, sales agreement, contract of purchase and sale, and purchase agreement are other names for which of the following? Buyer representation agreement Listing agreement Promissory note Sales contract

Mortgage contingency

Protects the buyer's earnest money in the event the buyer is unable to obtain financing.

Earnest money

Provides assurance to the seller that the buyer intends to go through with the sale. Possession Fixtures and personal property Earnest money

Sales contingency

The buyer has made the offer to purchase based on the buyer's current property selling.

offeror

The party extending the offer

offeree

The party receiving the offer

Milton and his agent

The sales contract between buyer Milton and seller Tom has been signed. Whose responsibility is it to keep track of all of the buyer contingency deadlines? Milton and his agent Milton and Tom Tom Tom and Tom's agent

no

The sales contract goes by many different names. Review each of the following names and determine if it's another name for the purchase contract or not. consumer notice (Y/N)

yes

The sales contract goes by many different names. Review each of the following names and determine if it's another name for the purchase contract or not. earnest money agreement (Y/N)

yes

The sales contract goes by many different names. Review each of the following names and determine if it's another name for the purchase contract or not. offer (Y/N)

yes

The sales contract goes by many different names. Review each of the following names and determine if it's another name for the purchase contract or not. offer to purchase (Y/N)

Establish if the sale of the property depends on the buyer obtaining mortgage financing.

What's the purpose of the mortgage contingency provision? Determine how the price of the property will be impacted if the buyer obtains a loan. Establish if the sale of the property depends on the buyer obtaining mortgage financing. Disqualify buyers from making an offer if they need a loan to afford the home. Provide the seller the opportunity to lower the asking price to enable the buyer to afford to purchase the home without having to take out a loan.

To provide a place in the contract where the buyer can indicate whether the sale of the property is contingent upon their obtaining a loan

What's the purpose of the mortgage contingency section in the agreement of sale? To identify whether the seller currently holds a mortgage on the property To provide a place in the Agreement of Sale for the buyer to apply for a mortgage loan To provide a place in the contract where the buyer can indicate whether the sale of the property is contingent upon their obtaining a loan To provide information about lenders that offer good rates on mortgage loans if the buyer needs a loan

Addendum

When Dashiell received the purchase offer for his bungalow, he was surprised to see a page added to the contract requesting that an attorney review the contract. What is Dashiell looking at? Addendum Amendment Annotation Appendix

Buyer's option to purchase a home warranty

Which of the following agreement terms is typically a standard part of the sales contract? Buyer's option to purchase a home warranty Selection of a closing agent Specific closing instructions Transfer of warranty on built-in appliances and HVAC systems

Offer to purchase

Which of the following is synonymous with a sales contract? MLS listing Mortgage Offer to purchase Promissory note

The amount of the purchase offer The buyer's financing contingencies The earnest money deposit amount

Which three provisions are generally included? The amount of the purchase offer The buyer's financing contingencies The types of offers the seller will consider The earnest money deposit amount

The agreement of sale, as signed by the parties Any associated addenda signed by the parties

Which two documents constitute a contract between the buyer and the seller? The agreement of sale, as signed by the parties Any associated addenda signed by the parties The signed brokerage relationship agreement

Specific closing and settlement instructions The selection of a closing agent

Which two of the following are commonly added to the sales contract? Specific closing and settlement instructions The selection of a closing agent Remuneration for the buyer should the seller reject the offer

True

With an appraisal contingency, the buyer can use the fact that the property hasn't appraised to terminate and receive a refund of the earnest money. (T/F)

Addendum

Your brokerage firm uses pre-printed sales contract forms, but your seller wants to add some language about staying in the house and renting from the buyer for a month after closing. What should you use to add this information? Addendum Amendment Annotation Appendix

Addendum

Your buyer, Billy, wants to make an offer on the craftsman house he saw today, but he wants the sellers to start the paperwork for a tax reassessment before closing. This isn't part of the standard sales contract in your area. What will you use to accomplish this request? Addendum Amendment Annotation Appendix