Contracts

Question 2

Contracts

Define a contract in real estate.

Answer 2

An agreement between parties formed by a meeting of the minds to do or not do something; not the paper itself but the enforceable agreement. (PREP 6th, Ch.10, p.129)

Question 3

Contracts

List the four legal statuses a court may assign to a contract (validity/enforceability).

Answer 3

Valid; valid but unenforceable; void; voidable. (PREP 6th, Ch.10, p.129)

Question 4

Contracts

What makes a contract valid?

Answer 4

It meets legal requirements for validity (competent parties, mutual consent, lawful objective, consideration). (PREP 6th, Ch.10, pp.129-131)

Question 5

Contracts

What does ‘valid but unenforceable’ mean?

Answer 5

A contract meets validity tests but cannot be enforced in court (e.g., must be in writing under Statute of Frauds). (PREP 6th, Ch.10, p.129)

Question 6

Contracts

What is a void contract?

Answer 6

An agreement with no legal effect from inception; it lacks an essential element and cannot be enforced. (PREP 6th, Ch.10, p.129)

Question 7

Contracts

What is a voidable contract?

Answer 7

A valid contract that one party can rescind due to a legal reason such as misrepresentation, duress, or lack of capacity. (PREP 6th, Ch.10, p.129)

Question 8

Contracts

List the basic criteria for contract validity in real estate.

Answer 8

Competent parties, mutual consent (offer and acceptance), consideration, and lawful purpose. (PREP 6th, Ch.10, p.131)

Question 9

Contracts

What does the Statute of Frauds require for real estate?

Answer 9

Certain contracts transferring interests in real estate must be in writing to be enforceable. (PREP 6th, Ch.10, pp.129-131)

Question 10

Contracts

What is mutual consent (meeting of the minds)?

Answer 10

The parties agree to the same terms at the same time, typically via offer and acceptance. (PREP 6th, Ch.10, p.133)

Question 11

Contracts

Define consideration in a real estate contract.

Answer 11

Something of value exchanged by each party (money, promises, services) to support the agreement. (PREP 6th, Ch.10, p.131)

Question 12

Contracts

Differentiate bilateral and unilateral contracts.

Answer 12

Bilateral: both parties promise performance; Unilateral: only one party promises (other accepts by performance). (PREP 6th, Ch.10, p.135)

Question 13

Contracts

Define an option contract.

Answer 13

A unilateral contract giving a party the right to buy or lease at a set price within a set time; only optionor is bound until exercised. (PREP 6th, Ch.14, p.205)

Question 14

Contracts

What is a contract for deed (installment sale)?

Answer 14

The buyer pays over time while the seller retains legal title until final payment; equitable title passes to the buyer. (PREP 6th, Ch.14, p.207)

Question 15

Contracts

Define offer and acceptance.

Answer 15

A definite proposal by one party and unqualified agreement by the other, creating mutual assent. (PREP 6th, Ch.10, pp.133-135)

Question 16

Contracts

What is ‘assignment’ of a contract?

Answer 16

A transfer of contractual rights and duties to another party unless prohibited by the agreement. (PREP 6th, Ch.10, p.139)

Question 17

Contracts

What is ‘novation’?

Answer 17

The substitution of a new contract or party for an old one, releasing liability under the original agreement. (PREP 6th, Ch.10, p.139)

Question 18

Contracts

What is ‘contingency’ in a sale contract?

Answer 18

A condition that must be satisfied for the contract to proceed (e.g., financing, inspection). (PREP 6th, Ch.14, pp.201-203)

Question 19

Contracts

A buyer withdraws an offer before the seller accepts. What is the result?

Scenario

Answer 19

The offer terminates with no contract formed; no penalty applies because there is no acceptance. (PREP 6th, Ch.10, pp.133-135)

Question 20

Contracts

A seller accepts an offer but dies before closing. Is the contract enforceable?

Scenario

Answer 20

Yes; death does not terminate most real estate contracts because duties pass to the estate (unless personal services). (PREP 6th, Ch.10, p.139)

Question 21

Contracts

A contract was signed under threat. What is its status?

Scenario

Answer 21

Voidable at the option of the harmed party due to duress. (PREP 6th, Ch.10, p.129)

Question 22

Contracts

List common causes of contract termination.

Answer 22

Performance, infeasibility/impossibility, mutual rescission, novation, assignment, breach, lapse of time, revocation. (PREP 6th, Ch.10, p.139)

Question 23

Contracts

Define breach of contract.

Answer 23

A failure to perform as required by the agreement without legal excuse. (PREP 6th, Ch.10, p.139)

Question 24

Contracts

Define liquidated damages.

Answer 24

An agreed amount in the contract to be paid in the event of breach (e.g., forfeiture of earnest money). (PREP 6th, Ch.14, pp.201-203)

Question 25

Contracts

What is specific performance?

Answer 25

A remedy requiring a breaching party to perform as agreed rather than pay damages. (PREP 6th, Ch.10, p.139)

Question 26

# Contracts Buyer fails to deliver earnest money as promised. What may the seller do? ## Footnote Scenario

Answer 26

Declare the buyer in breach and seek remedies such as termination and liquidated damages if provided. (PREP 6th, Ch.14, pp.201-203)

Question 27

# Contracts A financing contingency is not met by the deadline. What happens? ## Footnote Scenario

Answer 27

The contract may terminate without penalty per the contingency clause terms. (PREP 6th, Ch.14, pp.201-203)

Question 28

# Contracts When are electronic signatures acceptable?

Answer 28

When permitted by law and parties consent; electronic contracting is recognized for enforceability. (PREP 6th, Ch.10, p.131)

Question 29

# Contracts What is an 'as-is' clause?

Answer 29

A provision stating the property is sold in its present condition, though material defects must still be disclosed. (PREP 6th, Ch.14, pp.201-203)

Question 30

# Contracts Define earnest money.

Answer 30

A buyer's good-faith deposit held in escrow to secure the contract and potentially apply to damages if buyer breaches. (PREP 6th, Ch.14, pp.201-203)

Question 31

# Contracts Seller accepts a backup offer while first contract is active. Any issue? ## Footnote Scenario

Answer 31

It’s allowed if clearly labeled as a backup subject to the first contract’s failure; avoid creating conflicting duties. (PREP 6th, Ch.14, pp.201-203)

Question 32

# Contracts What is included in a typical sale (purchase) contract?

Answer 32

Identification of parties and property, price/terms, earnest money, contingencies, closing/possession dates, and signatures. (PREP 6th, Ch.14, pp.198-203)

Question 33

# Contracts Define 'time is of the essence.'

Answer 33

A clause making performance deadlines strict and material to the agreement. (PREP 6th, Ch.14, pp.201-203)

Question 34

# Contracts A buyer misses the inspection deadline under a 'time is of the essence' clause. Consequence? ## Footnote Scenario

Answer 34

Buyer may forfeit related rights or be in breach due to missed material deadline. (PREP 6th, Ch.14, pp.201-203)

Question 35

# Contracts What is counteroffer?

Answer 35

A response that changes terms of the original offer and constitutes a rejection plus new offer. (PREP 6th, Ch.10, p.135)

Question 36

# Contracts Seller signs the counteroffer after the original offer expired. Effect? ## Footnote Scenario

Answer 36

No contract forms unless buyer re-accepts; the expired offer cannot be accepted. (PREP 6th, Ch.10, p.135)

Question 37

# Contracts Define equitable title in a sale contract context.

Answer 37

An interest giving the buyer the right to obtain legal title upon performance (often after contract execution). (PREP 6th, Ch.14, p.198)

Question 38

# Contracts What is contract contingencies 'satisfaction or waiver'?

Answer 38

A contingency must be satisfied or expressly waived; failure typically permits termination per terms. (PREP 6th, Ch.14, pp.201-203)

Question 39

# Contracts Seller refuses to close though buyer is ready, willing, and able. Buyer remedy? ## Footnote Scenario

Answer 39

Seek specific performance to compel closing, or damages if appropriate. (PREP 6th, Ch.10, p.139)

Question 40

# Contracts Buyer discovers a material defect not disclosed before acceptance. Options? ## Footnote Scenario

Answer 40

Pursue contractual remedies (repair, credit, termination) per disclosure and inspection clauses. (PREP 6th, Ch.14, pp.201-203)

Question 41

# Contracts What is parol evidence?

Answer 41

Oral or outside evidence not in the written contract; often barred from altering clear written terms. (PREP 6th, Ch.10, p.131)

Question 42

Who may be named to hold earnest money in a Georgia purchase contract?

Answer 42

The brokerage, a closing attorney, or another named holder as specified in the contract. (The contract must clearly identify the holder and handling.)

Question 43

When should earnest money be deposited in Georgia once an offer is accepted?

Answer 43

Promptly after acceptance, following the terms of the agreement and the brokerage’s escrow procedures. (Timely deposit prevents commingling issues.)

Question 44

If the contract fails, how is earnest money disbursed in Georgia?

Answer 44

According to the contract’s instructions or written agreement of the parties; absent agreement, the holder follows the contract’s dispute procedure.

Question 45

May a Georgia broker release earnest money without both parties’ signatures?

Answer 45

Yes, if the contract authorizes a specific release mechanism (e.g., unilateral release after notice) or upon a final court order or interpleader outcome.

Question 46

What must a Georgia broker do if an earnest money dispute cannot be resolved?

Answer 46

Follow the contract’s dispute clause (often notice-and-wait or interpleader) and keep funds in escrow until resolution.

Question 47

Are 'as‑is' clauses permitted in Georgia sale contracts?

Answer 47

Yes, but they do not relieve parties from disclosing known material defects or fraud.

Question 48

Can a Georgia licensee draft custom contract clauses for consumers?

Answer 48

Licensees use approved forms and fill‑in-the‑blanks; they must not practice law by creating custom legal language beyond their competency.

Question 49

Is electronic signature enforceable on Georgia real estate contracts?

Answer 49

Yes, electronic contracting and signatures are enforceable when the parties consent and law permits.

Question 50

What must a Georgia contract state about brokerage relationships?

Answer 50

The contract and/or disclosures must state each party’s representation status (client or customer) and any dual/designated agency with proper consent.

Question 51

What is the broker’s duty regarding delivery of signed contracts in Georgia?

Answer 51

Deliver true copies of signed agreements promptly to all parties and maintain complete transaction records per brokerage policy.