REAL ESTATE CONTRACTS FINAL EXAM 2026/2027
QUESTIONS AND SOLUTIONS RATED A+
✔✔Broker Protection Clause - ✔✔Clause in a contract that protects a broker from losing
a commission in the event a transaction is not completed or is intentionally delayed until
after the listing expires.
✔✔Competent Party - ✔✔A person who has the capacity to be engaged in a legal
contract; being of sound mind and body.
✔✔Covenant - ✔✔A written agreement between two or more parties in which a party or
parties pledge to perform or not to perform specified acts with regard to property;
usually found in such real estate documents as deed, mortgage, lease, and contract
deeds.
✔✔Default - ✔✔The nonperformance of duty, whether arising under a contract or
otherwise; failure to meet an obligation when due.
✔✔Discharge - ✔✔The act of terminating a contract or agreement; this may be done
when it has been completely performed for by another party's breach or default.
✔✔Duress - ✔✔Unlawful constraint exercised upon a person whereby he is forced to do
some act against his will. A contract entered into under duress is voidable.
✔✔Equitable Title - ✔✔The interest held by a vendee under a contract for deed or an
installment contract; the equitable right to obtain absolute ownership to property when
legal title is held in another's name.
✔✔Installment Sale - ✔✔A transaction in which the sales price is paid in two or more
installments over two or more years. If the sale meets certain requirements, a taxpayer
can postpone reporting such income until future years by paying tax each year only on
the proceeds received that year.
✔✔Mutual Assent - ✔✔Requirement that there must be complete agreement between
the parties about the purpose and terms of a contract.
✔✔Purchase Money Mortgage - ✔✔A note secured by a mortgage or deed of trust
given by a buyer, as borrower, to a seller, as lender, as part of the purchase price of the
real estate.
✔✔Specific Performance - ✔✔A legal action to compel a party to carry out the terms of
a contract.
QUESTIONS AND SOLUTIONS RATED A+
✔✔Broker Protection Clause - ✔✔Clause in a contract that protects a broker from losing
a commission in the event a transaction is not completed or is intentionally delayed until
after the listing expires.
✔✔Competent Party - ✔✔A person who has the capacity to be engaged in a legal
contract; being of sound mind and body.
✔✔Covenant - ✔✔A written agreement between two or more parties in which a party or
parties pledge to perform or not to perform specified acts with regard to property;
usually found in such real estate documents as deed, mortgage, lease, and contract
deeds.
✔✔Default - ✔✔The nonperformance of duty, whether arising under a contract or
otherwise; failure to meet an obligation when due.
✔✔Discharge - ✔✔The act of terminating a contract or agreement; this may be done
when it has been completely performed for by another party's breach or default.
✔✔Duress - ✔✔Unlawful constraint exercised upon a person whereby he is forced to do
some act against his will. A contract entered into under duress is voidable.
✔✔Equitable Title - ✔✔The interest held by a vendee under a contract for deed or an
installment contract; the equitable right to obtain absolute ownership to property when
legal title is held in another's name.
✔✔Installment Sale - ✔✔A transaction in which the sales price is paid in two or more
installments over two or more years. If the sale meets certain requirements, a taxpayer
can postpone reporting such income until future years by paying tax each year only on
the proceeds received that year.
✔✔Mutual Assent - ✔✔Requirement that there must be complete agreement between
the parties about the purpose and terms of a contract.
✔✔Purchase Money Mortgage - ✔✔A note secured by a mortgage or deed of trust
given by a buyer, as borrower, to a seller, as lender, as part of the purchase price of the
real estate.
✔✔Specific Performance - ✔✔A legal action to compel a party to carry out the terms of
a contract.
