Purchase agreements, contingencies, and the closing and settlement process tested on state real estate licensing exams.
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- What is an earnest money deposit?
- A partial payment by the buyer demonstrating serious intent, held in escrow until closing.
- When does a purchase agreement become binding?
- When both buyer and seller have signed and accepted all terms.
- Define a contingency.
- A condition that must be satisfied for the contract to remain binding on both parties.
- What is a financing contingency?
- A clause allowing the buyer to cancel if mortgage approval cannot be obtained.
- What is a home inspection contingency?
- A condition allowing the buyer to have the property inspected and cancel if major defects are found.
- What is an appraisal contingency?
- A clause allowing the buyer to cancel if the property appraises below the agreed purchase price.
- What is a title contingency?
- A condition allowing the buyer to cancel if a clear title cannot be delivered.
- Define title in real estate.
- Legal ownership and the right to possess, use, and transfer a property.
- What is title insurance?
- Insurance protecting against financial loss from title defects discovered before or after purchase.
- What does a title search reveal?
- The property's ownership history and any liens, mortgages, or encumbrances against it.
- What is escrow in a real estate transaction?
- A neutral third party holds funds and documents until all contract conditions are met.
- What is a settlement statement?
- A document itemizing all credits, debits, and funds paid or received at closing.
- Define proration in closing.
- Dividing recurring expenses (taxes, utilities, HOA fees) between buyer and seller based on occupancy dates.
- What is the purpose of a final walkthrough?
- To verify the property condition matches the contract and any agreed repairs are complete.
- When must a closing disclosure be provided to the buyer?
- At least 3 business days before closing.