Indiana Contracts
Practice Questions & Answers (2026)
Contract law questions on the Indiana real estate exam test both general contract principles and Indiana-specific transaction requirements. The Indiana Professional Licensing Agency tests how Indiana contract law applies to purchase agreements, counteroffers, contingencies, and earnest money disputes. Pay close attention to offer and acceptance mechanics, how counteroffers extinguish prior offers, and the specific timelines under Indiana law for earnest money handling and contingency resolution. These are areas where candidates who studied nationally often apply the right concept but the wrong IN-specific timeframe or rule.
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Indiana Contracts — Practice Questions & Answers
147 questions on Contracts from the Indiana real estate question bank. First 10 are free — sign up to unlock all 147.
Q1. In Indiana, if a seller rejects a buyer's offer and makes a counteroffer, the original offer:
Explanation
A counteroffer is a rejection of the original offer and the creation of a new offer. Once the seller counters, the original offer is terminated and the buyer is not obligated to accept or respond.
Q2. A buyer includes an inspection contingency in their purchase offer. After the inspection, the buyer may:
Explanation
An inspection contingency gives the buyer the right to have the property inspected and, based on the findings, to request repairs, credits, or price reductions — or to cancel the contract within the specified contingency period.
Q3. What is the difference between an 'as-is' sale and a standard real estate sale?
Explanation
In an 'as-is' sale, the seller sells the property in its current condition and will not make repairs. However, the seller must still disclose known material defects. The buyer retains the right to inspect.
Q4. A land contract (contract for deed) is an installment sale arrangement in which:
Explanation
In a land contract (contract for deed), the seller retains legal title to the property while the buyer takes possession and makes installment payments. The seller conveys legal title only after the purchase price has been paid in full.
Q5. Rescission of a real estate contract means:
Explanation
Rescission cancels the contract and returns both parties to the positions they were in before the contract was made. Rescission may be mutual (by agreement) or ordered by a court in cases of fraud, misrepresentation, or material breach.
Q6. Under Indiana law, an amendment to a real estate purchase agreement must be:
Explanation
Under the Statute of Frauds and general contract law principles, amendments to real estate purchase agreements must be in writing and signed by all parties to be enforceable.
Q7. For a real estate contract in Indiana to be enforceable, it must be:
Explanation
Under the Statute of Frauds, real estate contracts must be in writing and signed by the parties to be enforceable in Indiana.
Q8. Which element is NOT required for a valid contract?
Explanation
A valid contract requires offer and acceptance, consideration, competent parties, and legal purpose. Notarization is not a requirement for contract validity.
Q9. A counteroffer legally:
Explanation
A counteroffer constitutes a rejection of the original offer and simultaneously creates a new offer that the original offeror may accept or reject.
Q10. In an Indiana purchase agreement, earnest money is typically held by:
Explanation
Earnest money in Indiana is typically deposited with the listing broker or a title company and held in an escrow account until closing.
Q11. A contract is voidable when:
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