Pennsylvania Contracts
Practice Questions & Answers (2026)
Contract law questions on the Pennsylvania real estate exam test both general contract principles and Pennsylvania-specific transaction requirements. The Pennsylvania State Real Estate Commission tests how Pennsylvania 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 Pennsylvania law for earnest money handling and contingency resolution. These are areas where candidates who studied nationally often apply the right concept but the wrong PA-specific timeframe or rule.
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Pennsylvania Contracts — Practice Questions & Answers
153 questions on Contracts from the Pennsylvania real estate question bank. First 10 are free — sign up to unlock all 153.
Q1. In Pennsylvania, a listing agreement is a contract between the:
Explanation
A listing agreement is a contract between the property owner (seller) and the listing broker. It establishes the broker's authority to market and sell the property and specifies the broker's compensation.
Q2. Which contingency in a purchase agreement gives the buyer the right to withdraw if they cannot secure financing on specified terms?
Explanation
A mortgage (financing) contingency allows the buyer to terminate the contract and recover their earnest money if they are unable to obtain financing that meets the terms specified in the contract — such as a certain loan amount, interest rate, or loan type.
Q3. An addendum to a purchase contract:
Explanation
An addendum adds to or modifies specific terms of an existing contract without canceling the original agreement. The addendum and the original contract together form the complete agreement. All parties must sign the addendum for it to be binding.
Q4. The remedy of 'specific performance' in a real estate contract allows:
Explanation
Specific performance is an equitable remedy in which a court orders the breaching party to perform their contractual obligations. In real estate, because each property is unique, courts may grant specific performance to compel a defaulting seller to complete the sale.
Q5. Under Pennsylvania law, which type of deed is used most commonly in residential sales and provides full warranties of title?
Explanation
A general warranty deed provides the buyer with the most complete protection, with the grantor warranting title against all claims — even those arising before the grantor owned the property. It is the most common deed used in Pennsylvania residential sales.
Q6. An agreement of sale in Pennsylvania is NOT binding until:
Explanation
A contract of sale in Pennsylvania (and generally) is not binding until both parties have signed and a fully executed copy has been communicated/delivered to both parties. Acceptance is not effective until the offeror is notified.
Q7. In Pennsylvania, an Agreement of Sale for residential real estate must include which of the following to be enforceable?
Explanation
A valid Pennsylvania Agreement of Sale must identify the parties, provide a legal description or sufficient description of the property, state the purchase price, and include the signatures of all parties. These are the essential elements for enforceability under the Statute of Frauds.
Q8. A contingency clause in a purchase agreement:
Explanation
A contingency clause makes the contract conditional upon a specified event, such as the buyer obtaining mortgage financing, a satisfactory home inspection, or the sale of the buyer's current home. If the condition is not met, the contract may be voided.
Q9. Under Pennsylvania law, earnest money deposited by a buyer is:
Explanation
In Pennsylvania, earnest money (deposit) must be placed in the broker's escrow or trust account within a specified time. It cannot be commingled with the broker's personal funds and is held until closing or the contract is terminated.
Q10. Which of the following best describes 'liquidated damages' in a real estate contract?
Explanation
Liquidated damages are a predetermined amount of compensation agreed upon by the parties in the contract, representing the damages one party suffers if the other defaults. In real estate, this is commonly the earnest money deposit.
Q11. A counteroffer in a real estate negotiation legally:
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