ContractsIntermediateAlabama Exam

A real estate purchase contract that contains an 'as-is' clause means:

AThe seller guarantees the property is in perfect condition, subject to the usual exceptions

BThe buyer accepts the property in its current condition and the seller makes no warrantiesCorrect

CThe buyer waives all inspection rights

DThe contract cannot be cancelled for any reason

Why The buyer accepts the property in its current condition and the seller makes no warranties Is Correct

Answer B: The buyer accepts the property in its current condition and the seller makes no warranties

An 'as-is' clause means the seller is making no warranties about the condition of the property and the buyer agrees to accept it in its current state. However, the seller must still disclose known material defects.

Exam Tip: Contracts

Contract questions frequently test the essential elements required for a valid contract. Remember: competent parties, mutual consent, lawful object, and sufficient consideration. Watch for void vs. voidable distinctions.

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Key Terms to Know

Earnest Money

A deposit made by the buyer when submitting a purchase offer, demonstrating serious intent and serving as consideration for the contract.

Contingency

A condition in a purchase contract that must be satisfied before the sale can proceed to closing.

Purchase Agreement

A legally binding contract between a buyer and seller that outlines the terms and conditions of a real estate sale.

Option Contract

A contract giving the buyer the right, but not the obligation, to purchase a property at a specified price within a specified time period.

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Real Estate Contracts Guide

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