Contracts
What is the legal effect when a buyer and seller sign a purchase agreement?
ATitle transfers immediately to the buyer
BA binding executory contract is created✓ Correct
CThe seller must vacate the property within 30 days
DThe agent's commission is immediately earned
Explanation
A signed purchase agreement creates an executory contract — binding on both parties, but not yet fully performed. Title does not transfer until closing. The contract obligates both parties to perform their respective duties.
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