Contracts
Under Illinois contract law, which of the following is sufficient 'consideration' in a real estate purchase agreement?
AThe buyer's promise to love and care for the property
BThe payment of $10 and mutual promises to buy and sell✓ Correct
CThe seller's agreement to hold the property for a reasonable time
DThe broker's assurance that the property is a good investment
Explanation
Consideration in a contract requires something of legal value given by each party. In a real estate purchase agreement, the buyer's promise to pay money and the seller's promise to convey title are mutual consideration.
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Key Terms to Know
Purchase Agreement
A legally binding contract between a buyer and seller that outlines the terms and conditions of a real estate sale.
Earnest MoneyA deposit made by the buyer when submitting a purchase offer, demonstrating serious intent and serving as consideration for the contract.
Net Operating Income (NOI)The annual income generated by an income-producing property after subtracting operating expenses, but before debt service.
ContingencyA condition in a purchase contract that must be satisfied before the sale can proceed to closing.
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