Contracts
In Minnesota, a 'bilateral contract' in real estate is one where:
AOnly one party is legally bound
BBoth parties exchange promises and are mutually obligated✓ Correct
CThe contract is valid in two states
DTwo separate buyers are competing for the same property
Explanation
A bilateral contract involves mutual obligations—both parties make promises to each other. A purchase agreement is a bilateral contract: the seller promises to sell and deliver title; the buyer promises to purchase and deliver funds.
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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.
Option ContractA contract giving the buyer the right, but not the obligation, to purchase a property at a specified price within a specified time period.
Earnest MoneyA deposit made by the buyer when submitting a purchase offer, demonstrating serious intent and serving as consideration for the contract.
ContingencyA condition in a purchase contract that must be satisfied before the sale can proceed to closing.
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