ContractsIntermediateNorth Carolina Exam

A contingency in a North Carolina real estate contract is best described as:

AA clause that automatically voids the contract

BA condition that must be met for the contract to become binding or for closing to proceedCorrect

CA penalty clause for late performance

DA provision that waives the buyer's due diligence rights, as is typical in most transactions

Why A condition that must be met for the contract to become binding or for closing to proceed Is Correct

Answer B: A condition that must be met for the contract to become binding or for closing to proceed

A contingency is a condition in the contract that must be satisfied for the transaction to proceed; if the contingency fails, the affected party may have the right to terminate.

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.

Key Contracts Terms in This Question

Contingency

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

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Key Terms to Know

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.

Right of First Refusal

A contractual right giving a party the opportunity to match any offer received before the owner can accept it from a third party.

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