hard · National Real Estate Exam contracts
A buyer and seller sign a binding purchase agreement for a residential property. Two weeks before the scheduled closing, a lightning strike causes a fire that destroys the detached garage.
If the jurisdiction follows the traditional common law doctrine of equitable conversion and the contract is silent on the matter, what is the legal result?
- The buyer must proceed with the purchase at the full contract price because they hold equitable title.
- The buyer may rescind the contract entirely and recover the full earnest money without penalty
- The contract is automatically voided by law because the improvements were destroyed before closing occurred
- The seller alone bears the entire risk of loss since they still retain legal title and possession until closing
Sign up free to see the explanation and track your rank →
More National Real Estate Exam contracts practice
- A broker's employment contract with a seller is officially called the:
- What is the current status of the contract?
- A buyer defaults on a purchase agreement, and the seller chooses to keep the earnest money
- A buyer makes a written offer to a seller. Two days later, before the seller has responded
- A contract for the sale of a property is signed. Before closing, the property is destroyed
- A contract for the sale of real estate that has been signed by both parties is valid, but
- A contract that is valid and binding but allows one party to avoid the agreement because o
- A contract that is valid and enforceable until it is canceled by a party who was a victim