PSI Virginia Real Estate Practice Exam

What does a purchase agreement contingent upon certain conditions imply?

1. The sale is guaranteed regardless of conditions

2. The agreement is void from the start

3. Conditions must be met before the property is sold

4. Parties have no obligations

The correct answer is: Conditions must be met before the property is sold

A purchase agreement that is contingent upon certain conditions implies that specific criteria or stipulations must be satisfied before the transaction can be completed. This means that the buyer and seller have agreed to proceed with the sale only if certain requirements—such as financing approval, home inspections, or the sale of the buyer's current property—are met within a specified timeframe. This type of agreement protects both parties by establishing that the sale is not finalized until the conditions laid out in the agreement are fully met. If the conditions are not met, the buyer typically has the right to cancel the agreement without penalty, thus preserving their investment and avoiding binding obligations that may not be in their best interest. In contrast, other options do not accurately describe the nature of a contingent purchase agreement. Guaranteeing the sale regardless of conditions would not allow for any contingencies to be in place. Claiming the agreement is void from the start does not reflect the reality that it is valid and enforceable until the conditions are unmet. Lastly, stating that parties have no obligations does not hold true, as there are specific obligations contingent upon meeting or failing to meet the outlined conditions. Therefore, the implication of requiring the conditions to be met before advancing to the sale is correctly reflected in the selected answer