Ch.7 California Residential Purchase Agreement Flashcards

Practice questions covering the provisions, requirements, and legal terminology of the California Association of REALTORS® Residential Purchase Agreement based on the provided lecture notes.

What are the three core requirements for a valid purchase agreement in addition to common contract elements?

It must be in writing under the statute of frauds, identify the parties and describe the property, and state the price and method of payment.

According to the transcript, how should married parties be identified in a legal document?

By the full name of each spouse (e.g., "John D. Smith and Mary L. Smith") rather than "Mr. & Mrs. John D. Smith."

What is the legal consequence if only one spouse signs a purchase agreement for property later determined to be community property?

The agreement will be unenforceable.

When a corporation is a party to the agreement, who typically signs and what evidence must be provided?

An officer authorized by the board of directors must sign, and evidence of authority must be provided within $3$ days after acceptance.

Why is a street address or assessor's parcel number (APN) alone insufficient for a property description?

Street addresses are never legally sufficient and APNs are risky because parcel numbers may change; a full legal description is the clearest and most unambiguous method.

When must a buyer receive the Disclosures Regarding Real Estate Agency Relationships (C.A.R. Form AD)?

Before signing an offer.

In an all-cash offer, within how many days must the buyer provide verification of funds to close?

Within $3$ days of the seller's acceptance.

What is the default deadline for a buyer to deliver a good faith deposit to the escrow holder?

Within $3$ business days after acceptance.

According to Paragraph 3L(1), what is the default length of the loan contingency period?

$17$ days after acceptance.

Under Paragraph 3J, what is the default timeframe for the buyer's final verification of the property's condition?

During the $5$ days prior to closing.

What specific form must be used if the seller is to remain in possession of the property for fewer than $30$ days after closing?

Form SIP, Seller License to Remain in Possession Addendum.

What is the difference in regional custom between Northern and Southern California regarding who pays for the owner's title insurance policy?

In Northern California, the buyer usually pays; in Southern California, the seller usually pays.

What are the six types of natural hazard zones that require statutory disclosure?

Special flood hazard area, potential flooding (inundation) zone, very high fire hazard area, state responsibility fire area, earthquake fault zone, and seismic hazard zone.

How many days does a buyer have to cancel a purchase agreement if statutory disclosures are delivered in person versus by mail?

$3$ days if delivered in person; $5$ days if delivered by mail.

If a buyer or seller misses a deadline, how much time does a 'Notice to Perform' give the receiving party to act before the other can cancel?

$2$ days.

How many days are used as the basis for all prorations at closing (e.g., property taxes, HOA dues)?

A $30$-day month.

What is the 'Time Is of the Essence' clause?

A provision meaning that the parties are legally required to meet all deadlines set out in the agreement; failure to meet a deadline can be treated as a breach of contract.

What is an 'Integration Clause'?

A provision stating that the purchase agreement contains the entire agreement between the parties and invalidates any previous agreements.

Under California law, what is the maximum amount of liquidated damages allowed for a one- to four-unit residential building the buyer intends to occupy?

$3.0\%$ of the purchase price.

What is the primary difference between the mediation (Paragraph 30) and arbitration (Paragraph 31) clauses in the C.A.R. form?

Mediation is a requirement of the form (necessary to recover attorney fees), while arbitration only applies if it is specifically initialed by both parties.