legal
QUIZ Test your knowledge of the back-up contract addendum BY WILL MARTIN, GENERAL COUNSEL
1.
A back-up contract created using the Back-Up Contract Addendum (Form 2A1-T) becomes binding only if and when the seller notifies the buyer that the primary contract has been terminated. True or False?
2.
Since a back-up contract becomes effective when signed, the back-up buyer may begin conducting due diligence immediately. True or False?
3.
The seller may not amend or modify the primary contract if there is a back-up contract on the seller’s property. True or False?
4.
The Initial Earnest Money Deposit becomes due and payable if and when the seller notifies the buyer that the back-up contract has become primary. True or False?
5.
If the seller notifies the back-up buyer that the back-up contract has become primary, the backup buyer is not obligated to pay the due diligence fee so long as they terminate the back-up contract within two days. True or False?
6.
Once the seller provides written notice to the buyer stating that the back-up contract has become primary,
the back-up buyer is obligated to perform the back-up contract. True or False?
7.
The seller may accept multiple back-up contracts and later decide which back-up buyer to proceed with if the primary contract is terminated. True or False?
8. 9.
The Back-Up Contract Addendum may not be used to create a second back-up contract. True or False?
When completing an offer that includes a Back-Up Contract Addendum, a buyer agent should insert a date in the Settlement Date blank in paragraph 1(l) of Offer to Purchase and Contract that is the buyer agent’s best educated guess about when Settlement of the backup contract will take place, based on the circumstances existing at the time of the offer. True or False?
10.
If a seller enters into a back-up contract, the listing agent is not obligated to let the primary buyer know about the existence of the back-up contract. True or False?
HOW DID YOU DO? Turn the page to discover the answers. ncrealtors.org • INSIGHT 9
