PSI Virginia Real Estate Practice Exam

What is the main purpose of a Real Property Sales Contract?

1. To allow immediate ownership transfer

2. To outline the conditions for title conveyance

3. To secure a mortgage loan

4. To establish property tax liabilities

The correct answer is: To outline the conditions for title conveyance

The main purpose of a Real Property Sales Contract is to outline the conditions for title conveyance. This document serves as a legally binding agreement between the buyer and the seller, detailing the terms under which the property will be transferred. It typically includes important elements such as the purchase price, contingencies (such as financing or appraisal), closing date, and any specific terms that govern the exchange of ownership. This clarity and structure ensure that both parties understand their rights and obligations, facilitating a smoother transaction process. By specifying conditions necessary for the transfer of title, this contract enhances the protection of both the buyer and the seller, helping to prevent disputes that may arise if the terms were vague or not documented. The other options, while related to real estate transactions, do not encompass the primary function of a Real Property Sales Contract. For instance, allowing immediate ownership transfer is not its role, as the contract typically precedes the transfer at closing. Securing a mortgage loan is also outside its primary purpose, as that involves a different document and process. Establishing property tax liabilities is unrelated to the sales contract, which does not deal directly with tax obligations but with the transfer of ownership rights.