California Real Estate Practice Exam

Under a real property sales contract, Buyer "A" makes a $2,000 down payment to Seller "B." "A" then moves to Florida without making further payments or notifying "B." Which of the following would be true?

1. New buyer should not be concerned about the previous sales to "A."

2. Seller could resell the property and obtain a deficiency judgment against "A."

3. "A's" activity has no effect upon the marketability of the property.

4. There would be a cloud on the title to the property.

The correct answer is: New buyer should not be concerned about the previous sales to "A."

In the scenario presented, the option that signifies that "A's" circumstances should not worry a new buyer shows an understanding of how real property transactions and ownership rights function. When "A" made a down payment and subsequently abandoned the property by moving to Florida without further payments or communication, it does not impede the potential new buyer's ability to purchase or take possession of the property. Generally, unless there are particular liens or legal encumbrances tied to the property, the new buyer can acquire it free of concerns related to "A." This is based on the premise that the seller retains the right to sell the property to a new buyer regardless of "A's" earlier arrangement, especially since "A" failed to uphold the contract terms. In real estate terms, marketability refers to how easily a property can be sold. A seller typically has the right to resell the property if the buyer defaults or does not fulfill contractual obligations, which allows new buyers to proceed without worry about prior transactions. The idea of a "cloud on the title" suggests unresolved issues impacting ownership rights, which does not apply in this case since "A's" actions do not create a barrier or defect for the seller to sell the property again. Therefore, the understanding