California Real Estate Practice Exam

Which of the following would NOT be considered a "deferred payment" form of contract?

1. Conditional sales contract

2. FHA purchase contract

3. Installment sale contract

4. Land contract

The correct answer is: Conditional sales contract

A conditional sales contract is designed to facilitate the sale of goods where the buyer takes possession but does not gain full ownership until the purchase price is paid in full. This type of contract typically involves immediate payments rather than deferring payments over time. The key characteristics of deferred payment contracts involve allowing buyers to make payments over a period rather than requiring full payment upfront. In contrast, the FHA purchase contract, installment sale contract, and land contract all involve deferring payments. The FHA purchase contract often allows for financing that can include a payment plan. The installment sale contract enables buyers to pay for property over several installments. A land contract, also known as a contract for deed, allows the buyer to make installment payments while maintaining possession of the property without receiving the title until the purchase price is fully paid. Thus, the conditional sales contract stands out as it typically does not fit the criteria of deferring payments, reinforcing its status as the appropriate choice for this question.