Contracts, Transfer, and Escrow Practice Question

Question

A property manager is preparing a written response involving risk of loss. The parties need a practical answer before moving forward. Which answer best applies the rule? (Item 120)

Answer choices

1. A. It is primarily a tax rule with no effect on brokerage practice.
2. B. It removes the need for written disclosure if the licensee believes the client already knows.
3. C. It can be ignored if the transaction is expected to close quickly.
4. D. Recognize contract allocation and insurance considerations before closing.

Correct Answer

D. Recognize contract allocation and insurance considerations before closing.

Explanation

The correct answer is D because risk of loss requires candidates to recognize contract allocation and insurance considerations before closing. The other options overstate the effect of custom, oral agreement, escrow, or independent salesperson action and do not reflect safe California exam practice.

Question details

• Difficulty: hard
• Domain: Contracts, Transfer, and Escrow
• Objective: risk of loss

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