Certified Residential Appraiser Practice Exam

What is an executed contract?

1. A contract that has not been signed

2. A contract that has been fully performed

3. A contract that is still negotiable

4. A verbal agreement only

The correct answer is: A contract that has been fully performed

An executed contract refers to a contract that has been fully performed by all parties involved. This means that all the obligations and terms set forth in the contract have been completed and fulfilled. For instance, in a real estate transaction, once the buyer pays the purchase price and the seller transfers the title of the property, the contract is considered executed. In contrast, a contract that has not been signed represents a preliminary agreement that is not yet enforceable. A contract that is still negotiable is one where the terms have not been finalized, and the parties are still discussing them. A verbal agreement only refers to oral contracts, which may not meet legal requirements for enforceability in many jurisdictions. Therefore, understanding that an executed contract signifies completion and fulfillment of all contractual obligations is crucial to recognizing the importance of this term in legal and real estate contexts.