Humber/Ontario Real Estate Course 4 Exam Practice

What binds a buyer to an irrevocable date on a purchase agreement?

1. The buyer can retract the offer anytime.

2. The irrevocable date must be a minimum of 48 hours.

3. The buyer is bound if the agreement is signed under seal and understood.

4. The irrevocable date automatically ends at 11:59 p.m.

5. The seller and buyer can mutually agree to disregard the date.

6. The buyer must provide a deposit to bind the date.

The correct answer is: The irrevocable date must be a minimum of 48 hours.

The correct answer reflects that the irrevocable date must be a minimum of 48 hours, which is significant in ensuring that all parties have adequate time to consider the offer without the pressure of an immediate response. The purpose of an irrevocable date in a purchase agreement is to create a binding timeframe within which the seller must respond to the buyer's offer. When the irrevocable date is set for a minimum of 48 hours, it establishes a clear window of time during which the buyer's offer is valid and cannot be rescinded by the buyer. This ensures that the seller can make an informed decision regarding the offer without concern that the buyer may change their mind too quickly. It is a standard practice in real estate transactions to have this kind of timeframe, which also helps in managing expectations and planning for both parties. In contrast, other options do not correctly describe how a buyer is bound to the irrevocable date in this context. While a buyer cannot retract an offer during the irrevocable period, and the mutual agreement to disregard the date is possible, neither of these points directly addresses how the buyer is bound to the terms. Understanding the 48-hour minimum is crucial for appreciating the formalities of entering into a purchase agreement in real estate transactions.