PSI New Jersey Real Estate State Practice Exam

If a buyer learns that a property cannot be used for its intended purpose after closing, how might the contract be viewed?

1. Legally binding

2. Voidable

3. Unenforceable

4. Cancelled

The correct answer is: Voidable

The contract may be viewed as voidable because the buyer was misled or did not have complete knowledge about the property's ability to be used for its intended purpose at the time of closing. A voidable contract allows one party, in this case, the buyer, to affirm or reject the contract based on certain circumstances, such as misrepresentation or lack of informed consent. If the buyer was not aware that the property could not fulfill its intended use, they may choose to void the contract due to this significant defect. In situations where a buyer makes a purchase based on specific expectations regarding the property's usability, discovering afterward that these expectations cannot be met significantly alters the agreement's foundational understanding. The buyer retains the option to proceed with the contract or to choose to cancel based on the new information regarding the property's restrictions. Other options might imply different legal standings for the contract that don't apply in this case. For instance, stating the contract is legally binding doesn't account for the buyer's new knowledge, and claiming it's unenforceable could suggest it was invalid from the start, which isn't necessarily accurate. Similarly, declaring the contract canceled without considering the buyer’s choice would overlook the buyer's potential option to affirm the contract instead.