Humber/Ontario Real Estate Course 1 Exam Practice

What is a legal impact of a real estate agreement based on a handshake without a written contract?

1. The agreement is legally binding.

2. The agreement can be enforced if witnessed by a third party.

3. The agreement is not enforceable without a written document.

4. The agreement can be voided if contested in court.

5. The agreement is considered valid under common law.

6. The agreement requires notarization to be binding.

The correct answer is: The agreement is not enforceable without a written document.

The correct answer points to the concept that a handshake agreement regarding real estate is typically not enforceable without a written contract, as dictated by laws governing real estate transactions. Real estate agreements generally fall under the Statute of Frauds, which requires certain contracts to be in writing to be enforceable. This is to ensure clarity and protection for all parties involved, as significant legal and financial implications arise from real estate transactions. The notion of a written document protects against misunderstandings and disputes, emphasizing the importance of documented agreements in real estate dealings. While verbal agreements may hold weight in some contexts, they do not carry the same legal enforceability in real estate transactions, which are often complex and require detailed terms and conditions laid out in writing. As for the other options, while some may present scenarios under which a handshake agreement might seem viable, they do not align with the standard legal requirements for real estate contracts in most jurisdictions. Hence, the emphasis is on the need for a written document to ensure enforceability.