PSI Virginia Real Estate Practice Exam

What is necessary for a real estate contract to be enforceable?

1. Approval by the local housing authority

2. Exchange of something of value

3. Witnesses present during the signing

4. Filing paperwork with the county clerk

The correct answer is: Exchange of something of value

For a real estate contract to be enforceable, the exchange of something of value, known as consideration, is essential. This consideration can take the form of money, services, or other benefits that one party provides to another as part of the agreement. The presence of consideration is a fundamental principle of contract law because it signifies that both parties have agreed to a reciprocal exchange, which is necessary for a contract to be binding. The other options mentioned do not constitute the essential elements that must be present for a real estate contract to be enforceable. Approval by the local housing authority is not a requirement for most contracts; witness signatures may enhance the credibility of a document but are not universally necessary for a contract's enforceability; and while filing paperwork with the county clerk may be needed for certain real estate transactions (such as recording a deed), it is not a prerequisite for the initial enforceability of the contract itself. Therefore, the exchange of something of value is the critical factor that validates the contract and makes it legally binding.