PSI Virginia Real Estate Practice Exam

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What distinguishes an installment contract?

A contract for full payment upfront
A contract that requires delivery in two or more separate lots
A contract that guarantees financing for a new purchase
A non-negotiable agreement between two parties

The correct answer is: A contract that requires delivery in two or more separate lots

An installment contract is characterized by the fact that it allows for the payment for an asset or property to be made in several parts over a specified period. This structure means that instead of requiring the full payment upfront, the buyer makes smaller, periodic payments until the full amount is settled. This method is particularly useful in real estate transactions, where large sums may pose financial strain, allowing buyers to manage their cash flow better while still securing the property at the beginning of the agreement. The option regarding making payments in two or more separate lots aligns with the essence of an installment contract, as it specifically points to the division of payment over time rather than lump-sum payment requirements. Hence, it effectively illustrates the nature of installment contracts, distinguishing them from other types of agreements that may not offer this flexibility.