PSI Oklahoma Real Estate Practice Test

What should a broker do to eliminate controversy regarding changes made to a sales contract?

1. Have both parties sign and date the entire contract

2. Have both parties initial and sign on the margin near each change

3. Keep a copy of the original contract without any changes

4. Utilize a notary public to witness the changes

The correct answer is: Have both parties initial and sign on the margin near each change

Having both parties initial and sign on the margin near each change ensures clarity and prevents misunderstandings about any amendments made to the sales contract. This practice is vital in real estate transactions because contracts are legally binding documents that must accurately reflect the agreement between parties. By requiring initials and signatures next to each modification, both parties acknowledge and accept the specific changes, reinforcing their agreement and reducing the potential for disputes in the future. This method serves as a clear record that both involved parties were aware of and consented to every specific alteration in the contract. In contrast, while having both parties sign and date the entire contract may seem comprehensive, it doesn’t specifically highlight which areas of the contract have been changed. Keeping a copy of the original contract without modifications doesn't address the need for clarification regarding changes. Utilizing a notary public to witness changes may lend an extra layer of legitimacy but does not provide direct evidence of agreement on the specific changes made, which is crucial in preventing controversy. Overall, the practice of initialing and signing near changes effectively safeguards the interests of all parties involved.