The contract is executory, making A correct. The critical distinction is between formation and performance. Once a valid purchase-and-sale agreement has been formed, it can create binding contractual obligations even though substantial performance—including delivery of the deed, payment of the balance of the purchase price, closing adjustments, and other conditions—remains for a future closing date.
Because those obligations remain outstanding, the agreement is executory. It becomes fully executed in the contract-classification sense once the required performance has been completed. Simply signing the agreement does not mean the transaction has been fully performed.
Option B is therefore wrong: a contract is not automatically nonbinding merely because closing will occur later. Whether it is binding depends on the requirements of contract formation, its terms, contingencies, and applicable law. “Non-recourse” is a financing concept and does not describe the performance status of a purchase contract.
The Massachusetts Board curriculum expressly identifies executed versus executory as a required contract classification and treats purchase-and-sale agreements as one of the core contracts used by real estate licensees.
Study Guide Reference: Contracts — Purchase and Sale Agreements; executed and executory contracts.
