Contracts
In a real estate contract, 'novation' means:
AAdding a new addendum to the existing contract
BSubstituting a new contract or party for an old one, releasing the original party✓ Correct
CBoth parties agreeing to modify the contract price
DThe seller taking back financing from the buyer
Explanation
Novation occurs when a new contract or new party is substituted for an existing one, with the consent of all parties, releasing the original party from their obligations. In real estate, loan assumption with novation releases the original borrower from liability when the lender approves a new borrower.
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