Contracts
Which contract clause allows a buyer to exit the purchase agreement if they cannot obtain financing on specified terms?
AAcceleration clause
BFinancing contingency✓ Correct
CDue-on-sale clause
DAlienation clause
Explanation
A financing contingency (also called a mortgage contingency) protects the buyer by making the purchase agreement contingent on the buyer obtaining financing with specified terms (amount, interest rate, term). If the buyer cannot secure qualifying financing, they may terminate the contract and receive their earnest money back.
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Key Terms to Know
Earnest Money
A deposit made by the buyer when submitting a purchase offer, demonstrating serious intent and serving as consideration for the contract.
Purchase AgreementA legally binding contract between a buyer and seller that outlines the terms and conditions of a real estate sale.
ContingencyA condition in a purchase contract that must be satisfied before the sale can proceed to closing.
LienA financial claim against a property that serves as security for a debt or obligation, giving the creditor the right to foreclose if unpaid.
Math Concepts
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