Contracts
An Arizona buyer submits an offer with a contingency that financing must be secured within 10 days. The seller accepts. If the buyer cannot secure financing within 10 days, the result is:
AThe buyer automatically forfeits the earnest money
BThe buyer may cancel the contract and receive the earnest money back per the contingency✓ Correct
CThe seller can sue the buyer for specific performance
DThe contract automatically extends for another 10 days
Explanation
If a valid financing contingency is included and the buyer cannot satisfy it within the specified timeframe, the buyer may cancel the contract without penalty and receive the earnest money refund as stated in the contingency.
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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.
ContingencyA condition in a purchase contract that must be satisfied before the sale can proceed to closing.
Option ContractA contract giving the buyer the right, but not the obligation, to purchase a property at a specified price within a specified time period.
Purchase AgreementA legally binding contract between a buyer and seller that outlines the terms and conditions of a real estate sale.
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