An Arizona purchase contract includes a financing contingency that states the buyer must obtain loan approval within 10 days. On day 11, the buyer has not obtained approval. The MOST likely outcome is:
Why The seller may cancel the contract and retain the earnest money Is Correct
Answer B: The seller may cancel the contract and retain the earnest money
Exam Tip: Contracts
Contract questions frequently test the essential elements required for a valid contract. Remember: competent parties, mutual consent, lawful object, and sufficient consideration. Watch for void vs. voidable distinctions.
Key Contracts Terms in This Question
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Key Terms to Know
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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