Contracts
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:
AThe contract automatically extends for another 10 days
BThe seller may cancel the contract and retain the earnest money✓ Correct
CThe seller may cancel the contract but must return the earnest money since the buyer acted in good faith
DThe buyer forfeits the earnest money and the contract is void
Explanation
If a buyer fails to satisfy or waive a financing contingency by the specified deadline, the seller typically has the right to cancel the contract and, depending on the contract terms, may be entitled to the earnest money as liquidated damages.
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