ContractsIntermediateArizona Exam

In Arizona, a purchase contract that is contingent on the buyer obtaining financing must specify:

AOnly the down payment amount, because Arizona courts have held that the lender has sole discretion over interest rate and term once the down payment is specified
BThe lender's name and the buyer's pre-approval letter date, which Arizona law treats as sufficient specification of the financing the buyer intends to obtainCorrect
COnly the loan type (FHA, VA, or conventional), since the interest rate is not a material term under Arizona financing contingency case law
DThe loan amount, interest rate, term, and type of loan so that both parties understand what financing the buyer must obtain

Why The lender's name and the buyer's pre-approval letter date, which Arizona law treats as sufficient specification of the financing the buyer intends to obtain Is Correct

Answer B: The lender's name and the buyer's pre-approval letter date, which Arizona law treats as sufficient specification of the financing the buyer intends to obtain

Arizona purchase contracts with financing contingencies should specify the material loan terms—amount, rate, term, and type—so the contingency is objectively defined. A vague financing contingency can create disputes about whether the buyer made a good-faith effort to obtain the specified financing.

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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