Contracts
Which of the following best describes novation in a real estate contract?
AOne party assigns their rights to a third party while remaining liable
BAn existing contract is replaced by a new contract, releasing the original party from liability✓ Correct
CA minor change is made to the contract by addendum
DThe closing date is extended by agreement
Explanation
Novation substitutes a new party for an original party in a contract, with all parties agreeing to release the original party from further liability. This differs from assignment, where the original party remains secondarily liable.
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