Contracts
A Connecticut purchase contract is subject to a 'clean title contingency.' At closing, the title search reveals an old mortgage from 1988 that was never formally released. The seller must:
AClose anyway since the mortgage is very old
BProvide a release of the old mortgage or a bond before the buyer is obligated to close✓ Correct
CDisclose the issue and let the buyer decide if they still want the property
DReduce the purchase price by the old mortgage amount
Explanation
Under a clean title contingency, the seller must provide marketable title free from defects. An unreleased old mortgage is a lien that must be resolved—by obtaining a formal release from the lender or bonding around it—before the buyer is required to close.
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Key Terms to Know
Contingency
A condition in a purchase contract that must be satisfied before the sale can proceed to closing.
LienA financial claim against a property that serves as security for a debt or obligation, giving the creditor the right to foreclose if unpaid.
Earnest MoneyA deposit made by the buyer when submitting a purchase offer, demonstrating serious intent and serving as consideration for the contract.
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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