Contracts
A Florida residential sales contract contains a mortgage contingency that expires on a specific date. If the buyer cannot obtain financing by that date, which statement is correct?
AThe contract automatically terminates and the deposit is returned
BThe buyer must notify the seller in writing before the contingency deadline or may lose their right to cancel and their deposit✓ Correct
CThe closing date is automatically extended 30 days
DThe seller must reduce the price to help the buyer qualify
Explanation
If the financing contingency deadline passes without proper written notice from the buyer that they could not obtain financing, the buyer may waive their right to cancel under that contingency. The buyer must monitor contingency deadlines carefully and provide timely written notice of any inability to perform.
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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.
Earnest MoneyA deposit made by the buyer when submitting a purchase offer, demonstrating serious intent and serving as consideration for the contract.
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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