Contracts
A novation in a real estate contract occurs when:
AA new addendum is added to the original contract
BA new party is substituted for an old party, releasing the original party from obligation✓ Correct
CBoth parties negotiate new terms but keep the original contract
DThe contract is recorded in the public records
Explanation
Novation replaces one of the original contract parties with a new party, completely releasing the original party. Unlike assignment (where the original party may still be liable), novation fully substitutes a new party.
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