Contracts
Novation in real estate contract law means:
AForgiving all contract obligations
BReplacing an old contract or party with a new one, releasing the original✓ Correct
CAdding new terms to an existing contract
DAssigning the contract to a third party while remaining liable
Explanation
Novation replaces an existing contract or party with a new one, releasing the original obligation. For example, when a new buyer assumes a mortgage and is substituted for the original borrower with the lender's consent.
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Key Terms to Know
Earnest Money
A deposit made by the buyer when submitting a purchase offer, demonstrating serious intent and serving as consideration for the contract.
ContingencyA condition in a purchase contract that must be satisfied before the sale can proceed to closing.
Purchase AgreementA legally binding contract between a buyer and seller that outlines the terms and conditions of a real estate sale.
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.
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