Contracts
A real estate contract can be discharged (ended) by mutual rescission, which means:
AOne party unilaterally cancels the contract
BBoth parties agree to cancel the contract and return to their original positions✓ Correct
CThe contract expires after its stated term without being renewed
DA court orders the contract to be terminated due to impossibility of performance
Explanation
Mutual rescission occurs when both parties voluntarily agree to cancel the contract and return all consideration (such as earnest money) to restore each party to their pre-contract position. It requires agreement by both parties — unlike a unilateral cancellation.
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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.
Purchase AgreementA legally binding contract between a buyer and seller that outlines the terms and conditions of a real estate sale.
Listing AgreementA contract between a property owner and a real estate broker that authorizes the broker to market and sell the property.
ContingencyA condition in a purchase contract that must be satisfied before the sale can proceed to closing.
Math Concepts
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