Contracts
In Indiana, when a purchase contract specifies that closing must occur 'on or before' a stated date, which party bears the risk if closing does not occur by that date?
AAlways the seller
BAlways the buyer
CThe party whose actions or inactions caused the delay✓ Correct
DNeither party — extensions are automatic
Explanation
When a closing date is missed, the party responsible for causing the delay bears the risk of being in breach of contract. If 'time is of the essence,' the non-breaching party may have the right to terminate and seek remedies.
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Key Terms to Know
Option Contract
A contract giving the buyer the right, but not the obligation, to purchase a property at a specified price within a specified time period.
Earnest MoneyA 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.
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