Contracts
Under Indiana law, if a property has a deed restriction limiting use to residential purposes and a buyer intends to operate a commercial business, the broker should:
AIgnore the restriction as private covenants are rarely enforced
BAdvise the buyer of the restriction and recommend they seek legal counsel regarding enforceability✓ Correct
CProceed with the sale without mentioning it
DAsk the seller to remove the restriction before closing
Explanation
A deed restriction limiting use to residential purposes is a material fact that could prevent the buyer's intended use. The broker must advise the buyer and recommend they consult an attorney about the restriction's enforceability.
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Key Terms to Know
Deed
A written legal instrument used to transfer ownership of real property from one party (grantor) to another (grantee).
ContingencyA 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.
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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