Contracts
An Iowa purchase agreement contains a financing contingency. If the buyer cannot obtain financing within the contingency period, the buyer:
AMust close anyway or forfeit the earnest money
BMay terminate the contract and recover the earnest money✓ Correct
CMust extend the closing date automatically by 30 days
DMay sue the seller for failure to sell
Explanation
A properly drafted financing contingency protects the buyer by allowing them to terminate the contract and recover the earnest money if they are unable to obtain financing on the specified terms within the contingency period.
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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.
Math Concepts
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