Contracts
A Maine purchase and sale agreement includes a financing contingency. If the buyer cannot obtain financing and properly invokes the contingency, the earnest money:
AIs forfeited to the seller
BIs returned to the buyer✓ Correct
CIs split equally between buyer and seller
DIs retained by the broker
Explanation
When a buyer properly invokes a financing contingency (unable to obtain financing despite good faith efforts), the contract terminates and earnest money is returned to the buyer.
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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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