Contracts
In Maine, 'novation' in a real estate contract means:
ASubstituting a new contract or party for an existing one, releasing the original party✓ Correct
BAdding an addendum to an existing contract
CCanceling the contract without penalty
DExtending the closing date
Explanation
Novation substitutes a new party or obligation for an existing one, releasing the original party from liability. For example, when a buyer assumes a mortgage through novation, the original borrower is released.
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Key Terms to Know
Contingency
A condition in a purchase contract that must be satisfied before the sale can proceed to closing.
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.
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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