Contracts
When a Maryland home under contract is damaged by fire before settlement, which party typically bears the risk of loss?
AAlways the buyer once the contract is signed
BDetermined by the contract terms or state law on risk of loss — Maryland follows equitable conversion but contracts may specify otherwise✓ Correct
CAlways the seller until settlement
DThe insurance company only
Explanation
Maryland follows equitable conversion, placing risk of loss on the buyer after contract signing. However, most Maryland contracts include provisions that place risk on the seller until settlement.
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Key Terms to Know
Purchase Agreement
A legally binding contract between a buyer and seller that outlines the terms and conditions of a real estate sale.
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.
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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