Contracts
A Minnesota purchase agreement includes a financing contingency. The buyer is denied financing on the last day of the contingency period. What typically happens?
AThe buyer automatically loses their earnest money
BThe buyer can cancel the contract and receive their earnest money back✓ Correct
CThe buyer must extend the contingency at the seller's option
DThe contract becomes void without any action required
Explanation
When a financing contingency is properly invoked (buyer is denied financing within the specified period), the buyer can typically cancel the contract and receive their earnest money back. The contingency protects the buyer from losing their deposit if they cannot obtain financing. Proper written notice is usually required to invoke the contingency.
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