Contracts
A Minnesota purchase agreement that has been fully signed by both buyer and seller but the buyer's financing falls through is resolved when:
AThe buyer automatically keeps the earnest money
BThe parties follow the financing contingency terms—the buyer may be entitled to a full refund of earnest money if the contingency conditions are met✓ Correct
CThe seller can sue the buyer for the full purchase price
DThe contract is automatically void
Explanation
If a properly written financing contingency in a Minnesota purchase agreement is not satisfied (buyer cannot obtain financing on the specified terms), the buyer may cancel the agreement and recover their earnest money as long as they acted in good faith and followed the contingency procedures. The contract then terminates.
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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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