Contracts
In Minnesota, a 'novation' in a real estate contract occurs when:
AAn addendum is added to modify the contract
BA new party is substituted for an original party with the original party being released from their obligations✓ Correct
CThe contract is rescinded and all parties return to their pre-contract position
DAn original offer is countered with new terms
Explanation
Novation substitutes a new party for an original party in a contract, releasing the original party from all obligations. For example, if a buyer assumes the seller's mortgage and the lender releases the seller from the original mortgage obligation, this is a novation. The original debtor is discharged and the assuming party takes on full responsibility.
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