Contracts
In Minnesota, which of the following provisions in a purchase agreement specifically addresses who is responsible if the property is damaged or destroyed between signing and closing?
AThe financing contingency
BThe risk of loss provision✓ Correct
CThe earnest money clause
DThe inspection contingency
Explanation
A risk of loss provision specifies which party (buyer or seller) bears the risk if the property is damaged or destroyed between the signing of the purchase agreement and closing. Many Minnesota purchase agreements follow the uniform risk of loss act, which places risk on the seller until title passes.
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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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