Contracts
A Mississippi buyer has a financing contingency in their purchase contract. If the buyer cannot obtain financing by the contingency deadline and properly notifies the seller, the buyer is entitled to:
ANothing; the earnest money is forfeited
BTermination of the contract and return of the earnest money✓ Correct
CA one-time 30-day extension of the deadline
DTransfer of the earnest money to the seller as damages
Explanation
A financing contingency protects the buyer. If the buyer properly invokes the contingency because financing was not obtained, the contract terminates and the earnest money is returned to the buyer.
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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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