Contracts
In Missouri, 'novation' in a real estate contract context means:
AAdding an addendum to the contract
BSubstituting a new party or obligation for an old one, releasing the original party✓ Correct
CExtending the closing date
DConverting a lease to a purchase contract
Explanation
Novation replaces an original contract party or obligation with a new one, and the original party is released from liability. In real estate, this can occur when a buyer is replaced by a new buyer with the seller's agreement.
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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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