Contracts
In a New Mexico real estate transaction, 'novation' occurs when:
AA contract is modified by an addendum
BA new party substitutes for an original party, releasing the original party from the contract✓ Correct
CThe buyer assigns their rights to a third party without releasing themselves
DThe seller cancels the listing
Explanation
Novation replaces an original party with a new party, releasing the original party from all obligations. In loan assumptions, for example, if the lender approves novation, the original borrower is released from the debt.
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