Contracts
Under New Mexico law, a real estate contract signed by a mentally incompetent person is:
AAutomatically enforceable
BVoid if the person was adjudicated incompetent, or voidable if not adjudicated✓ Correct
CFully enforceable by the other party only
DOnly valid if witnessed by two people
Explanation
A contract signed by a person adjudicated (declared by a court) as mentally incompetent is void. A contract by a person with mental incapacity who has not been adjudicated may be voidable.
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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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