Contracts
Which clause in an Ohio purchase contract allows the buyer to cancel if they cannot obtain financing?
AHold harmless clause
BMortgage contingency clause✓ Correct
CAcceleration clause
DDefeasance clause
Explanation
A mortgage contingency (financing contingency) clause gives the buyer the right to cancel the contract and recover earnest money if they are unable to obtain the specified financing.
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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.
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.
Adjustable-Rate Mortgage (ARM)A mortgage with an interest rate that changes periodically based on a financial index, usually after an initial fixed-rate period.
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