Contracts
Under Oklahoma law, what happens to a purchase contract if the property is destroyed by fire before closing?
AThe buyer must still purchase the property
BThe contract may be terminated and earnest money returned to the buyer✓ Correct
CThe seller keeps the earnest money
DThe contract automatically transfers to the insurance proceeds
Explanation
If a property is substantially destroyed before closing, Oklahoma follows the rule that the buyer may terminate the contract and receive back their earnest money, as the subject matter of the contract no longer exists as agreed.
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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.
Math Concepts
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