Contracts
What is the difference between an 'assignment' and a 'novation' in a Pennsylvania real estate contract?
AAssignment is for commercial contracts; novation is for residential
BAssignment transfers contractual rights while the original party remains liable; novation replaces one party with a new party who assumes all obligations, releasing the original party✓ Correct
CAssignment requires court approval; novation requires only written notice
DThey are legally equivalent under Pennsylvania contract law
Explanation
In an assignment, the original party (assignor) transfers their contractual rights to a third party (assignee) but remains liable if the assignee defaults. In a novation, all parties agree to substitute a new party for the original party, completely releasing the original party from liability.
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Key Terms to Know
Purchase Agreement
A legally binding contract between a buyer and seller that outlines the terms and conditions of a real estate sale.
Right of First RefusalA contractual right giving a party the opportunity to match any offer received before the owner can accept it from a third party.
Earnest MoneyA 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.
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