Contracts
In Pennsylvania, what is the legal effect of a buyer signing an Agreement of Sale that contains a mortgage contingency?
AThe contract is void until financing is secured
BThe buyer has a conditional obligation to purchase if financing is obtained✓ Correct
CThe seller may immediately seek another buyer regardless of the contingency
DThe buyer must close even if financing falls through
Explanation
A mortgage contingency creates a conditional contract — the buyer is obligated to purchase if they obtain the specified financing, but may terminate and recover their deposit if financing is not available despite good-faith efforts. Pennsylvania courts enforce these contingencies, and buyers must make reasonable efforts to secure financing or risk losing their earnest money deposit.
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