Contracts
In South Dakota, what is the legal effect of a 'contingency' in a real estate purchase contract?
AIt makes the contract automatically void
BIt makes the contract binding only if the specified condition is met within the specified time✓ Correct
CIt reduces the purchase price automatically
DIt extends the closing date by 30 days
Explanation
A contingency is a condition that must be satisfied for the contract to remain binding. Common contingencies include financing, inspection, and appraisal. If the contingency condition is not met, the party with the contingency typically has the right to terminate the contract.
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