Contracts
In a Texas residential contract, which clause protects the buyer if the property's appraised value comes in below the contract price?
AThe option period provision
BA financing contingency that specifies the loan-to-value requirement, which may allow termination if the property does not appraise✓ Correct
CThe title provision
DThe property condition paragraph
Explanation
The TREC financing addendum specifies loan terms including LTV. If the property does not appraise at the contract price and the lender reduces the loan based on lower appraised value, the buyer may not be able to obtain the specified financing terms, potentially allowing termination under the financing contingency. Buyers should understand their options when a property appraises low.
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