Contracts
Novation in Vermont real estate refers to:
AThe addition of a new contingency
BThe substitution of a new party or obligation for an old one, releasing the original party from liability✓ Correct
CThe modification of the purchase price
DRecording a new deed
Explanation
Novation substitutes a new party or obligation in place of the original, releasing the original party from further liability. In real estate, it is common when a buyer assumes a mortgage and the lender releases the original borrower.
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Key Terms to Know
Contingency
A condition in a purchase contract that must be satisfied before the sale can proceed to closing.
DeedA written legal instrument used to transfer ownership of real property from one party (grantor) to another (grantee).
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.
Short SaleA sale of real property where the sale proceeds are less than the outstanding mortgage balance, requiring lender approval.
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