Contracts
In West Virginia, a purchase contract may be rescinded (cancelled) by mutual agreement of the parties. When this occurs:
AThe broker retains the earnest money as compensation
BThe parties are restored to their pre-contract positions and earnest money is returned per the agreement✓ Correct
CThe seller owes the buyer damages equal to the earnest money
DOnly a court can authorize the rescission
Explanation
When a West Virginia purchase contract is rescinded by mutual agreement, both parties are restored to their original positions. The disposition of earnest money is governed by the terms of the rescission agreement.
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Key Terms to Know
Earnest Money
A deposit made by the buyer when submitting a purchase offer, demonstrating serious intent and serving as consideration for the contract.
Purchase AgreementA legally binding contract between a buyer and seller that outlines the terms and conditions of a real estate sale.
ContingencyA condition in a purchase contract that must be satisfied before the sale can proceed to closing.
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.
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