Donna is purchasing a home in Mobile, Alabama. Her purchase agreement includes a financing contingency stating that if she cannot obtain a mortgage commitment at 7% or below within 21 days, she may terminate the contract and receive a full refund of her earnest money. Donna is unable to secure financing within the 21-day period. What is the most likely outcome?
Correct Answer
D) Donna may terminate the contract and recover her earnest money per the contingency terms
A properly drafted financing contingency in an Alabama purchase agreement protects the buyer if they cannot obtain financing on the specified terms within the stated period. When Donna is unable to secure a mortgage commitment at 7% or below within 21 days, the contingency is triggered, entitling her to terminate the contract and receive a full refund of her earnest money as expressly stated in the agreement.
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Related Topics & Key Terms
Key Terms:
Related Concepts
A purchase agreement is a legally binding contract between a buyer and seller that outlines the terms and conditions for the sale of real property. It is also commonly called a sales contract, purchase and sale agreement, or earnest money agreement.
Specific performance is a court-ordered remedy that compels the breaching party to fulfill their obligations under the contract rather than simply paying monetary damages. It is an equitable remedy used when monetary damages would be inadequate.
The Statute of Frauds is a legal requirement that certain types of contracts must be in writing and signed to be enforceable. In real estate, all contracts for the sale of land or interests in land must be in writing.
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