A buyer and seller in Montgomery, Alabama have a fully executed purchase agreement. Which of the following would most likely NOT constitute grounds for the buyer to lawfully terminate the contract and recover earnest money?
Correct Answer
A) The buyer finds a different property they prefer more and no longer wishes to purchase the contracted home
Simply finding a preferred property and no longer wishing to purchase the contracted home is NOT a lawful basis for the buyer to terminate the contract and recover earnest money. This is a voluntary change of mind, which constitutes a buyer default under the purchase agreement. The buyer would be in breach of contract, and the seller would typically be entitled to retain the earnest money as liquidated damages.
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Related Topics & Key Terms
Key Terms:
Related Concepts
Equitable title is the buyer's interest in a property after a purchase contract is signed but before closing, giving the buyer the right to acquire legal title in the future. The seller retains legal title until the deed is delivered at closing.
A financing contingency makes the purchase contract conditional upon the buyer obtaining mortgage approval within a specified time period. If the buyer cannot secure financing, they can cancel the contract and receive their earnest money back.
An inspection contingency gives the buyer the right to have the property professionally inspected within a specified time frame and to negotiate repairs or cancel the contract based on the findings.
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