In an AAR Purchase Contract, the buyer's lender requires an appraisal that comes in $15,000 below the purchase price. The contract includes an appraisal contingency. What options does the buyer have?
Correct Answer
B) Cancel the contract and receive earnest money back, or negotiate with seller
Cancel the contract and receive earnest money back, or negotiate with seller. The appraisal contingency protects the buyer when the property doesn't appraise for the contract price, allowing them to cancel or renegotiate terms. Why not A: The buyer is not obligated to proceed at the original price when the appraisal contingency is triggered. Why not C: There is no automatic price reduction; any adjustment must be negotiated between parties. Why not D: There is no automatic splitting of the difference; any compromise must be mutually agreed upon.
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Related Topics & Key Terms
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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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A seller receives multiple offers on their property using AAR Purchase Contracts. The seller wants to accept one offer but keep the others as backup. What is the proper procedure using AAR forms?
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