A Tempe seller includes a clause requiring the buyer to assume the existing $200,000 mortgage at 3.5% interest. The buyer qualifies for a new loan at 4.2% but prefers the assumption. During the assumption process, the lender requires a $5,000 assumption fee not mentioned in the contract. Who is responsible for this fee?
Correct Answer
D) Determined by contract language or negotiation
Correct: Unless the contract specifically addresses assumption fees, the parties must negotiate or follow any applicable contract provisions about closing costs. Why not A: Benefit alone doesn't determine fee responsibility. Why not B: Requiring assumption doesn't automatically make seller responsible for all related costs. Why not C: Equal splitting is not the default rule without agreement.
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Related Topics & Key Terms
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Related Concepts
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.
Liquidated damages are a predetermined amount of money specified in the contract that the non-breaching party is entitled to receive if the other party breaches. In real estate, the earnest money deposit typically serves as liquidated damages.
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