A Tempe purchase contract includes a provision stating 'Seller shall provide clear title free of all encumbrances except those specifically accepted by buyer.' The title commitment reveals an easement not disclosed in the contract. How should this be handled?
Correct Answer
B) Seller must cure the title defect or buyer may terminate
Since the seller warranted clear title except for specifically accepted encumbrances, and the easement was not specifically accepted by the buyer, the seller must either cure this title defect or the buyer has grounds to terminate the contract. Option A is incorrect because public record doesn't automatically make encumbrances acceptable under the contract terms. Option C is incorrect because encumbrances must be specifically accepted, not automatically accepted. Option D is incorrect because the contract requires clear title, so closing cannot proceed with unaccepted encumbrances.
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Related Topics & Key Terms
Key Terms:
Related Concepts
An assignment of contract transfers one party's rights and obligations under a contract to a third party called the assignee. The original party, known as the assignor, transfers their contractual position to someone who was not originally part of the agreement.
A bilateral contract is an agreement in which both parties exchange promises and are both obligated to perform, while a unilateral contract is one in which only one party makes a promise and the other party is not obligated to act.
A breach of contract occurs when one party fails to perform their obligations under the contract without a legal excuse. The non-breaching party is entitled to legal remedies including damages, specific performance, or contract rescission.
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