A buyer in Phoenix submits an offer with a financing contingency requiring loan approval within 21 days. On day 18, the buyer's lender denies the loan application. The buyer immediately notifies the seller and requests to extend the contingency period by 10 days to seek alternative financing. What is the seller's obligation under Arizona law?
Correct Answer
B) May choose whether to grant the extension
The seller may choose whether to grant the extension. Under Arizona law, contingency periods are contractual deadlines, and extensions require mutual agreement between parties. The seller has no obligation to grant an extension but may do so voluntarily. Option A is incorrect because extensions are not automatic. Option C is incorrect because there is no statutory limit on extension length if both parties agree. Option D is incorrect because parties can mutually agree to extend contingency periods even after the original deadline.
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Related Topics & Key Terms
Key Terms:
Related Concepts
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.
Novation is the substitution of a new contract for an existing one, or the replacement of one party with a new party, with the consent of all parties involved. The original party is completely released from all obligations.
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