A buyer enters into a C.A.R. RPA with an appraisal contingency. The lender's appraisal comes in at $380,000 against a purchase price of $400,000. Which of the following accurately describes one of the buyer's options under the C.A.R. RPA appraisal contingency?
Correct Answer
B) The buyer can cancel the contract and recover the earnest money deposit in full
Under the C.A.R. RPA appraisal contingency, when a property appraises below the purchase price, the buyer has the right to cancel the contract and receive a full refund of the earnest money deposit without penalty. This right exists without any prerequisite steps such as renegotiation or a second appraisal.
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Related Topics & Key Terms
Key Terms:
Related Concepts
Consideration is something of value exchanged between parties to a contract, making the agreement legally binding. It can be money, a promise to act, a promise to refrain from acting, or anything else of value.
Contingencies are conditions written into a real estate contract that must be met before the transaction can close. If a contingency is not satisfied, the buyer can typically cancel the contract without penalty.
Contract termination occurs when a contract is ended or discharged, releasing both parties from their obligations. A contract can be terminated through performance, mutual agreement, operation of law, or breach.
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