A buyer in Manteca has a C.A.R. RPA with a 21-day loan contingency. On day 19, the buyer's lender issues a conditional loan approval contingent on the buyer providing additional pay stubs. The buyer is not sure the condition can be met. Should the buyer remove the loan contingency?
Correct Answer
D) No, the buyer should keep the loan contingency active until receiving unconditional loan approval to protect the deposit
A conditional loan approval means the loan is not yet fully secured. The buyer should keep the loan contingency active until receiving unconditional (clear-to-close) approval. Removing the contingency with outstanding conditions puts the buyer's deposit at risk if the loan ultimately falls through.
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Related Topics & Key Terms
Key Terms:
Related Concepts
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.
A counteroffer is a response to an original offer that changes one or more terms of the offer, effectively rejecting the original offer and creating a new offer. The party who makes the counteroffer becomes the new offeror.
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