Robert and Angela are under contract to purchase a home in Colorado Springs. The contract includes a financing contingency with a Loan Conditions Deadline of October 15. On October 14, the lender notifies Robert and Angela that their loan has been denied due to a recent job change. They inform their broker, who advises them to submit a Notice to Terminate. Under the CREC contract, which statement best describes the consequence if they do NOT submit a Notice to Terminate by the Loan Conditions Deadline?
Correct Answer
B) The buyers waive their right to terminate based on loan conditions and must proceed or forfeit their earnest money
Under the CREC-approved Contract to Buy and Sell Real Estate, contingency deadlines are not self-executing. If the buyer fails to deliver a Notice to Terminate by the Loan Conditions Deadline, the buyer waives the right to terminate based on that contingency and is obligated to proceed with the contract. Failure to close after waiving the contingency would constitute a breach, and the buyer risks forfeiting their earnest money.
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Related Topics & Key Terms
Key Terms:
Related Concepts
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.
Earnest money is a deposit made by the buyer at the time of the offer or shortly after to demonstrate good faith and serious intent to purchase the property. It is also called a good faith deposit.
Equitable title is the buyer's interest in a property after a purchase contract is signed but before closing, giving the buyer the right to acquire legal title in the future. The seller retains legal title until the deed is delivered at closing.
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