A purchase contract for a single-family home in Glastonbury, Connecticut includes an appraisal contingency stating the property must appraise at or above the $550,000 purchase price. The appraisal comes in at $525,000. The buyer invokes the appraisal contingency and requests that the seller reduce the price to $525,000. The seller refuses and insists the buyer proceed at $550,000 or forfeit the deposit. Which outcome best reflects Connecticut contract law?
Correct Answer
C) The buyer may terminate the contract and recover the earnest money deposit because the appraisal contingency was not satisfied
An appraisal contingency protects the buyer by making the purchase obligation conditional upon the property appraising at or above the purchase price. When the appraisal comes in below the purchase price ($525,000 vs. $550,000), the contingency condition is not satisfied. The buyer has the right to terminate the contract and receive a full refund of the earnest money deposit. The seller cannot force the buyer to proceed or retain the deposit when the buyer properly invokes a valid contingency.
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Related Topics & Key Terms
Key Terms:
Related Concepts
An option contract gives one party the exclusive right, but not the obligation, to purchase or lease a property at a specified price within a specified time period. The buyer pays option consideration to keep the option open.
A purchase agreement is a legally binding contract between a buyer and seller that outlines the terms and conditions for the sale of real property. It is also commonly called a sales contract, purchase and sale agreement, or earnest money agreement.
Specific performance is a court-ordered remedy that compels the breaching party to fulfill their obligations under the contract rather than simply paying monetary damages. It is an equitable remedy used when monetary damages would be inadequate.
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