During a brokerage meeting in Elgin, Rowan Monroe asks what a financing contingency is designed to do in a residential Illinois contract. What is the best answer under current Illinois law or practice?
Correct Answer
B) A financing contingency generally makes the buyer's duty to close contingent on obtaining the stated financing under the contract terms.
The financing contingency ties performance to the buyer obtaining the contractually described financing, not to seller financing or automatic waiver of other terms.
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Related Topics & Key Terms
Key Terms:
Related Concepts
A financing contingency makes the purchase contract conditional upon the buyer obtaining mortgage approval within a specified time period. If the buyer cannot secure financing, they can cancel the contract and receive their earnest money back.
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.
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