Carlos is purchasing a condominium in Boston, Massachusetts. His purchase and sale agreement includes a mortgage contingency with a commitment deadline of June 15. On June 14, Carlos receives a conditional mortgage commitment that requires him to sell his current home before closing. The seller's agent argues this does not satisfy the mortgage contingency because it is not an unconditional commitment. Under Massachusetts practice, which statement is most accurate?
Correct Answer
A) A conditional mortgage commitment generally does not satisfy a standard mortgage contingency requiring an unconditional written commitment, so Carlos may invoke the contingency
Under Massachusetts real estate practice, a standard mortgage contingency requires the buyer to obtain an unconditional written mortgage commitment by the specified deadline. A conditional commitment — one that requires the sale of another property before the loan will be funded — is generally not considered a satisfactory mortgage commitment. Therefore, Carlos may invoke the contingency to cancel the contract and recover his deposit, as the condition imposed by the lender (selling his current home) is a material condition outside his control.
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Related Topics & Key Terms
Key Terms:
Related Concepts
A time is of the essence clause in a contract means that all deadlines and dates specified in the agreement are strictly enforceable, and failure to meet them constitutes a material breach.
An appraisal contingency allows the buyer to cancel or renegotiate the contract if the property's appraised value comes in lower than the agreed-upon purchase price. This contingency protects buyers from overpaying.
An assignment of contract transfers one party's rights and obligations under a contract to a third party called the assignee. The original party, known as the assignor, transfers their contractual position to someone who was not originally part of the agreement.
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