Linda is buying a single-family home in Springfield, Massachusetts. Her purchase and sale agreement includes a standard mortgage contingency clause. The contingency deadline passes without Linda obtaining a written mortgage commitment, and she does not notify the seller or request an extension. The seller then declares the contract void and retains Linda's $10,000 deposit. Under Massachusetts law, which statement best describes this situation?
Correct Answer
B) The seller acted properly because Linda's failure to satisfy or waive the contingency by the deadline allowed the seller to treat the contract as void and retain the deposit
Under Massachusetts real estate practice, if a buyer fails to satisfy a contingency by the stated deadline and does not notify the seller or request an extension, the seller may treat the contingency as having lapsed and declare the contract void. The seller is then generally entitled to retain the deposit as liquidated damages, as specified in the purchase and sale agreement. Linda's failure to act — either by obtaining the commitment, waiving the contingency, or requesting an extension — gave the seller the right to void the contract and keep the deposit.
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Related Topics & Key Terms
Key Terms:
Related Concepts
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.
The Statute of Frauds is a legal requirement that certain types of contracts must be in writing and signed to be enforceable. In real estate, all contracts for the sale of land or interests in land must be in writing.
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