Susan signs a purchase and sale agreement to buy a property in Brookline, Massachusetts. The agreement includes a mortgage contingency with a deadline of July 1. On June 28, Susan receives a written mortgage commitment but does not notify the seller. On July 2, Susan's lender rescinds the commitment due to a change in Susan's employment status. Susan then attempts to invoke the mortgage contingency to cancel the contract. Under Massachusetts practice, which outcome is most likely?
Correct Answer
C) Susan cannot invoke the contingency because she had satisfied it by obtaining the written commitment before the July 1 deadline, and the subsequent rescission does not revive the contingency
Under Massachusetts real estate practice, once a buyer obtains a written mortgage commitment before the contingency deadline, the mortgage contingency is satisfied and effectively waived. The contingency's purpose is to protect the buyer if they cannot obtain financing; once financing is obtained, the contingency is fulfilled. The subsequent rescission of the commitment — even if due to circumstances beyond the buyer's control — does not revive a contingency that has already been satisfied. Susan obtained the commitment by June 28, which was before the July 1 deadline, so the contingency was met and cannot be re-invoked.
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Related Topics & Key Terms
Key Terms:
Related Concepts
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.
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.
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