Sarah contracts to purchase a condominium in Boston for $650,000 and deposits $13,000 as an earnest money deposit under the purchase and sale agreement. Before closing, the seller discovers a title defect that makes the property unmarketable and is unable to cure it within the time allowed under the contract. Sarah demands her deposit back. Under Massachusetts law, which of the following best describes Sarah's remedy?
Correct Answer
B) Sarah is entitled to a full refund of her $13,000 deposit because the seller's inability to deliver marketable title constitutes a seller default.
Under Massachusetts law, a seller has an obligation to deliver marketable title at closing. When the seller cannot cure a title defect within the contractually specified time, the seller is in default. A buyer is entitled to a full refund of the earnest money deposit when the seller fails to perform due to an inability to convey marketable title. This is a fundamental principle of Massachusetts real estate contract law.
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