A Maryland purchase agreement contains a clause stating that the property is sold subject to the buyer obtaining a satisfactory home inspection. The buyer's inspector submits a report, but the buyer simply decides she no longer wants the property for personal reasons unrelated to the inspection findings. She attempts to void the contract using the inspection contingency. Under Maryland law, which statement best describes the validity of her attempt to void the contract?
Correct Answer
D) The buyer may void the contract only if the inspection reveals material defects that are objectively unsatisfactory
Under Maryland contract law, a home inspection contingency allows the buyer to void the contract based on the results of the inspection — meaning the condition of the property must be the basis for the decision. The contingency is not a free exit clause for personal reasons unrelated to the property's condition. The buyer must act in good faith, and voiding the contract for reasons wholly unrelated to inspection findings (e.g., simply changing her mind) is not a valid exercise of the contingency. The inspection must reveal conditions that a reasonable buyer would find unsatisfactory.
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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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