Marcus is buying a home in Montgomery County and his contract includes a financing contingency requiring him to obtain a mortgage commitment within 21 days of ratification. On day 20, his lender denies his loan application. Marcus properly notifies the seller in writing within the contingency period. What is the most likely outcome regarding his earnest money deposit under Maryland contract law?
Correct Answer
B) Marcus is entitled to a refund of his earnest money deposit because he properly invoked the financing contingency
Under Maryland contract principles, when a buyer properly invokes a financing contingency within the agreed period — meaning the buyer could not obtain the specified financing and provides timely written notice — the contract is voided and the buyer is entitled to a full refund of the earnest money deposit. Marcus notified the seller on day 20, within the 21-day window, so he properly exercised the contingency.
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Related Topics & Key Terms
Key Terms:
Related Concepts
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.
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.
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