A buyer in Kalamazoo signs a purchase agreement to buy a home for $280,000. The agreement contains an inspection contingency allowing the buyer to request repairs or cancel the contract within 10 days of the inspection. The inspector finds a cracked foundation. The buyer submits a repair request on day 8. The seller refuses all repairs. The buyer now wants to cancel the contract and recover the earnest money. Which of the following best describes the buyer's position under Michigan contract law?
Correct Answer
A) The buyer may cancel the contract and recover earnest money because the inspection contingency was properly exercised within the specified timeframe
When a purchase agreement contains a properly drafted inspection contingency, the buyer has the right to cancel the contract and recover the earnest money if the seller refuses to make requested repairs, provided the buyer acted within the contingency period. The buyer submitted the repair request on day 8 of a 10-day window, which is timely. The seller's refusal to repair triggers the buyer's right to cancel under the contingency terms.
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Related Topics & Key Terms
Key Terms:
Related Concepts
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.
An assignment of contract transfers one party's rights and obligations under a contract to a third party called the assignee. The original party, known as the assignor, transfers their contractual position to someone who was not originally part of the agreement.
A bilateral contract is an agreement in which both parties exchange promises and are both obligated to perform, while a unilateral contract is one in which only one party makes a promise and the other party is not obligated to act.
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