Marcus and Linda submit an offer on a home in Grand Rapids with a 21-day inspection contingency. The home inspection reveals a cracked foundation. Marcus and Linda notify the seller in writing within the contingency period that they are exercising their right to void the contract. What is the most likely outcome regarding their earnest money?
Correct Answer
D) The earnest money is returned to Marcus and Linda in full
When a buyer properly exercises a valid inspection contingency by providing written notice within the contingency period, the purchase agreement is voided and the earnest money must be returned to the buyer. Marcus and Linda followed the contractual procedure correctly by notifying the seller in writing within the 21-day window, so they are entitled to a full refund of their earnest money deposit.
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Related Topics & Key Terms
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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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