A buyer in Eden Prairie submits a written purchase offer that includes a due diligence contingency giving the buyer 10 days to inspect the property. On day 7, the buyer discovers a significant foundation crack not disclosed by the seller. The buyer's agent notifies the seller's agent in writing that the buyer is withdrawing from the contract under the contingency. Under Minnesota contract principles, which of the following is TRUE?
Correct Answer
A) The buyer may withdraw and is entitled to a full refund of the earnest money
Under Minnesota contract law, if a buyer properly exercises a contingency within the specified timeframe, the buyer is entitled to withdraw from the contract and receive a full refund of the earnest money. The due diligence contingency gave the buyer 10 days to inspect; the buyer exercised the right on day 7 (within the period) with written notice. The buyer's right to withdraw and recover earnest money is contractually protected when a contingency is properly invoked.
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Related Topics & Key Terms
Key Terms:
Related Concepts
Offer and acceptance is the process by which one party proposes specific terms for a contract and the other party agrees to those exact terms, creating mutual assent. This mutual agreement, also called a meeting of the minds, is an essential element of every valid contract.
An option contract gives one party the exclusive right, but not the obligation, to purchase or lease a property at a specified price within a specified time period. The buyer pays option consideration to keep the option open.
A purchase agreement is a legally binding contract between a buyer and seller that outlines the terms and conditions for the sale of real property. It is also commonly called a sales contract, purchase and sale agreement, or earnest money agreement.
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