Tom and Linda are selling their St. Paul home. They accept an offer from Kevin that includes both a financing contingency and an inspection contingency. Kevin's home inspector discovers a cracked heat exchanger in the furnace, which could allow carbon monoxide to enter the living space. Kevin submits a repair request to Tom and Linda, who refuse to make any repairs or reduce the price. Kevin then cancels the contract under the inspection contingency and demands his earnest money back. Under Minnesota law, which statement best describes the outcome?
Correct Answer
B) Kevin is entitled to recover his earnest money because he properly exercised the inspection contingency
Under Minnesota purchase agreement practice, an inspection contingency gives the buyer the right to cancel the contract based on the results of a professional inspection. Provided Kevin exercised the contingency within the specified timeframe and followed the proper notice procedures, he is entitled to a full refund of his earnest money. The seller's refusal to repair or reduce the price does not eliminate Kevin's right to cancel under the contingency—the contingency itself gives him the exit right regardless of whether the defect is 'material' in a legal sense.
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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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