A Minnesota purchase agreement for a Rochester home contains an appraisal contingency stating the property must appraise at or above the purchase price of $420,000. The property appraises at $405,000. The seller refuses to reduce the price. The buyer's agent advises the buyer of three options. Which of the following is NOT a valid option available to the buyer under this contingency?
Correct Answer
C) Demand that the seller make $15,000 in home improvements to justify the purchase price
An appraisal contingency gives the buyer the right to cancel if the property does not appraise at or above the purchase price, but it does not give the buyer the right to demand that the seller make home improvements to justify the price. That is not a recognized remedy under an appraisal contingency. The buyer's valid options are: (1) cancel and recover earnest money, (2) proceed by paying the gap out of pocket, or (3) negotiate a price reduction with the seller's agreement.
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Related Topics & Key Terms
Key Terms:
Related Concepts
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.
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.
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