A Minnesota purchase agreement is fully executed with a closing date of August 10. The agreement includes an inspection contingency with a deadline of July 20. The buyer completes the inspection on July 18 and is satisfied with the results but does not send any written notice to the seller. On July 25, the buyer attempts to cancel the contract, claiming new personal financial concerns. What is the most likely outcome?
Correct Answer
C) The inspection contingency was waived when the buyer failed to cancel by July 20, and the buyer has no contractual basis to cancel without risking earnest money forfeiture
Under Minnesota purchase agreement practice, a contingency that is not exercised (i.e., the buyer does not cancel or raise objections) by its deadline is deemed waived. The inspection contingency deadline was July 20. The buyer did not cancel or raise concerns by that date; therefore, the contingency was waived. The buyer's attempt to cancel on July 25 based on personal financial concerns—not a valid contractual contingency—places the buyer at risk of being in default and forfeiting the earnest money.
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Related Topics & Key Terms
Key Terms:
Related Concepts
Contract termination occurs when a contract is ended or discharged, releasing both parties from their obligations. A contract can be terminated through performance, mutual agreement, operation of law, or breach.
A counteroffer is a response to an original offer that changes one or more terms of the offer, effectively rejecting the original offer and creating a new offer. The party who makes the counteroffer becomes the new offeror.
Earnest money is a deposit made by the buyer at the time of the offer or shortly after to demonstrate good faith and serious intent to purchase the property. It is also called a good faith deposit.
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