A buyer waives the financing contingency to make an offer more competitive. If the buyer later cannot obtain a loan, what is the buyer's position?
Correct Answer
B) The buyer may be in breach of contract and risk losing earnest money
By waiving the financing contingency, the buyer removed the contractual protection. If the buyer cannot close, the buyer may be in breach and the earnest money may be at risk.
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Related Topics & Key Terms
Key Terms:
Related Concepts
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.
Equitable title is the buyer's interest in a property after a purchase contract is signed but before closing, giving the buyer the right to acquire legal title in the future. The seller retains legal title until the deed is delivered at closing.
A financing contingency makes the purchase contract conditional upon the buyer obtaining mortgage approval within a specified time period. If the buyer cannot secure financing, they can cancel the contract and receive their earnest money back.
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- → A Rhode Island licensee encounters a listing contract is drafted. What should the licensee remember?
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