A purchase and sales agreement in New Hampshire includes a financing contingency stating the buyer must obtain a written mortgage commitment at a specified interest rate within 21 days. On day 19, the buyer's lender issues a commitment but at a rate 0.5% higher than stated in the contingency. The buyer's agent submits a written notice of unsatisfied contingency to the seller. Which statement best describes the legal effect of this notice?
Correct Answer
B) The buyer may terminate the agreement and recover the earnest money deposit, as the contingency terms were not met.
A financing contingency in a NH purchase agreement is a contractual condition that must be satisfied according to its specific terms. If the commitment issued does not match the specified rate in the contingency (here, it is 0.5% higher), the condition has not been met as written. Timely written notice of the unsatisfied contingency within the contingency period allows the buyer to terminate the agreement and recover the earnest money deposit.
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Related Topics & Key Terms
Key Terms:
Related Concepts
Consideration is something of value exchanged between parties to a contract, making the agreement legally binding. It can be money, a promise to act, a promise to refrain from acting, or anything else of value.
Contingencies are conditions written into a real estate contract that must be met before the transaction can close. If a contingency is not satisfied, the buyer can typically cancel the contract without penalty.
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.
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